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I-Glow

01/25/17 8:39 PM

#16427 RE: MoneyWorksForMe #16426

You are confused about the difference between short volume and short interest.

There is absolutely no one shorting SMAA - who in the hell would short a 0.0002 stock and there isn't any brokers that would loan the shares to short.

I really think most don't understand how shorting works and why it isn't economically feasible to short penny stocks - especially a trips stock.

First you have to find a broker that will loan you the shares to short - and you have to have a margin account and for stocks below $2.50 per share you have to have $2.50 per share for each share you borrow. If you are shorting 1 million shares you would need $2.5 million in your margin account.

But you would only control $200 of SMAA stock at today's price.

First, you have to borrow shares from your broker to short (and sell them on the open market) - then you have to buy the shares back at the lower price and return the borrowed shares to your broker.

This is all done via a margin account.

For SMAA the most you can profit is $100 on 1 million shares if the price dropped to 0.0001 and that doesn't include trading fees and margin account fees. But, you would have tied up $2.5 Million in a margin account that you couldn't use.

Short volume isn't short interest! You really need to understand the trade cycle.

And for those using junk like the OTCShortReport (short volume) - they need to understand that FINRA Daily Reg SHO data, it is meaningless on it's own. The Trade cycle is Trade Date plus 3 days for settlement, Daily Reg SHO only shows the Initial leg of each transaction and doesn't reconcile based upon settlements made seconds later as the trade has yet another 3 days to settle.

IG