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NewLead Holdings Limited Message Board

  • anthonythai1388 anthonythai1388 Jun 23, 2014 8:51 PM Flag

    A farfetch question.

    Applying this situation (short squeeze) in a perfect world, If all and only all shareholders (common and peferred stock holders) somehow become synergistic refuses to sell Zero (nada, none, not even 1) share which prevent all shorts position (naked and/or normal short) to cover. What would happen to firm(s) that are in this short position with marginal call???? and how would the price of the stock reactive????

    Many thanks those replies with a educated/knowledgeable response.

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    • It is my understanding that the MM's will raise prices to get people to sell...or they will drop prices to create a panic and make people sell. The objective is to free up shares.

      Obviously these tactics can be very effective at keeping things liquid.

      People will sell at a higher price, and they will sell under panic conditions,
      sometimes these artificial psychological scenarios are created intentionally to achieve the desired effect.

      • 1 Reply to amysteryman2003
      • In another word, if all shareholders refuse to sell at all cost (psychologically removed the monetary value of the shares), firms that shorted the equity will go bankrupt. Any institute that got involved with these short firm (giving them margin access to short the equity) will be effected, or even go bankrupt. But then again, this is highly unlikely because there will be some and many individuals who would rather take the profit, due to fulfilling their desires

 
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