Naked Shorting-Hedge Fund & Market Maker manipulation? Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: pcyhuang	2/3/2008 7:54:13 PM
	of 5034

Assignments on Naked Short Call Options >>>What happens when you write a call, get assigned, and there are no shares available to borrow? Do you just have to buy them in immediately?<< You basically have no choice but to buy them in. Sometimes your brokerage can look outside the firm and scrounge some up. This happens all the time - about once a quarter to me. It isn't a big deal. There are no penalties, demerits, etc associated with the call w/o shares to borrow. If you don't act, your broker will just do it for you - probably about three days after exercise. About six months ago, I was assigned with expiry, went down my list to buy in, and bought them in on the Monday following expiry. I missed one. On Wednesday about noon, I saw an order entered on my StreetSmart screen. And then it executed. I called Schwab that quickly to inform them that their computer was generating random orders and that there was great danger to the world's financial markets as a result. They politely informed me that the margin department had generated the order as a result of my "naked short." This boo-boo was profitable since my "naked short" had dropped since exercise. I got to keep the profit. No muss. No fuss. Of course it could have gone the other way. It is up to the brokerage to crack down on its wayward clients. Schwab doesn't fool around. Naked shorts can destroy a corporation, and I have seen what I can only construe to be hedge funds shorting imaginary shares. The SHO (naked short) rule has been tightened and enforced more rigorously. My understanding is that it is still a joke. Full Story: Message 24277943 pcyhuang

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next