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Gold/Mining/Energy : Abnormal Volume and Block Trades
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To: Essam Hamza who wrote (1930)6/19/1997 10:21:00 AM
From: Crocodile   of 2340
 
Butting in here...(-:

Hi Essam,

Your question for Eric is precisely what I am getting at... How does the actual "short sale" start?? Wouldn't it sort of HAVE to go to market to set the price at the beginning of the short? Otherwise, shorters and houses could be setting any mutually agreed upon price...which would seem like a damned weird thing to me... Also, (as I understand it) the house isn't really "giving" the shorter the shares, but instead, it sells the shares at market... the shorter pays for them (on margin from what I understand)... then waits to cover when the share price drops... If the price goes up instead, he can try to wait it out until the market turns again, but if the house needs to "sell" the shares for the guy that actually owned them in the first place (and which basically are now "gone")... and it doesn't have enough on hand, it will probably force the shorter to pay the difference to cover them immediately, so that it can buy shares at market to replace the "borrowed" ones that were sold off before when the short started. That is my understanding after reading posts from annoyed shorters who were forced to cover and replace shares when stocks went up.

However, that said, I don't know a heck of a lot about this stuff yet... but I'm trying to learn... (-:

Bev
P.S. Upon proof-reading this post, I realize that it sounds very confusing... but this is a darned confusing subject.
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