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Short Position, page-124

  1. 6,255 Posts.
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    Good. Shorts need to close at some point so what they are now are 100% guaranteed buyers of the stock at some time in the future. The ammo they expended shorting can't be fired twice so the price it is now is as far as those shorts can ever represent.

    Of course, they could keep on shorting more and more but as the SP gets this low, the extra marginal effect of each shorted share diminishes. Shorting at ~50c is a hell of a lot less risky than shorting at ~15c.

    Then there's the issue of the lack of liquidity when betting too much on one trade. Very risky given that one break in news can suddenly send you rocketing to the poor house as your short is so large, it becomes difficult to exit without creating a short squeeze effect.

    So, as Vladimir Putin would say, "I wish them good health..."
 
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