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east central ND | My knowledge is non existent on the actual rules about this.
Unlike buying a stock where all you can lose is your initial investment, there is no limit to the loss you can incur by shorting (the more a “shorted” stock goes up, the more you lose). Insanely risky if you get caught in a “short squeeze”.
I googled “naked short”, that’s what there doing and getting burned on.
Some answers were that shorting above 20% of the shares is unusual, over 30% is crazy high, crazy risky. Getting to this 140% is insane and a pure attempt at manipulation that can be exploited for, or by, both sides.
It is debated that it might be “technically illegal“ to short more shares than the shares that a broker holds and are “available”, let alone more than the total shares, but the big boys do it all the time. Something about how when you short a stock, you “borrow” it and when you exit the short you “pay”. Just backwards from a normal “buy the stock”. The broker collect big fees to do this.
Just remember, the big boys thought this “scheme” up so they could make more money when stocks fall, or when an individual company is dropping in price. They normally “pump the stock to the down side” and get out, get paid big $$$.
Like I said, they got caught with their hand way to deep in the cookie jar. And the crazy thing is, more money is jumped on the short side “because it sooo over bought “ on the up side. But.... the “others” keep buying the stock pushing up the price, and causing the shorts to get burned worse.
My head hurts.
Edited by D6Joe 1/27/2021 05:45
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