Shorts Interesting the short position is unchanged. Thank you Finalstep.
Shorts usually buy out-of-the-money call options when they short a stock to limit risk and equally important credit requirements from their brokers. Covered short positions require much less margins than "naked" positions.
I shorted once in my life, by turning a long GM position into a short one about 20 years ago. I did well.
A call option gives shorts the right to buy the stock at a specific strike price for a certain period of time. So the exposure is limited.
Example: a short of SNC at 28$ would buy for a cost of say 1$ the right to buy the stock for 30$ anytime for the next 12 months. So this short has now lost 5$ on the shares (28$ to 33$) but has gained (1$ to 6$) an equal 5$ on the call option. Short funds balance the sensitivity of their portfolios to price change (net delta).They may have now sold their calls at a profit (because of the higher time volatility premium and jump in intrinsic value) and kept their short positions and bought cheaper calls at a higher strike price say 38$.