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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (2175)	11/21/1997 10:07:00 AM
From: Gary M. Reed	Respond to of 42834

I2, Nope, when your brokerage firm "lends" 100 shares of XYZ for someone to sell short, the short seller didn't purchase the shares, he sold them, with the agreement that at some point in time, he would buy them back. So his brokerage firm couldn't turn around and lend those shares to someone else, because he wasn't long XYZ--he was short--therefore there would be no more stock to lend. What he did was sell the stock you owned, and when you decide to sell your stock--or place it in Type 1--he has to buy the stock back in to give back to you. Technically, while short sales are done in a margin account, when a short sale is done, it is called a "Type 3" trade--Type 1 is cash, Type 2 is margin, and Type 3 is short sales. It's a little complicated--I don't know how the back offices keep it all straight--I certainly don't envy them. Gary