How about a 'newbie' area
- Thread starter brownsfan019
- Start date
Okay, here is one I asked already, without getting an answer. It's about naked shorting:
http://www.elitetrader.com/vb/showthread.php?s=&postid=1156123#post1156123
I had another one, regarding a specific stock, but I don't know what stock it was anymore
. I'll try to find it.By the way, am I the only newbie in this thread? What the hell... I might choose to give up.
I find that stock I had a question about. It's RBAK.
RBAK has been going down in the past days. It's not in a great situation, but since it went down quite a bit I wondered if it was on the SHO list. So I went on nasdaqtrader.com and checked. What I found was not RBAK, but RBAKZ Now, a few questions:
1) is RBAKZ a stock? I read "REDBACK NETWORKS INC WT EXP $9". It looks more like an option.
2) I understand that RBAKZ, like RBAK, trades on the Nasdaq. If it's so, why did I find on Yahoo, MarketWwatch and Reuters that RBAKZ is trading OTC?
3) Does the fact that RBAKZ is on the SHO list affect RBAK? And how?
RBAK has been going down in the past days. It's not in a great situation, but since it went down quite a bit I wondered if it was on the SHO list. So I went on nasdaqtrader.com and checked. What I found was not RBAK, but RBAKZ Now, a few questions:
1) is RBAKZ a stock? I read "REDBACK NETWORKS INC WT EXP $9". It looks more like an option.
2) I understand that RBAKZ, like RBAK, trades on the Nasdaq. If it's so, why did I find on Yahoo, MarketWwatch and Reuters that RBAKZ is trading OTC?
3) Does the fact that RBAKZ is on the SHO list affect RBAK? And how?
For your naked short selling question (which wasn't a typical newbie question) I found this, let's see if it answers it for you:
http://www.elitetrader.com/vb/showt...t=naked+short+sales+stock+delivery#post528198
> The Commission also adopted uniform locate and delivery requirements for
certain securities to safeguard against naked short selling. The uniform
locate requirements, applicable to all securities across all markets, will
prohibit Broker/dealers from executing short sales for their own accounts or
the accounts of other persons unless they can document that: (a) they have
borrowed the stock or entered into an arrangement to borrow the stock or (b)
they have reasonable grounds to believe they can borrow the security in
order to make delivery on the delivery date. Broker-dealers would need to
document the steps taken to locate stock prior to effecting a short sale,
even if the seller> '> s position will be closed out the same day. The
proposal contains an exemption for bona fide market making (as opposed to
speculative activity) that is consistent with the market maker> '> s past
trading patterns.
>
> The Commission also approved uniform delivery requirements based upon
thresholds currently contained in NASD Rule 11830. The rule establishes
that delivery is required for short sales of all securities with 10,000
shares or more of > "> failed to delivers> "> if such failures account for
0.5% of outstanding shares. Once the thresholds are met, broker/dealers
would be required to deliver within ten days of settlement (or 13 days
total). A failure to deliver within that period would result in a ban on
executing short sales in that security by that broker-dealer absent a prior
agreement to borrow. There is no market maker exemption from the delivery
requirement.
http://www.elitetrader.com/vb/showt...t=naked+short+sales+stock+delivery#post528198
> The Commission also adopted uniform locate and delivery requirements for
certain securities to safeguard against naked short selling. The uniform
locate requirements, applicable to all securities across all markets, will
prohibit Broker/dealers from executing short sales for their own accounts or
the accounts of other persons unless they can document that: (a) they have
borrowed the stock or entered into an arrangement to borrow the stock or (b)
they have reasonable grounds to believe they can borrow the security in
order to make delivery on the delivery date. Broker-dealers would need to
document the steps taken to locate stock prior to effecting a short sale,
even if the seller> '> s position will be closed out the same day. The
proposal contains an exemption for bona fide market making (as opposed to
speculative activity) that is consistent with the market maker> '> s past
trading patterns.
>
> The Commission also approved uniform delivery requirements based upon
thresholds currently contained in NASD Rule 11830. The rule establishes
that delivery is required for short sales of all securities with 10,000
shares or more of > "> failed to delivers> "> if such failures account for
0.5% of outstanding shares. Once the thresholds are met, broker/dealers
would be required to deliver within ten days of settlement (or 13 days
total). A failure to deliver within that period would result in a ban on
executing short sales in that security by that broker-dealer absent a prior
agreement to borrow. There is no market maker exemption from the delivery
requirement.
