Zion Oil & Gas Inc (ZNOG)

[DragonBear]

The myth of the daily Short trades

The Scenario...

There exists a Long who wishes to sell 10000 shares at 0.29. He places his Ask with his Broker. His Broker doesn't have an internal Bid order that matches. Off it goes to the MM.

There exists a Long who wishes to buy 5000 shares at 0.29. His broker does not have a matching Ask internally. Off it goes to the MM.

The MM having already received the Ask from the first broker, receives/sees the Bid from the 2nd broker. The MM does not hold any Long, or Short positions.

Instantly the MM sells Naked Short to the Bid 5000 shares at 0.29. Since the MM already knows where there are 10000 shares available to cover against. The MM must mark the sell as "Short". This goes onto the consolidated tape and also shows up on the Daily Reg SHO. report. On a separate leg of the very same trade transaction the MM purchases 5000 from the Ask to close their open Naked Short position. Almost faster than a MM trading computer program can blink. That gets reported to the NON TAPE report. All of this trade execution information flows through FINRA.

The net effect is one Long has sold, and one Long has bought. It was a trade between 2 Longs. With the MM in the middle facilitating the trade. The MM receiving a cut of the two brokers commissions for facilitating the trade. However, the initial Bid fill was recorded as Short, or technically a Naked Short. In comes a NakedShortReport.com site. Where they are reporting the Naked Short trades reported in the Daily Reg SHO. Thus, one ends up with 75% of the trades yesterday labeled as Naked Short. But how many of those shares traded ended up as a real "Short" position? Very few if any.

We have sites like the NakedShortReport.com reporting a months worth of Reg Sho tape data averaging 50% "Naked Short". As in OMG, the poor stock is under a massive Naked Short attack by evil MMs! It's a headline grabber for retail. Boring, and non-profitable for these sites would be to post semi-monthly FINRA reports, showing no significant Short Interest, and/or very little change. Likewise retail depending on these sites never ask: Gee, if daily Short volume averages 50% session after session, month after month, why isn't the semi-monthly FINRA reports showing close to 45M shares (e.g. 45M is approx 50% of the O/S) of the stock as Short, instead of 3.6M?

Unless one sees a large number of failure to delivers for ZN, along with a large share increase in the semi-monthly FINRA Short Interest, all of the daily short reports are nonsense. Which means there is no OMG, the poor stock is under a massive Naked Short attack by evil MMs! There's no Naked Short conspiracy. As in there will be no Short squeeze to rescue retail Longs from purgatory. What you see in the PPS action is what ya gets. Where support for the ZN stock is up to retail. Brown creates the PSPP shares, and retail has to continuously buy. No, the Tutes aren't buying.