Major mistake in recent SA article concerning "short interest"...
Quote: "The other thing to consider is that when a short sale happens, the seller gets cash"
--This statement is not true. If one sells short today, there cash postition will be reduced by the amount of the purchase, and they have to carry enough additional cash/equity to cover the "short sale" margin requirements... A short seller does NOT receive cash when the sale happens.
Big BD are telling shorts NOT to short ARNA into these catalysts by upping interest rates to 20% !!!!
If a potential short CAN find ARNA shares to sell short, he must 15¢ / share Carrying Cost or INTEREST Per Month!!!!!!! The longer ARNA stays stagnant or goes up, the more pain, they will soon be Compelled to cover.
Actually, your statement is only true for us retail investors. Hedge funds get credit for the cash right then. Yes, they do also have an IOU (for lack of a better term; it really is a debit note) but they get the cash. Sucks how the entire market is wired against us retail investors.
you are right....writer is an idiot...i did think and then was going to comment on his article...i would short sale everything in this world and take the cash and run away...not even buy another equity as per him.
Not cash as in greenbacks but your account's balance will reflect the sale of said equity. You wont be able to withdraw it. But, as the article said, you will be able buy another equity with your "proceeds" so long as you maintain your brokers margin requirements.