Replies to post #7096 on Biostax Corp (BTAX)

[noreen]

and they do not "need" to cover.

I don't see any way that it is possible that MM's don't need to cover. If that were true, then no stock would ever go up, or maybe you're talking about only in the OTC that market makers don't need to cover, in which case no penny stock would ever go up. And we know that is not that case. There are penny stocks that have obviously gone up.

To elaborate on what I mean, let's just say IMUN announced that they received a $50m government grant from UNAIDS, and also received $50m in initial orders through Fidson. Let's say they promoted the stock and had 5000 new interested investors wanting to buy up the stock. If market makers didn't have to cover naked shorts, what interest would the market makers have in ever letting the stock go up? If they see all this buying interest, they'd want to be the first one on the Ask, and if there are multiple MM's (which there obviously would be if they didn't have to cover), then they'd keep outbidding each other to lower the Ask to assure these new buyers keep buying from them. If they don't have to cover, they could just sell billions and trillions of counterfeit shares for lower and lower prices, and they would just get whatever cash new investors keep putting in. Why would they ever let the stock go up if they didn't have to cover? They could sell shares for 1 cent or lower forever, even if the company appeared to be worth $50b. Why ever let it go above 1 cent (or any arbitrary value)?

As there are plenty of examples of penny stocks that have gone up, it is quite obvious that would you are saying MUST be incorrect, but please elaborate on why you think you are correct. And if you really believe MM's would NEVER have to cover, why would you own any penny stock ever (or any stock where naked shorts do not have to cover)? Please elaborate or cite your source. Your statement does not make sense.

[noreen]

If MM's don't need to cover their naked shorts, why don't they just naked short trillions and trillions of counterfeit AMZN shares, and just keep knocking the price lower and lower? I would do that for sure if I didn't have to cover - especially if I could just counterfeit as many shares as I want.

What am I missing?

[noreen]

I BELIEVE what you meant to say is that when MM’s naked short a penny stock that will eventually go bankrupt, they will never have to cover their shorts, which I know is true. Essentially, they will never be forced to cover while the stock is not performing well, and after bankruptcy, they will be free of their obligations to
cover.

However, if a stock like IMUN all of a sudden gets multi million dollar grants and multi million dollar revenues, the MM’s will be forced to cover. Do you agree? If not, why not?