I know what a short selling is...borrow the shares of stock u believe the price will decrease and sell it and return the stock at a future date at a lower price. The question about naked shorts is how can u sell something that u don't have? I'm sure I missing a piece of the puzzle here.
question about naked short selling?
- Thread starter hlmencken
- Start date
- Feb 26, 2001
- 13,593
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You aren't missing a thing. Its amazing how much money has been robbed from every investor under the watchful eye of the SEC.
They can go F themselves.
http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/699/Default.aspx
the shortsellers are often blamed during a bear market, or if a few "blue chip" stocks blow up. in most cases the companies are weak, and they are just making a gains.
do feel sorry for a small company who may be shorted but most of the ones we hear about are large blue chip companies.
one example of how short sellers can get it wrong and actually benefit long term shareholder is CALM.
they produce eggs and they hit a low of 13.88 now around 37-38. they decided since they were cash flow positive they would start paying out a large div...hello over 10% yield (now 8.5%) and the short were caught hello short squeeze.
also an article in Barrons couple weeks back helped...own a small portion of them at 28.75. helps make up for HD, losses on VLO ect.....ect...
read about them in a farming paper, slightly smaller circ. than Barrons.
believe they can hit 40-45. however have limited knowledge on eggs, free range, omega 3, vitamin added, ect.
thanks
selkirk
do feel sorry for a small company who may be shorted but most of the ones we hear about are large blue chip companies.
one example of how short sellers can get it wrong and actually benefit long term shareholder is CALM.
they produce eggs and they hit a low of 13.88 now around 37-38. they decided since they were cash flow positive they would start paying out a large div...hello over 10% yield (now 8.5%) and the short were caught hello short squeeze.
also an article in Barrons couple weeks back helped...own a small portion of them at 28.75. helps make up for HD, losses on VLO ect.....ect...
read about them in a farming paper, slightly smaller circ. than Barrons.
believe they can hit 40-45. however have limited knowledge on eggs, free range, omega 3, vitamin added, ect.
thanks
selkirk
ok, SEC regulation against naked shorts, are they after the sellers of the options or the buyers of puts?
I think I got it....since naked short sellers do not deliver the stock there is no short squeeze right and the whole controversy?
correct hlmenken...though shorting by borrowed shares or naked still has high risks.
CALM update the stock is now up from the 37-38 range and now around 41.30... the stock is performing well so will hold.
stop on 50% of the position at 40. hope it can take out 45.
AFAM is contining to perform well. so holding for now.
through the summer reducing my energy portfolio by 50% still like these stock, however some are broken in the short term so just taking some gains, (in most energy names) off the table.
stocks like CNQ and ECA are very CHEAP, however they can still correct more in Aug...so will wait.
thanks
selkirk
CALM update the stock is now up from the 37-38 range and now around 41.30... the stock is performing well so will hold.
stop on 50% of the position at 40. hope it can take out 45.
AFAM is contining to perform well. so holding for now.
through the summer reducing my energy portfolio by 50% still like these stock, however some are broken in the short term so just taking some gains, (in most energy names) off the table.
stocks like CNQ and ECA are very CHEAP, however they can still correct more in Aug...so will wait.
thanks
selkirk
selkirk,
how can naked short sellers sell stocks they don't have. If u don't the have the stock to sell (first step in short sell tranaction), how can u then profit from a short sell. For example, Overstock.com's CEO has been complaining that more short sell exceeds the actual float or outstanding number of shares available.
how can naked short sellers sell stocks they don't have. If u don't the have the stock to sell (first step in short sell tranaction), how can u then profit from a short sell. For example, Overstock.com's CEO has been complaining that more short sell exceeds the actual float or outstanding number of shares available.
hlmenken most hedge funds that I have heard of do not short naked. though not sure the number overall.
still believe they only make a big deal of this during a bear market, it is easy to blame the short sellers.
instead of idiot management, or how about people on the long side that pump a stock and then dump it....the overstock ceo is a prime example of what not to do....
