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Short Selling (for a short bus rider)
Posted on 9/19/08 at 11:29 am
Posted on 9/19/08 at 11:29 am
I guess I don't get it.... what does the loaner of Shares stand to gain from this? Are the fees that great?
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From Wikipedia
For example, assume that shares in XYZ Company currently sell for $10 per share. A short seller would borrow 100 shares of XYZ Company, and then immediately sell those shares for a total of $1000. If the price of XYZ shares later falls to $8 per share, the short seller would then buy 100 shares back for $800, return the shares to their original owner (paying a fee for having borrowed the shares) and make a $200 profit (minus the fee for having borrowed the shares).
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From Wikipedia
For example, assume that shares in XYZ Company currently sell for $10 per share. A short seller would borrow 100 shares of XYZ Company, and then immediately sell those shares for a total of $1000. If the price of XYZ shares later falls to $8 per share, the short seller would then buy 100 shares back for $800, return the shares to their original owner (paying a fee for having borrowed the shares) and make a $200 profit (minus the fee for having borrowed the shares).
Posted on 9/19/08 at 11:30 am to Glacierbengal
the loaner doesn't even know that he's loaning his shares.
Posted on 9/19/08 at 11:32 am to Glacierbengal
quote:
what does the loaner of Shares stand to gain from this?
I used to ask this question all the time...then I gave up and ate some nachos
Posted on 9/19/08 at 11:35 am to Putty
I like how they point out that the major indicies haven't seen volatility like this since 1987. Cause obviously everything worked out just dandy that year.
Posted on 9/19/08 at 11:54 am to Putty
The loaner stands to gain nothing - except that it allows him to use a margin account. I could be wrong, but I think when you get a margin account you are required to allow your shares to be borrowed for short selling. No margin account, and your shares don't get borrowed.
Posted on 9/19/08 at 12:44 pm to ArkansasDon
Don, I've been thru Conway Arkansas many times on the way to Lead Hill (via Harrison)
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