"Your being silly comparing being forced-cover to foreclosing a home. I mean, come on. Have you never been forced by your broker to cover a short position when you don't want to? I have. Haven't you ever been forced to sell a security because of margin issues? I have (When I first started and was using too much margin anyhow)."
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Fair enough, I'm being silly too. No ... I have never been forced to cover a short position of a practically delisted Chinese microcap stock at $7.00 when everything looked like the share price was headed under $1.00 ... most short squeezes that I've witnessed have been in a situation where unexpected good news was driving the share price higher along with a large naked short position. And, No, I have never faced a margin call because I have never bought on margin. And, my points remain:
1) The intitial volume most likely will be there at below $4.00 because of disgruntled longs, embarrassed institutions, and recently resigned insiders. Panic selling most likely will provide all the shares the shorts need to cover "mandatory positions" immediately anyway.
2) If the naked shorts that signed an agreement with their broker do not cover on the "first trading day" because lower prices do not materialize, wouldn't they only face a fine. A fine that would most likely be much less than being forced into a position of paying "$7 to $8" per CCME share. What were the ramifications in your instance ... what would have happened if you did not cover?
