Crius Energy Trust Tr Unit CRIUF

How does short selling make money

[novascotian2014]

Short selling is a fairly simple concept: you borrow a stock, sell the stock and then buy the stock back to return it to the lender. Short sellers make money by betting that the stock they sell will drop in price. If the stock drops, the short seller buys it back at a lower price and returns it to the lender.

[marketsense]

Don't forget about the dividend.  The shorter is now responsible for paying the dividend if he is still short on record date.   The concept is simple providing you understand all the  implications.  There has been a lot of confusion over this by reading the previous posts so for a simple concept,  it seems to confuse a lot of people.

[deisman03]

When I first started reading up on shorting it seemed simple.  There is more to than you mention.  Yes, the distribution needs to be paid. At first I would think that the distribution would just be paid out to whomever is on record at the appropriate time. That's what happens.  Here's where it get tricky. The stock was borrowed and the short became the owner on record

[Sadie222]

YUP The new owner of the shares, IS THE OWNER. The history includes an IOU between the lender and shorter, but that is a private agreement. The lender has sold those shares. He expects to be repaid in-kind, and will generally make very sure it happens.

[predawn]

bs The company pays the dist for ALL shares ;;;;the shorter has to transfer the dist to the person he borrowed the shares from;;;;;;

[Sadie222]

The shorter doesn’t TRANSFER anything. He has sold the shares, the buyer gets the dividend. The shorter gets to reimburse the lender for the dividend they (as the original owner) would have received if they still had possession.

[predawn]

BS KWH pays the dist for every share out there in the trading market;; KWH does not get releif (no dist paid) just because a share is sold on the short side;;; 

[Sadie222]

That’s exactly what I said. KWH still pays the dividend, but it goes to the buyer of the shorted shares - not to the shorter, not to the lender. The buyer is now the legal owner of the shares, and can do whatever he wants with them. The lender holds an IOU from the shorter for that number of shares, and will do whatever it takes to get the shares back, at whatever cost TO THE SHORTER according to

[deisman03]

predawn, it is my understanding that the shorter SELLS those units almost immediately upon reciept. The ownership of those units it again transferred to the NEW purchaser.  I believe it is illegal for the LENDER of those shares/units to purchase them, but it's OK for another institution or individual to purchase them in another MARGIN ACCOUNT and thereby making the unit available for

[deisman03]

I replied to quickly. Predawn explained it well in his latest post.  THE SHORT HAS TO COVER THE DISTRIBUTION TO THE LENDER UNTIL THE SHORT COVERS AND RETURNS THE UNITS/SHARES

[Sadie222]

Deisman03 I doubt the shorter ever actually receives the shares. They are transferred directly from the brokers pool to the buyer. The registrar never sees any part of the shorting transaction.

[Tad]

This post has been removed in accordance with Community Policy

[predawn]

why when the person that owns the shares gets his dist  moneyfrom kwh? the lender does not own the share and does not have a dist coming???

[StocknerdEQcool]

The best way to educate yourself is to start getting your foot wet by shorting , the remaining details are only nuts and bolts. 

[predawn]

The point is the dist for every share issued weather they be short or long KWH pays it out so of course if the shorter gets the dist he or she or they would be required to repay it to the lender 

[predawn]

anyhow dont care as theres not enough KWH short to makes a pinch of coon chit difference 

[deisman03]

Predawn, if the short were holding the units, then the units wouldn't be short.  Other than that, I agree

[predawn]

LOL I think u know full well what I mean ;;;;

[Sadie222]

Don’t forget the flip side. If the stock increases, he still has to buy replacements to return to the lender, and that cost has no top limit. A really bad short can bankrupt you.