Well, i would think that naked short selling is quite basic stuff, but if you say it's not a typical newbie question I won't argue, because I'm a newbie
Maybe I can be proud of myself 
Maybe it doesn't really answer it, but I get at least a clearer picture. I understand that paperwork is not really the problem, but rather the trust given to the broker that he will find the shares. Point b seems to be the problem.
Tell me, did it take you a long time to find it? I'll try a more difficult question next time
These are also valid stock questions and not general newbie ones, I will try my best:
Quote from andread:
1) is RBAKZ a stock? I read "REDBACK NETWORKS INC WT EXP $9". It looks more like an option.
Looks to me both are stocks of the same company, but traded on different places. RBAK is on the Nasdaq and RBAKZ is on the OTC BB. They have different prices so I assume that the company had 2 IPOs and listed two different stocks in 2 different markets....
3) Does the fact that RBAKZ is on the SHO list affect RBAK? And how?
The 2 stocks move together as one would expect them to do so...
Quote from andread:
1) is RBAKZ a stock? I read "REDBACK NETWORKS INC WT EXP $9". It looks more like an option.
Looks to me both are stocks of the same company, but traded on different places. RBAK is on the Nasdaq and RBAKZ is on the OTC BB. They have different prices so I assume that the company had 2 IPOs and listed two different stocks in 2 different markets....
3) Does the fact that RBAKZ is on the SHO list affect RBAK? And how?
The 2 stocks move together as one would expect them to do so...
Quote from andread:
Tell me, did it take you a long time to find it? I'll try a more difficult question next time
I think I put the following words into the searchfield all at once:
"naked short sales stock delivery"
There were only 6 hits and the last one contained the info. Took about 20 secs and a little imagination.
Going back to the question, here is how I understand the situation:
Let's say I am your broker and you want to short an obscure XYZ stock that I don't have. The SEC wants to make sure I don't let you just short it without making sure I the broker have it or I at least made the effort to get it from other brokers. Now how exactly the transportation of the stocks occur (I assume electronically) I am not sure, but I have 10 days to get them from another broker.
If this is how it works, it is still funky because I the broker might need 5 days to get it and you could have covered the stock on the same day, thus basicly you were shortselling a stock that you didn't own or borrow....
Again, I am not a stock expert, I just play one on ET...
really? I almost feel like a serious trader
Maybe I can actually even start trading and make money. Wow
And what would be the reason for that? Isn't Nasdaq enough? Also, what does "exp $9" mean?. To me exp sounds like expiration
because people interesting in buying the stock on the Nasdaq can actually buy the same stock on the OTC for a lower price? It's a sort of arbitrage, isn't it? Is it the reason why RBAKZ is on the SHO list for the Nasdaq?
Going a bit off topic here, but thank you for the answers! Maybe I should start an appropriate thread. I still have a couple of things about SHO that are not completely clear. I also have a couple of more questions.
Thank you also for the other answer. Yes, it's not completely clear. I also don't understand why the broker is not better checked, or maybe even prosecuted, but I guess this starts to be a bit complex.
Anyway, it looks like, if we had a newbie area, I would be the only one to ask and you would be the only one to answer. I'm not sure it's the case to go on any further with the discussion.
Seriously, I don't think there is a need for a newbie area because:
1. The general,basic newbie questions were already answered and could be searched.
Now here I mean the "What is ES?, How much money should I start with?, What kind of books should I read first?, What is an ETF?" type questions that one could find the answers just by googling the question or reading the CBOT and other similar websites.
2. If you ask question like those that you did here, you can simply just ask them in the appropriate section and if you feel intimidated, just state first that you are a newbie. Nobody is going to jump on you, unless maybe if you ask the questions under #1.
The point here is that just because you are new to trading, that doesn't mean your question is a newbie one...
As for those 2 specific questions, I would ask them under Stocks, and make sure you start a new thread, otherwise people who know the answer might not see it if it is inside a different thread...
1. The general,basic newbie questions were already answered and could be searched.
Now here I mean the "What is ES?, How much money should I start with?, What kind of books should I read first?, What is an ETF?" type questions that one could find the answers just by googling the question or reading the CBOT and other similar websites.
2. If you ask question like those that you did here, you can simply just ask them in the appropriate section and if you feel intimidated, just state first that you are a newbie. Nobody is going to jump on you, unless maybe if you ask the questions under #1.
The point here is that just because you are new to trading, that doesn't mean your question is a newbie one...
As for those 2 specific questions, I would ask them under Stocks, and make sure you start a new thread, otherwise people who know the answer might not see it if it is inside a different thread...