if he just ran his company and ignored the shorts...the stock is welll of the lows,...if you are company just produce great results, and think about paying a dividend.
let say you short a stock naked, and the stock does what calm which was heavily shorted hello, large dividend....on going.
there is still a short squeeze, because no one want to be on the wrong side of a trade.
not saying I agree with the practice however believe it is often overblown by the media and some companies.
by the way I sometimes short, however borrow shares, and or write uncovered calls....for the most part portfolio is probably over 75-80% longs.
thanks
selkirk
still believe they only make a big deal of this during a bear market, it is easy to blame the short sellers.
instead of idiot management, or how about people on the long side that pump a stock and then dump it....the overstock ceo is a prime example of what not to do....
if he just ran his company and ignored the shorts...the stock is welll of the lows,...if you are company just produce great results, and think about paying a dividend.
let say you short a stock naked, and the stock does what calm which was heavily shorted hello, large dividend....on going.
there is still a short squeeze, because no one want to be on the wrong side of a trade.
not saying I agree with the practice however believe it is often overblown by the media and some companies.
by the way I sometimes short, however borrow shares, and or write uncovered calls....for the most part portfolio is probably over 75-80% longs.
thanks
selkirk
most of the longs have covered calls against them and pay a dividend...like to make a decent return in case the stock just sits there.
also in 1999 knew someone who decided to short tech stocks, mainly ones that loss money and had no real revenue, almost got wiped out.... not easy.
thanks
selkirk
also in 1999 knew someone who decided to short tech stocks, mainly ones that loss money and had no real revenue, almost got wiped out.... not easy.
thanks
selkirk
Selkirk, btw I appreciate your input and post on this. My question is the actual "nuts and bolts" of a naked short sell. I understand the whole short sell concept: 1. borrow the stock
2. sell the stock
3. hope the stock's price decrease
4. buy the stock back and return
the stock back to the seller of
put option.
I apologize if my question was not more specific.
In a naked short sell, how can u sell something u don't have, i.e. the stock. I read an article, where a investor bought 100% of the outstanding shares of company (forget the name of the company and the investor) but he later found out that people were still shorting (naked) his stock with no available outstanding share on the market? If u can provide an answer, I appreciate it very much.
2. sell the stock
3. hope the stock's price decrease
4. buy the stock back and return
the stock back to the seller of
put option.
I apologize if my question was not more specific.
In a naked short sell, how can u sell something u don't have, i.e. the stock. I read an article, where a investor bought 100% of the outstanding shares of company (forget the name of the company and the investor) but he later found out that people were still shorting (naked) his stock with no available outstanding share on the market? If u can provide an answer, I appreciate it very much.
hlmenken at the end of every stock trade a stock has to be delivered or the trade is void, no good.
in the past the settelment time was 5 business days, today it is 3 business days... in that amount of time the short seller has to come up with the shares. ( is supposed to)...
cannot address some of the stories, however even a naked short seller would have to come up with the shares or close out the trade.
naked short selling is only considered ilegal if it is designed to drive the stock down.
there are some times when I wanted to short but it was not allowed for that particular stock (main reason could not get any shares, no matter the amount of time).
even a short seller would have to get the shares, however unlike regular short sellers who try to borrow the shares the naked short seller would short the stock then worry about getting the shares, at a lower price, or quickly closing out the positon. however in every trade the stock has to be delievered.
thanks
selkirk
in the past the settelment time was 5 business days, today it is 3 business days... in that amount of time the short seller has to come up with the shares. ( is supposed to)...
cannot address some of the stories, however even a naked short seller would have to come up with the shares or close out the trade.
naked short selling is only considered ilegal if it is designed to drive the stock down.
there are some times when I wanted to short but it was not allowed for that particular stock (main reason could not get any shares, no matter the amount of time).
even a short seller would have to get the shares, however unlike regular short sellers who try to borrow the shares the naked short seller would short the stock then worry about getting the shares, at a lower price, or quickly closing out the positon. however in every trade the stock has to be delievered.
thanks
selkirk
- Feb 12, 2000
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