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Keryx Biopharmaceuticals Inc. Message Board

  • josephanastasiw josephanastasiw Oct 29, 2013 10:45 AM Flag

    Short question

    Hey when a short position is opened, what determines when the position has to be closed? It seems like each position has a different time frame to it. If that's the case, then why do people constantly say that 15-20 million shorts will have to cover if the stock goes up? When does a margin call override the4 amount of days to cover? Is there a maximum percentage lenders are willing to allow before they want the shares converted?

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    • There are other circumstances such as for those who play the options game to protect their short or long positions against adverse swings. In this case, getting out of short or long positions will be dictated a bit more by the options market, the closing dates and price fluctuations on those options. So to say that "15-20" million shorts will have to cover is simply not true. It is to some extent, but most investors who short stocks or at least those who are heavily into shorting stocks, are pretty savvy and cover their @$$e$ while holding short positions rather than waiting for the stock price to swing. If they do not, they are simply crazy and probably will not be investing for long.

    • No limit. As long as your margin account is ok you hold the short shares as long as you want. So your margin account needs to deal with potentially unlimited loss. Retailers probably can't do this but big houses can.

    • Since I've never shorted a stock I can't really help. But shorting is extremely dangerous because, theoretically, it can bankrupt you if you short a stock that has a phenomenal rise(like Keryx may have) and do receive a margin call, or your shares are called in. The losses can be tremendous because a stock can continue to rise, whereas if you are on the long side you know exactly how much you could possibly lose ifg you're stock goes to zero.

      Sentiment: Strong Buy

    • There are 13-15 million shares short of KERX at any given time lately. There is no predetermined time frame on a short. Technically, you could hold a short position forever if you had the capital to back it up. However sometimes brokerages call back those loaned shares. If the stock price goes up quickly, these shorts get a much larger margin requirement. This can give them a margin call, meaning they have to cover/ buy back the short shares causing a buy in the stock. Most brokerages will give you 3 days to cover a margin call. I hear some immediately liquidate your position and don't even ask you which equity. Hope this is helpful.

    • I believe there is only a couple of trading days to get funds in to cover a margin call but would like to hear from our more experienced board members...

      Sentiment: Strong Buy

 
KERX
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