Quote:
Originally Posted by GregWeld
To use your analogy.... it would be like selling a house you borrowed from your neighbor, for $500,000 and hoping the buyer defaults and you could buy the house back for $400,000 and return it to the neighbor you borrowed it from.
If, in the meantime, the real estate market gets 'hot' - and the house value shoots up to $650,000 and the neighbor is demanding the return of his house - and you have no other option but to go to the buyer and lay $100 bills on the table until the buyer decides to sell back to you.
Sometimes - when a "short" is "obvious" to many... that trade gets "crowded" (using terms in quotes that you'll hear on TV etc) and everyone decides to cover... the stock can shoot up just because everyone has to buy the shares to cover their short positions.
Basically - it's a very risky trade.
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Thanx Greg. It makes it more clear (for a cloudy brain)... Between Bryan's and yours i've got a basic understanding of something thats not basic. Cheers.
U going to t-hill in Feb or May? Hows the house coming along?