Not the same shorters? I'm not so sure. There's a law of diminishing returns that applies to shorting:- Suppose Shorty shorts 1,000 at $3. When shares drop 33%, on paper Shorty is up $1k. But now a further 50% drop is needed to make the next $1k. The $1k paper profit is a nice buffer, so Shorty shorts a further 500 at $2, and now another drop of 33% will make another $1k. When the shares duly drop the further 33% to $1.33, Shorty now has a $2k buffer to short another 750 to maintain the equation that a further 33% fall makes him another $1k. The next time it's 1125 shares, then 1687, 2531, 3796, 5695, ...
Expand
