Ann: Change in substantial holding, page-14

The fees on shorting are fantastic. In US it is variable but usually about what the Credit card companies receive, Interest is calculated daily. On shares borrowed times current stock price. Plus the Borrower has to have cash to cover the short, yes this is a double whammy. Also the loan is callable. If the loaner does not like what is happening in the market they can ask for shares back and they have to be delivered in 24 hours. I had a big short on Amazone in 2000. The price started dropping, I was Looking like I would be making big money. Short was called. Made some money but not nearly what I was expecting. I have never shorted since then. I buy puts you are in control of everything then. Limited loss if stock goes up and chance to make great money if it goes down but generally only 75% of what it drops.


If you own stock that has lots of shorting activity make sure it is a non-margin account. Then firm cannot loan it to shortens. If they want to they have to call and get your permission. I always say no unless they pay me a fee. If I want to sell I have to notify the broker and wait 24 hours before I can sell.

Generally if your position is small you will never be called. If it is large it does happen but not all that often. Simpler for broker to just go to another broker. Some high discount brokers only offer margin accounts. They make money with your stocks while they hold them. all the biger companies let you have a margin section and a non margin section and you can move stocks back and forth. If the broker is not insured, most are, And they lose your shares doing something you can lose them. You have great flexibility in a margin account in that you can borrow from your holdings and you do not need to worry about paying for buys as quickly. All my shares are in a non margin account. I do have a revolving credit loan at prime +0.25% secured by stock. It is illegal to use this account to buy stock. If I buy stock with other sources then draw on the revolving line to replace funds that is legal. Just more games.