Shorts? Live by the sword die by the sword...
Whoever the shorts borrow shares from, is who they owe shares to... when the CUSIP changes, though it may be the same company, those shares that were registered under the "old" registration is striken and voided because the company once merged is the "new" company.
New company shares are exchanged for old company shares during the halt exchange whatever you want to call it.
Market Makers will continue trading with the newly registered shares once the halt is lifted. The old shares are voided and are rubbish.
Those holding old shares cannot trade those since they are not registered any more and can no longer be in the market.
Shorts tend to borrow shares for companies that can be shorted, which almost all. But those shares need to be put back since they were "borrowed" and there is a void now... but those shares are revoked and no longer tradable. Failure to deliver. Money now owed to pay for that Fail since the shares still need to be covered. New shares bought at the new pricing will have to take place since those are the only eligible shares to market.
Squeeze happens if the MMs or shorts wait too long to cover before the change of the CUSIP... the market will only take so much and if no one is buying, the price rises until some sell to loosen up shares needed to cover...
Pretty simple huh? Last few days, you may note that a lot of the stock was 75% of it was shorted because the MM's also need inventory to sell into the market.
If you can figure what is going on... might be a good time to accumulate while the pricing is cheaper and the merger is final... and it is coming real soon.
Dragon52
