Nobody has to "pony up" any money to short any stock.
Only longs must pony, or borrow, on margin.
Also, shorts never have to cover,
just like longs never have to sell.
If the stock rises in value, usually 50% or more,
from the price where the shorter shorted,
the shorter will get a "margin call" ,
and only then, must he "pony up" , or cover part
or all of his short position, OR add collateral,
if it is not already available is his accounts.
The margin call is cancelled if the stock falls
back down within 3 days, and the ponies go back home.
(Note: Since paim very rarely rises in price,
by 50% or more, for more than 3 days, investors
who short paim very rarely get a margin call.)
And, when the company goes BK,
the shorts get paid off, 100%, without covering,
and the longs get 0%, and can't sell,
and the Brokers + MM's get zero.
Also, no investors ever "Naked" short. They just short,
with their "covers on", and available, as collateral.
But, if the BROKER, in his secret back office, does not
already have ("in street name"), or borrow the shares,
to balance the short, within 3 days (?), only then
is it considered to be a "Naked" short.
The client, who sold short, has no way of knowing if
his transaction is running around naked for more
than 3 days, and totally does not care, or get embareassed,
or cold feet, or any other appendage.
Pinky investers grossly mis-understand the recent changes
in the SEC Rules, with respect to shorting. None of the
rules changes will help paim, or any pinky, because they
deliberately don't comply with SEC rules. And, if they
"demand strict enforcement", the SEC will suspend their
trading, for non-compliance. Otherwise, the SEC will continue
to ignore most pinkys, except the complainers.
But, there is 1 Big Rule change, that is already in effect,
that is already having a huge effect on pinkys, and all
real stocks that are severely over-priced. And, it was part
of the "package" that dealt with "Nakeds + Grandfathers".
It is "The End Of The 'Up-Tick' Rule For Shorters",
which will result in diluting, profitless, pinky shells
being shorted to BK, faster than ever, legally.
Forever profitless pinkys can't get a real loan, just like
homeless bums who have never earned a penny. So, to get
new cash, pinkys dilute, and bums beg or steal, just like
pinkys. The better their story, and supporting appearance,
the more "successful" they are (pinkys, and bums). But, the
end of the "Up-Tick" rule for pinkys will have the same
effect as slicing the bottom out of the homeless beggar's cup.
I love the irony, of the political "deal". The money-losing
companies that blame their business failures on short naked
grandfathers, got their meaningless rule changes, BUT, only
by agreeing to the end of the "Up-Tick" rule, which has been
the most annoying restriction on shorters, for the last
~70 years. In combination, the package of rules changes
will drive money-losing companies to BK, faster than ever
before, and prevent pinkys like paim from losing money and
diluting shares, faster than ever, for endless years.
Pinkys are now being forced to reverse-split, faster than ever,
and paim has done it 3 times, in just the last 3 months.
First the Commons, then the Preferreds, then the CDs.
They did the Prols also, earlier this year. And, the
Commons are almost ready to reverse-split again.
P.S., Maybe I should move up the date for my "short"
Caribbean cruise, as suggested by outsided.
