| | | Shorting is just like borrowing cash. If you borrow cash from the bank, you have an obligation to repay on some specified schedule, but you're free to do what you want to do with the cash. You can spend it.
If you borrow shares (go short) you are free to spend them,also. You can sell them to the active bidder. The shares can be repaid later.
What happened last week was a total set-up. Shorters drove the SP below $3, and thereby triggered margin calls on anyone who had leveraged their ZEN shares. Those individuals became forced sellers, increasing the selling momentum, and guaranteeing that those who went short could buy back cheaper shares. But the shorters weren't content with just that. They also took out a number of stop-loss orders along the way, before they allowed the price to start to rise again.
The net effect was that short-sellers stole the shares from longs, and at a discounted price. And if they covered the short the same day, there is nothing to report. Blood suckers.
Lar |
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