You're absolutely correct.
People are commonly confused as to why a large, long shareholder would loan out their shares for someone else to short. It doesn't make sense to people that a a holder would risk "hurting" the share price. There is however a logical explanation:
- The lender gets a return from the investment in the form of interest payments where no return exists, say from dividends.
- The lender recognises that the underlying value of the company is not linked to short-term price movements. Should they be correct about their assessment of the intrinsic value of the business it will eventually be reflected in the share price.
- They know shorters are working for them when they have to purchase shares on market. Every long is a potential seller, every short is a committed buyer.
- Shorters can provide liquidity in a tightly held stock.
It's worth keeping in mind that shorts and longs are attempting to do the same thing, that is: to buy low and sell high. Their timing may be different but if we didn't have these differences we wouldn't have a market.
- Forums
- ASX - By Stock
- Ann: West Arunta Project - Luni Assay Results
You're absolutely correct. People are commonly confused as to...
- There are more pages in this discussion • 76 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add WA1 (ASX) to my watchlist
(20min delay)
|
|||||
Last
$18.89 |
Change
-0.010(0.05%) |
Mkt cap ! $1.158B |
Open | High | Low | Value | Volume |
$18.85 | $18.98 | $18.40 | $4.349M | 232.3K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 500 | $18.71 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$18.90 | 458 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 500 | 18.710 |
1 | 35 | 18.680 |
1 | 1000 | 18.650 |
1 | 2000 | 18.530 |
1 | 3200 | 18.520 |
Price($) | Vol. | No. |
---|---|---|
18.900 | 458 | 1 |
18.910 | 500 | 1 |
19.000 | 717 | 5 |
19.060 | 2000 | 1 |
19.100 | 1000 | 1 |
Last trade - 16.10pm 08/05/2024 (20 minute delay) ? |
|
|||||
Last
$18.90 |
  |
Change
-0.010 ( 0.38 %) |
|||
Open | High | Low | Volume | ||
$18.64 | $18.96 | $18.54 | 14843 | ||
Last updated 15.59pm 08/05/2024 ? |
Featured News
WA1 (ASX) Chart |
The Watchlist
LU7
LITHIUM UNIVERSE LIMITED
Alex Hanly, CEO
Alex Hanly
CEO
SPONSORED BY The Market Online