Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: Please explain short selling?

news.ycombinator.com

Post reply on HN
Print view View original

101–106 of 106 posts

Re: Ask HN: Please explain short selling?

#101

Post by ndc »

elecengin wrote: post #16

I think there are plenty of good descriptions of the basics of short selling here, but I wanted to help explain the "who are you borrowing from" aspect. When you trade, you must trade through a broker-dealer. A broker-dealer is authorized to trade on behalf of it's customers. A broker-dealer must uphold certain regulatory requirements put in place by the SEC, and policed by a variety of government and non-government…

In case the borrower fails to deliver, the broker lose license, ok understood, but what about the stock itself? Does the transaction gets rolled back? Or will the total number of shares be permanently increased at the cost of the broker's license?

Edit: The lender must write off the stock?

Re: Ask HN: Please explain short selling?

#102

Post by artsrc »

ddlatham wrote: post #69
fexl wrote: post #14

I'm a hedge fund accountant, and my software follows many thousands of trades including short sales. I know exactly how to account for these trades, but I have no idea what's really going on. As an accountant, all I see is that someone sold 1200 XYZ shares at $23.00 each, receiving a grand total of $27,600 cash. To simplify the example, I am not subtracting any commission there. Now the funny thing is, this account d…

What happens when I buy some shares from someone who happened to be short selling them naked, then I try to vote those shares in the next proxy vote?

The naked short seller has to physically deliver in 3 days, either with a loan, or by buying the stock.

Re: Ask HN: Please explain short selling?

#103

Post by artsrc »

bernardlunn wrote: post #80

Naked Short Selling needs a new name. It sounds like Short Selling which is quite legitimate way to bet that a stock price will decline. Markets need traders who will spot problems at say Enron and bet against them. But Naked Short Selling is simply fraud. It needs a new name.

What is the difference if you arrange the loan required to short sell before of after you do the short sale?

Re: Ask HN: Please explain short selling?

#104

Post by artsrc »

Before you take a position in a stock you should research the stock to find out what it is worth.

If a share is worth more than the current price you should buy it. If it worth less than the current price you should short sell it.

If you don't short sell, then half of your research is wasted.

Post reply on HN