SI
SI
discoversearch

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.
Biotech / Medical : Biotech Short Candidates
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: A.J. Mullen12/17/2017 11:26:17 AM
  Read Replies (1) of 897
 
I'd like to ask a general question regarding shorting a stock: what are the odds of a short position being called away? My fear is that, even if I have correctly diagnosed a stock of being substantially over bought and buy it, the stock continues its run and then has a correction which turns into a rout. So far that's exactly what I would have hoped, but it seems quite likely the person from whom I borrowed the stocks will want to sell. Won't his sale force me to close my position? If that happens at the beginning of the rout, it seems I might lose money while being correct about the stock. I'd hate that.

How do brokerages manage their borrowed shares? Is it done on a one to one basis, ie. if things get tight, am I at the mercy of the what the one or two guys from whom I borrowed? Or does the brokerage call away stocks on a LIFO principle, or do they use another hierarchy.

Is this a problem in practice for shares that are widely held? Is margin-trading so common that brokers have little problem finding shares to borrow for customers who want to go short? I know I have been given cash by my broker in the past so someone could borrow them, presumably to short them. The stocks concerned were relatively small caps, relatively thinly traded.

I know I could buy a PUT option, but that adds the problem of timing. I've failed with options when events happened slower than I expected.

Ashley
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News