Innovation Pharmaceuticals Inc (IPIX)

[BonelessCat]

OTC trades are in 2 parts, each transaction being one part. Market makers execute buys by filling orders, thus leaving an open position or “short”. They then fill that open position with a sell transaction. The fill can be executed at the same price as the original sell, above that price or below that price. Filling an open position with shares sold higher leaves a deficit that needs covering later, which is fine in a rising market. Fills using shares at a lower price leaves a surplus which the MM is free to pocket.

The published short report is nothing more than the number of shares traded as buys that left an open position to be filled later. The vast majority of open positions are filled instantly or within minutes and are a normal part of daily trade executions.

Of course, things are never as straight forward as the basic transaction operations:
http://www.imf.org/external/pubs/ft/fandd/basics/markets.htm