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kmuirhead

1,271 Posts.

330

08/02/24

06:39

Post #: 72295417
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Originally posted by gimo211: ↑

Hi kmuirhead,

"Why on earth would an index fund commission a third party to do the short selling so the third party could borrow shares and sell these shares to the index fund?"
I think the following logic underlies this:
An index fund must reflect the inclusion of STX in an index (e.g. ASX 200) in proportionately in a certain time.
Therefore, the fundmust acquire a correspondingly large quantity of STX shares. The index fundtherefore creates - from its point of view - an “artificial” and large demand.
If the index fund were to buy the required Strike shares on the market, this would lead to a significant increase in the share price.
However,an index fund wants to avoid this, as a fall in the share price after coveringits own requirements would have a direct negative impact on the fund value.
Shortselling therefore provides the necessary liquidity: the index fund can coverthe necessary demand immediately - without moving the share price.

That is theanswer to your question...

I expect that we will see an enormously high volume tomorrow in the closing auction andon Friday an ASIC report on an equally high short selling volume.

Let's see...

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Thank you very much gimo. It all makes sense now.
STX Price at posting: 43.0¢ Sentiment: None Disclosure: Held
2 Upvote

0 Great analysis

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(20min delay)
Last 19.0¢		Change -0.010(5.00%)		Mkt cap ! $543.5M

Open	High	Low	Value	Volume
20.0¢	20.0¢	19.0¢	$873.2K	4.500M

Buyers (Bids)

No.	Vol.	Price($)
73	3507920	19.0¢

Sellers (Offers)

Price($)	Vol.	No.
19.5¢	1387202	8

View Market Depth

No.	Vol.	Price($)
70	3431131	0.190
30	1578077	0.185
25	1148203	0.180
7	139258	0.175
9	568236	0.170

Price($)	Vol.	No.
0.195	866368	6
0.200	1519527	9
0.205	1176225	6
0.210	1169528	12
0.215	1024883	13

Last trade - 16.10pm 30/07/2024 (20 minute delay)

STX (ASX) Chart

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