RE:RE:Canadian Banks Make $Billions off Naked Short SalesKelvin naked shorts dont borrow the shares, they just sell them. If they borrow from another bank or their own accounts thats just regular shorts.
Just because shorts borrow the shares from another account doesnt mean they dont have to replace it. There is no wash. They pay a borrowing fee, like an interest rate but much higher, and still have to replace what they short (sell).
They use calls to hedge against the huge downside loss potential of shorts, but that costs more money.