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13,316 Posts.

168

09/04/15

09:42

Post #: 15055267
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Originally posted by Fireflyau ↑

Londoner - This is a common misconception held by many that have never shorted or investigated how to short a stock. This is why it is wrong -

When a shorter shorts a stock they sell the stock and the cash from the transaction is attributed to their account at the price the short was taken. If the stock ceases to trade and is desisted the cash remains where it is( in the shorter's account) because it is impossible to buy back the shares.

So as you can see as Blackrivered said it is a "home run".

With most retail shorters - this is not quite true because usually they short via the CFD instrument. With CFD shorts it is their broker that nominally takes the counter party risk. Some brokers provide CFDs and manage their risk on the market and other create a market of their own. How much the retailer wins when a company goes into Admin is then determined by the terms and conditions set by the broker offering the CFD.
But even then they don't lose....

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Thanks that is much appreciated and of great help as have a CFD account so will follow up with my CFD provider to understand their terms and conditions around this ie whether share winfall etc.

AGO Price at posting: 12.0¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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