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Arena Pharmaceuticals, Inc. Message Board

  • iago4466 iago4466 Mar 2, 2013 12:06 PM Flag

    Trapped shorts myth 2

    And you know what? None of this matters. Beyond the childish taunting of the few trapped retail short short idiots, a short is a short, and it needs to be covered at some point. The dynamics are the same whether the short position is under water or in profit. Indeed, one could argue that, for longs, it can be better for the large short positions to be in profit at the moment, because there is a strong incentive for the pros to cover their shorts and book their profits if there is a decent price move upward in the near future. If you took out a short at, say, 10 in Jan, and are happily in the money now at 8.3, you would want to take your profits if the PPS started approaching 9, triggering more buying via momentum.

    The shorts will cover at some point. They will cover if the PPS rises so as to book their profits. Or, if the launch fails, they will wait until the longs capitulate and then book their profits. They only way the shorts will truly be squeezed is if there is an unanticipated event they cannot plan for. That could happen, but planning for the unexpected is a risk for all sides in the short-long fight.

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