Archegos is not a “naked short” position. I have been posting about it for weeks on other boards. You can’t see it, but it is not a “naked short” position. They cover with cash collateral on a total return swap position. Naked shorting as w concept means shorts never have to cover shares that did not exist, and that is not the case in either of those cases. I often say perpetuation of the “naked short” idea serves the interests of shorts because it makes it seems like illegality is rampant and even squeezing shorts won’t do anything because they are just creating fake shares. But that was never true. They are legally shorting, just not in the manner that retail understands or can track shorting.
And when the shares move against them, they do have to pay their brokerages in cash, not shares. But it can be unlimited piles of cash, if the move is a crazy move, as we saw with Archegos, though eventually the positions can be closed. And we also saw the same with GME, though they actually had to cover.
Anyway, maybe looks like a “naked short”, but it’s just a kind of trade only open to institutional clients and is outside of the possibilities of retail generally, and, it does not show up in the retail stats that otherwise should transparently alert all in a stick as to what is going on. That is about to be fixed though.
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