Firstly if a retailer investor was going to short sell CIM it would most likely be done via a CFD where the borrowing cost is minimal (used to be positive i.e. you got paid a daily "interest" rate once) and you can use a guaranteed stop loss to negate these risks.
However there is no need to short CIM to obtain downside exposure, as CIM has exchange traded options:
- Simply buy a put; or
- Use options to create a synthetic short; or
- Use mini-warrants.
All the nonsense on Hotcopper about "shorters" is immature, when the market crashes "shorters" have profits and have the confidence to "buy" when confidence is lost. "Shorters" are very important at stabilizing downtrends and preventing negative feedback loops when it counts. From memory when governments/exchanges have limited or banned short selling in the past, markets fell more in a shorter period of time than prior to controlling short positions.
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