Post by
CaneIsAbel on Mar 17, 2021 12:41pm
Short positions don’t expire options do
You can never know when a short needs to cover it depends on the collateral. Let's say I want to short a company that's twenty dollars down to 15. Normally the shares are borrowed by short sellers and they need collateral in cash to cover a run up instead of a downtrend. If the brokerage or stock broker notices the stock price climbing he will notify the short his collateral is close to running out does he want to add more money or does he want to swallow the loss and close the postion. This is the simplest way to explain short selling. Typically to be a short seller they say the risk is high because the amount you lose is endless. Well that's not true that amount you lose is your collateral and whatever the brokerage or bank is willing to extend you. Hence GmE squeeze when short sellers turned to fellow short sellers to increase the collateral high enough where Reddittors couldn't achieve tipping the stock back down crashing making some short sellers rich