Inovio Pharmaceuticals Inc (INO)

[Scruffer]

Had a question about "Short Covering".

Will post here as well.

Shorting a stock is selling it first and your account is credited with the money. The investor borrows shares from others (the brokerage firm handles this), but then must "Cover" or buy back his/her shares at some time in the future.

So, if you short a stock at $10 and it goes to $5, you borrowed the shares at $10 and returned them (or bought them back or "Covered" at $5). You made $5 per share (less commission and a small borrowing fee--it's pennies per share to borrow).

But if you short a stock (or borrowed shares) at $10 and there is positive news, the stock will run-up. Buyers will come in and buy, buy, buy, depending on the news of course. Well, many shorts will begin to panic. They'll also try to buy "To cover" their position or return the shares to the brokerage firm.

With everyone buying and the shorts trying to buy as well, the price can go up dramatically.

Moreover, investors know "The shorts" will want to cover so they'll buy even more, forcing the price up above what is typical.

Tomorrow should definitely be exciting.

Scruffer