Replies to post #60195 on RCC Holdings Corp fka RCCH

[martingale]

OK...good luck. I once thought it was undervalued at .015.
If there weren't so many shares out you might be right.
Heres another link to what we were discussing:


Could probably find dozens of links just by Googling "mechanics of short selling stock".


Here's one.


http://www.thestreet.com/story/10383365/1/how-short-selling-works.html

Since the stock lender has lent out securities, it will require that the borrower (the short seller) post collateral to secure the loan . This collateral is derived from the short sale proceeds, which the short seller receives from the buyer. However, the selling broker will actually receive the cash from the buyer and will not disburse it to the seller. Instead, the selling broker will withhold those short sale proceeds, make a "memo entry" in the short seller's account and then use the short sale proceeds to post as collateral against the stock that was borrowed from the stock lender.

[frogdreaming]

It isn't really too complicated.

I'm still confused on how you guys say you can't make money shorting, vw was shorted for profit right?

You can make money shorting. If you think a stock price is going to fall, you sell shares (you don't really have) at the current price. The money goes into your account, but is held from you by your broker until you replace the stock you sold. After the stock price has fallen, you buy the shares to replace the ones you sold using the money in that account. After you have replaced those shares your broker will release your 'profit' to you.

For it to work you need a starting price (the price at which you sell) that is higher than the cover price. (The price you have to pay to replace the shares). Otherwise there is no profit and you can only lose money.

VW was shorted because the price was falling from a high price to a lower price. RCCH can't really be shorted because the starting price (.0001) is as low as it is going to get. It doesn't make sense to sell shares short if you have to pay the same amount of money when you cover. Especially if you don't get your money from the broker until you have covered the short.