Anavex Life Sciences Corp (AVXL)

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But, how come no warnings, here, for shorters?

Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment.

Pretty good and standard text from the publisher’s legal people. Keeps the publisher out of court proceedings. “Sorry you lost so much when trying to follow the advice and information in our article. But, you should have read and followed the “Never invest....” text we posted.”

Taking equity positions (stock buys) in start-up biotechs that don’t yet have an approved drug nor any sales revenues present rather obvious value-loss jeopardies. A diligent equity investor needs to use only discretionary dollars that if lost won’t jeopardize his financial security. Lots of Anavex naysayers expound on this topic each day here.

But, is there an opposite, opposing hazard; which has never once been touched upon in any detail on this message board?

Anybody been warning holders of short AVXL positions that their jeopardies are potentially far more ominous than those who have purchased AVXL shares, which could devalue to $0.00. They would lose every penny they invested in their AVXL position.

But when things go bad for them, not so with holders of short positions of AVXL shares. In anticipation of the eventual devaluation of Anavex shares, holders (takers) of AVXL short positions have paid to temporarily borrow the ownership of AVXLs. When the stock price drops, the short seller buys it back at an even lower price and returns it back to the lender. The difference between the sell price and the buy price is the profit he makes.

But what if the stock shorter has it wrong and instead of the AVXL share price declining below the price he borrowed the stock, it, instead, begins a continuing, persisting price ascent? Right now, the AVXL share price is a bit above $4.00. What happens to the financial obligations to the holder of an AVXL short position when the price goes to, say, $10.00. Or, $20.00 ... and on up?

The shorter is obligated to “cover.” Short covering is the buying back of borrowed securities in order to close out an open short position. It requires the purchasing of the same security that was initially sold short, and handing back the shares initially borrowed for the short sale. Simply, the shorter’s obligation to cover, when his share prices have escalated, are limited only by the new, high price(s) of the stock he borrowed — typically far more than what he originally paid to borrow them.

Lots of good, well-meaning stock investment advisors post each day, here, telling the hazards of taking or holding an AVXL position. Thanks.

But, anyone spending any time to work up lucid postings on how, if Anavex succeeds, shorters could lose their financial shirts; far more than their original investments in their AVXL short positions?

Of course not. AVXL shorters and Anavex naysayers are of the same ilk. They KNOW. Anavex Life Sciences Corp is doomed to fail. Those who invested in AVXL positions will lose every dollar they used to buy AVXLs. But the shorts, smart guys they are, will clean up; walk away with hundreds of thousands of dollars of profit.

Let’s watch, to see how this all plays out.