RE:Naked ShortIt's all done under the guise of legal trades. (may not be very ethical but it's the way this works). Institutions have a lot more leaway than individuals. Naked simply means you they don't per say own the shares to cover but can simply legally "borrow" as many shares from the "house" as required. Institutions themselves "borrow" shares from other client's accounts. Ever notice on your statements the line below your own number of shares? Unless one specifically request a firm to not "lend" out shares from your cash accounts, the shares can / are automatically "borrowed" by firms.
GLTA