Tuesday, November 17, 2020 3:20:31 AM
That is hilariously false.
Even on the rare occasion that someone may short an OTC stock through a novelty broker, the best he or she can do is a double up.
A physical short on any stock has limited reward and unlimited risk.
If XYZ goes to $1 and someone wants to short it from there, the gain is limited.
“Sell to open” 1000 shares of XYZ @ $1 it would yield $1000 in premium to that account.
If you “buy to cover” this hypothetical XYZ short @.01, that would cost $10 giving that short a $990 profit.
A $990 gain with $1000 at risk, isn’t very impressive.
If the hypothetical XYZ PPS jumped to $10 from $1, that short would cost $10,000 to cover.
That XYZ cover loss would be much more than the entire VAR.
That risk is so high that no broker is willing to burden that liability and allow OTC short selling on any significant level without insane margin levels.
Happy to help.
You sir, are welcome.
LOL, IMO and FWIW.
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