Replies to post #367200 on Digital Brand Media and Marketing Group Inc (DBMM)

[johnydollar]

The question was.......

Do naked shorts have an expiry date.........

No, naked shorts do not have an expiry date; they are a type of short sale and can be held indefinitely as long as the seller pays margin interest and meets capital requirements. Unlike short options, which expire, short positions are not subject to time limits, though they can be forcibly closed by the broker if the stock price rises significantly and the investor cannot meet margin calls.
Naked short sales and expiration
No expiration: A short position is a loan of shares that must be repaid, not a contract with a fixed expiration date like an option.
Holding period: The seller can hold the position as long as they pay the required interest on the borrowed shares.
Broker can force closure: A broker may force the closure of a short position if the stock's price moves against the seller, leading to large losses and unmet margin calls.
Seller can close: The investor is often the one who chooses to close the position, typically to limit potential losses, rather than waiting for the lender or broker to do so.
Difference from naked short options
Short options: Options, including short call options, have a specific expiration date and are subject to risks related to that expiration.
Options risk: Short call options can lead to an assignment of shares if they expire "in the money," even with a risk of after-hours price changes that make the option profitable for the buyer.
Short sales vs. options: The key difference is that a naked short sale involves selling a stock, while a naked call option involves selling the right to buy a stock.