View single post by Principal_Raditch
 Posted: Thu Jan 28th, 2021 11:10 pm
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Joined: Mon Feb 18th, 2008
Posts: 7444
WongLee wrote: Thanks for the explanation. But what does "their shares were shorted by a Hedgefund" mean?

When you short a stock, in effect you're borrowing a stock and hoping the shares go down by a certain set date. Then you "sell" the stock back to the borrower at the prices you "borrowed at it. So for example. Let's say I shorted this stock when it was $15/share, and I have a strike date for 1 month later. Now a month later the stock has dropped to $10/share. Now I get to in effect sell my $10 stock back to the lender at $15. The problem is, if I short it at $15, and the stock goes to $200, I"m fucked. I"m buying it at $200 to sell at $15. 

The Hedgefund is just a name for a company that takes this approach of buying stock they think will go down and gambling that the prices will go negative during the holding period. 

Last edited on Thu Jan 28th, 2021 11:11 pm by Principal_Raditch