Mike The Pike Productions Inc (fka MIKP)

[imiloa]

re: [[ But you are ignoring one basic fact about shorting.
Someone holding a short position does not get their money until the position is closed. ]]

fwiw, that is not true.

when you sell short,
you are borrowing someone else's shares,
typically within the umbrella of your broker's accounts,
to sell into the market that day,

and you get the proceeds from the borrowed share sale
as if you had sold your own shares of the stock,
but with the rider that you need to
buy back the shares later
to replace what was borrowed.

viz,

[[ When you sell the stock short, you'll receive $10,000 in cash proceeds, less whatever your broker charges you as a commission. That money will be credited to your account in the same manner as any other stock sale, but you'll also have a debt obligation to repay the borrowed shares at some time in the future.

Now let's say that the stock falls to $70 per share. Now you can close the short position by buying 100 shares at $70 each, which will cost you $7,000. You collected $10,000 when you initiated the position, so you're left with $3,000. That represents your profit -- again, minus any transaction costs that your broker charged you in conjunction with the sale and purchase of the shares. ]]

https://www.fool.com/investing/how-to-invest/stocks/how-to-short-stock


[[ For example, if you think the price of a stock is overvalued, you may decide to borrow 10 shares of ABC stock from your broker. If you sell them at $50 each, you can pocket $500 in cash.

At that point, you have $500 in cash, but you also need to buy and return the 10 shares of stock to your broker soon. If the price of the stock goes down to $25 per share, you can buy the 10 shares again for only $250. ]]

https://www.thebalancemoney.com/the-basics-of-shorting-stock-356327