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Technology Stocks : Cymer (CYMI)
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To: Scott Violette who wrote (10760)12/1/1997 2:36:00 AM
From: ben luong  Read Replies (1) of 25960
 
RE:>>Market Makers can short more shares than they physically have, to the tune of 140%.

I don't think so. Market makers are risk-adverse people. They short
stock only if they know they can buy it back at a lower price (They
know perfectly well who is willing to sell them at a lower price - they have all limited open orders in their record book) They don't leave any position open overnight and normally close out their position by end of the trading day. They sometimes use options to hedge their stock position. They don't need to borrow shares like normal investors but they still need to have cash at hand to cover their position just in case.

In short, market makers are perfect hedgers. They earn their living by ripping investors off 1/8 or 1/4 of a point.
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