>The firm that represents the seller reports the transaction and the firm that represents the buyer reports the transaction.
Dominic,
So how does this relate back to the volume NASDAQ reports?
>The presence of a short position increases the total float.
Does it? According to Barron's dicitionary of Finance and Investment Terms, 3rd edition, page 156, a float is "the number of shares of a corporation that are outstanding and available for trading by the public". [The definition seems a bit ambiguous to me.] Does the float also include transactions based upon borrowed shares used by short sellers? Or is the float strictly a company's outstanding shares issued. I don't know.
WTMHouston made these comments in post #3170...
"While short selling creates more shares traded, it is not dilution in the same sense as issuance of more shares. It is not dilution that ever shows up in reported economic numers for the company, which is generally how companies are judged. In theory, it is short term trading dilution, not permenant share dilution. It may create more volatility, but that is about the only effect of the species of "dilution" to which you refer. In some resepcts, to call it"trading dilution" is a bit of a misnomer, because it creates more traded shares. Generally, more shares traded is not viewed as dilution."
What I read here is that shorting impacts the number of shares traded, not a company's float. Is this your understanding?
Barron's dictionary also goes on to say..."a small float means the stock will be more volitile, since a large order to buy or sell shares can influence the stock's price dramatically".
However, you said...
>The presence of more stock in the float will cause more volatilty in the price action.
There seems to be a contradiction here. Again, my interpretation from all this is that shorting impacts the number of shares traded, not the float (?), which in turn makes a stock less volatile than it otherwise would be without the prsence of shorts. In other words, shorting adds stability to the market, not volatility.
Thanks for your comments. If I've misinterpreted anything, please let me know. I'm just trying to understand, not only the terminology, but how things actually work.
Ice
|
