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frankly I'm not even sure where to begin.
when you short, you're obviously borrowing shares from someone who is long. These days you need a "locate" from the stock loan dept in order to substantiate that it's not a naked short. (btw you can't borrow your own shares)
Sometimes there is charge to borrow, often there's not. I've seen charges as high as 70% ...not a typo.
The collateral for the short can be any long marginable security in your account, including treasuries, munis, stocks, etc. Treasuries have the highest margin release.
The short sale is an open market transaction so of course there is a buyer for your sale, just as there is a buyer for every sale
whether it's a sale of a long position or a short sale.
Buy-ins occur (sometimes) when the lender of the stock sells his position and the firm can no longer find shares to borrow in order to settle the trade so they buy-in the shares that were previously loaned.
once a week, the short position is marked to the market and the short credit is adjusted higher or lower depending upon the change in price of the security. If the short goes against you (price appreciates), the firm increases the short credit and debits your margin or cash account. This continues weekly until the short is closed out.
lending fees depend on the difficulty to borrow. They have nothing to so with account size.
Krom is right
You really do not understand as much about shorting as you think you do.
Lending Fee
There may or may not be a lending fee. Sometimes it's high, very often it's zero.
you don't pay margin interest on the short credit. It makes sense that you should receive interest on the proceeds of the short but it rarely happens.
fwiw, long vs short positions provide a high margin release ...typically 95%
finally shorting low priced stocks is of course allowed at major firms. But they are subject to minimum margin requirements
Cost to Borrow
fwiw, for hard to borrow stocks there is often a cost to borrow shares when you short stocks. it's referred to a the "neg" or sometimes just the rate. It can be very expensive at times.
Good Question
my memory is probably no better than yours. But everything here pointed towards a PIPE so I was surprised that it hadn't occurred earlier. I recalled how people laughed at the notion at the time, but I always believed it was inevitable.
Regards
Bad Timing but you heard it here first
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=36475609
Questions to Midtier and others,
Lets say you had the opportunity today to purchase the company's assets in the JDZ and the EEZ. If you would pay X for the JDZ assets, how much would you be willing to pay the EEZ assets?
thanks. interesting reading. Ridiculous but interesting. No surprise that this came from the New School
I don't know about Allstate except that they issue their own fixed and variable annuities. I imagine it's conceivable that they could offer a fixed annuity with a lower rate and have them be backed by treasuries. Most annuities (by far) are backed by the credit of the insurance company, and secondarily by the state (subject to some maximums)
And I agree that legislators would prefer that our retirement savings not be subject to the whims of the stock market. But I definitely don't believe that there is any hidden agenda towards buying treasuries.
just for perspective, recall that IRA's and 401ks are defined contribution plans. Very few companies offer defined benefit plans anymore, so the risk of meeting retirement goals has shifted entirely to the employees. When the market declined in 2008 those retirement savings got depleted rapidly. So I would not be surprised to see attempts to move back to some program where the participant is provided some guarantees.
yup, you're correct. I forgot about the 72T election
BB: Changes in capital gains taxes is a non issue for 2010. It is not even being discussed for 2010 but is almost certainly going to be increased to 20% for long term gains in 2011.
Red,
MZ is exactly right. You need to be able to borrow shares before you can short the stock. The point of my message was that I was able to locate the shares to short if I had wished. It could just be that the increased short interest is not naked shorting at all, just someone expecting the price to fall.
Red,
when I responded to you earlier I merely stated that you can short penny shorts here in the U.S. Today for the first time ever I tried to see if I could borrow 50,000 shares of ERHE in case I wanted to short them. To my surprise, it was easy to locate the shares. I wasn't interested in doing the trade but just to reiterate ...it's no problem to short the stock if you have the inclination.
wrong! you can short it here no problem. there may be minimum margin requirements but you can definitely short penny stocks here.
you most certainly can short a penny stock
can't substantiate, but was told that they released news 41 days into a 45 day drilling program
meant to say 5 bagger implies a buy out at $7.50 / proven (not $7.50/share)
It's about Risk vs Reward.
Thanks for the reply and last night's spirited debate.
IMHO, the key to successful investing is primarily to assess the return / trade-off. I'm not willing to invest based upon $13.40 per proven, but since the stock presently sells at approximately $1.50 / proven (using NSAI #s and $7.50/ proven) then I believe it a very favorable risk/return so I bought more today.
It's a 5 bagger if the NSAI figures turn out to be correct and we get bought out at $7.50. A 10 bagger, or more, is easily possible with more aggressive assumptions.
The important thing is that the downside should be minimal at these stock prices.
thanks, I was using $6 so happy to hear anything higher. I'm also aware that others are assuming much higher numbers but I'll take $6 hopefully X 500 mil to 1 bil barrels. btw. appreciate all your posts.
thanks, and what do you believe is a good estimate for erhe's share (i.e. after all costs)of $/proven
Valuation Assumptions,
Balance, I'm directing this question to you but I could also be asking Tamtam, Midtieroil, YankeeMike, and many others as well so I'd appreciate comments from anyone.
In today's announcement of BP's oil find in the Gulf, the analyst at Societe Generale estimates a 35% recovery rate.
What assumptions are you making about recovery rates?
Pls. remind me what you are using for $/proven and how you developed that #
Also, in your assumption of $/proven, is that NET of all costs, taxes, etc.
Many thanks
fyi. on otc bb stocks your buy limit does not need to be reflected. So the stock can trade below your limit and you're not legally entitled unless the stock is offered at your price.
If this were not a bulletin board stock then your limit would have been shown and your bid would have been hit.
it's too bad but it's just how it works. fyi. usually my orders have been reflected, but not always.
LOL, a bit cynical but don't necessarily disagree particularly in fast markets where you are 100% correct
stop = market order when limit price is reached
stop limit= limit order when limit price is reached
example . sell 100 shares xyz stock stop $50 . becomes market order when stock hits $50 or below
sell 100 shares xyz stock stop $50 limit $49.90. becomes limit order @ $49.90 when stock hits $50 or below
I haven't made myself clear. Suppose the company wants to raise some money for an acquisition. They issue let's say 100 mil shares at 20-25 cents in a private transaction to a group of close friends.
The Red Chip Review report that everyone thinks is worthless actually serves the company's purpose (albeit not ours).
yes. Not a banker either.
I neither trust nor distrust management but am expecting many curveballs from them before the game is over. This may be one.
the mistakes are minor and can be easily be cleaned up. ERHE board would definitely need a fairness opinion if hey wished to sell all or part of the company. Now why would they want to place a low valuation on the company? Who benefits?
Has anyone considered that any asset sale will require a fairness opinion, and perhaps the lowball Red Chip Review valuation may be used accordingly.