Short Position for SPL shares at 19-11-2018, page-4

Short selling certain stocks has been a "nice little earner" for a long time for a few institutional players who have direct computer access to the exchange systems. You have to have direct access in order to respond very quickly to any changes in the market such as feeding small orders in response to any changes. Stocks which are thinly traded and have 'good announcements" followed by periods of inactivity are ideal. Because they have a fairly predictable and manipulable market. That SPL is an easy stock to manipulate in the absence of buying pressure is obvious to anyone who watches the market.

Is short selling a hedge by big holders? I don't think so because such sales would not settle with borrowed stock and so would not be recorded as short. The big holders also need to record changes in their holdings and to do so may not be in their interest.

Short sales, like all sales, have to be settled and the shorters do this by borrowing shares from a big holder. You need to have good credit to be able to borrow shares to settle and that is another reason why the shorters are institutional in nature.

Do shorters have an out? Possibly. While there is no traded option market for SPL there is nothing to stop the big end of town negotiating options. I would not be surprised to find that shorters have buy options in place. I daresay the strike price of these options would be high (it would be a price that the big holders would be prepared to sell at when the option was written). This provides the shorters with insurance and also provides a revenue stream for big holders.

Hope this helps.