Replies to post #541 on Scorpex, Inc. (SRPX)

[Jim Bishop]

Find us somebody, preferably in Canada where the margin and maintenace fees are less than the $2.50/share required in the US for stocks under $2.50.

In Canada last I looked minimum margin/maintenance according to the Investment Dealers Assoc of Canada for stocks trading under .50/share was 100% margin PLUS .50 (FIFTY CENTS) per share, but you'll be hard pressed to find a broker anywhere up here, that will allow you to short anything under a buck, on any market.

Makes a lot of sense to tie up a few million bucks to short a subpenny that if it goes to zippo zero you might make a few grand, or lose it all if the POS takes a momo run and you can't handle the extra margin.

All this paid basher stuff, working for hedgies, shorting, naked shorting pennies is just so much bullshit...and you know it.

[scion]

Short selling is an effective trading strategy that can be employed to hedge the risk of a loss on an off-setting position or to speculate on an equity's price movement. In essence, short selling entails selling a stock that you do not own.
[...]
Although short selling is allowed on these securities, it is not without its problems. Short selling on OTC is extremely risky because these securities are often very thinly traded, which makes them very illiquid. This illiquidity can prove hazardous if an investor needs to cover an increasingly unprofitable short position. If the volume is very low, covering the position may become a very unlikely prospect. Another problem that has arisen with short selling in OTC securities is the use of pump and dump schemes. These schemes are done by con artists who use internet message boards and SPAM emails to heavily promote a thinly traded stock in which they have long positions. When this happens, the result is often a high spike in the price of the stock, followed by a fall. However, the initial spike will devastate any investor with a short position. These schemes often use OTC stocks because they are relatively unknown when compared to exchange traded stocks.

To learn more, see The Lowdown On Penny Stocks [ http://www.investopedia.com/articles/03/050803.asp ] , Short Selling Tutorial [ http://www.investopedia.com/university/shortselling/ ] and the Online Investment Scams Tutorial.[ http://www.investopedia.com/university/scams/ ]

Filed Under: Short Selling

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