Kent, hopefully somebody else can offer their opinion too. I'll give it my shot:
< 1. Is there any way to protect oneself from a short call? >
Not that I know of, except to avoid shorting stocks with very small floats or very high short interest as a fraction of the float. I still do it sometimes, but I will deliberately take a small position so the pain will be less if it happens.
BTW, when you broker calls you to say you are called in, I think you might have a couple of days to cover, and he might find new shares subsequently in between. Make sure he knows you want him to find new shares.
2. If I where to short a stock in smaller batches, say 5 sets
of 200 shares each in the example above, would they all be
called at the same time, or in batches?
Interesting idea. I don't know.
3. Do different brokers borrow from different places?
Definitely. Otherwise you wouldn't read reports in online forums
that broker A had shares to lend and broker B didn't.
4. Once a call is made on borrowed shares, is there any
other place to go and borrow shares to make up for them?
You can insist that your broker try to find shares outside his firm. As far as you finding shares thru a different broker and then transferring them to the other broker, I don't know if that is possible, but if it is, it might be easier anyway just to establish the new short position at your other broker and close out the first one. Although the transaction costs are something to reckon with. |
