If I’m to short sell a company’s stock and due to the current climate that company goes bust, is my profit essentially the share price I bought at times the no. of stock I own, so 100% profit?
@hubble2bubble Depends on what happens with the stock, It can get delisted way before it reaches 0. In that case, the positions will be closed at the last available trading price.
There are cases with bankruptcy & liquidation where the closure will indeed happen at $0 & you’d bank a 100% profit.
Thanks David. Is there still a ban on short-selling?
@hubble2bubble Yup, around 2 more weeks but only for Spain, Greece, Belgium, Italy, Austria & France.
that is a shocking number of markets to head off with “only” xD
@Dao It’s a significant amount digit-wise but if you compare short sell trading volume/interest of all these markets combined with even only the UK or the US, you’d understand why I use “only”.
I will never understand those who feel its right/safe to bet against the market so daringly >.< and then to capitalise on fear mongering for a quick risky profit.
I dare say that if short selling was banned on all markets for the next 2 months, things would be a whole lot calmer.
@Dao Against the whole market, I’d probably agree. However, I think short selling a specific stock is almost essential for normal market behavior.
Shorts usually do a ton of research & act as detectives/fraud investigators. People like Carson Block (Muddy Waters Research) & Andrew Left (Citron Research) have done wonders to uncover massive frauds.
when it makes sense absolutely. but so many times I see people decide to short something when the market is doing well and the general consensus based on the fundamentals shows the stock is strong and sound.
admittedly the ones I usually see are people who speculate and want to gamble on a quick payoff, rather than fully committed and invested in their approach. right now markets are doing so badly because of a pandemic that having rampant short-selling just does so much damage to livelihoods of families all over based on hypothetical :S this happening at a level warranting a short-ban is troubling to say the least.