Lets say Lynas is $1.00 and you have 3million lynas shares.
I borrow a million off you and start selling them at $1.00. As the price drops I sell them at 95 cents ect until I've sold the million. By the time I've done that the dropping price causes others to sell and eventually the price is 90 cents.
When i sold those 1 million shares at an average price of 95 cents, into my account goes 1000000 times .95 = $950,000.00
When the price is 90 cents I buy 1 million shares for $900,000.00 and return the shares to you and I'm up $50,000.00 for the effort.
Now if for example the price didn't go down but went up I could lose 50 to $100,000.
And you can do this with smaller amounts but thats how you make money in a falling market. You sell something you dont own and hopefully buy it back cheaper. The differnce in the prices is your profit or loss.
LYC Price at posting:
59.7¢ Sentiment: None Disclosure: Held
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