<Are shorts required to cover in a specific amount of time/days? >
No. As long as they have the equity to back their position, a short can stay short indefinitely. Of course as a short position moves against you (i.e. the stock you are short goes up, like THQ today), the shorts have to have more and more money or other equity behind their position. (A short position is always on margin, just by it's very nature.)
The only exception to the above, I suppose, would be an extraordinary situations. Suppose THQ was bought out for $50/share cash. The shorts would of course be forced to cover prior to the closing of the deal. Or if 100% of the THQ long holders all decided to put their shares into a cash account (where they couldn't be borrowed), the shorts would have their short position called in and they would be forced to cover. This will never happen, however, since too many THQ holders are on margin.
It is possible for there not to be shares available to borrow for selling short, in a particular issue. Usually this is with highly shorted stocks, with small floats. I am not sure about your comment that "nor can the same shares be borrowed over and over again." I thought that they could be. For example, I go short 3 million of THQ by borrowing 3 million shares and selling them to 3 million new longs. Couldn't another short then borrow these shares held by the 3 million new longs and short them to yet another group of new longs? Maybe someone more knowledge on this could answer this question. |
