reverse split question <<rookie>>

A

ASmith01

Hey guys, i've been trading for about 4 months now, still trying to learn the ins and outs of the game. Seen that AIG and FAS/FAZ got a reverse split brought a copule of questions to mind.

-What happens if you are short in a stock when it gets a reverse split?
-does the value of your account change at all?
-are you even allowed to short a stock that is about to get a rev.split?

I also noticed that AIG started selling off after the split. Is this the usual thing to do after a rev.split?

thanks for any help.
 
Quote from ASmith01:
-What happens if....
-does the value....
-are you even allowed to....
-Is this the usual thing.....
More...
1) Nothing. You have fewer shares at a higher price. A times B equals B times A.
2) No
3) Yes. If it's shortable through your firm.
4) With reverse-splits, company fundamentals don't magically "improve" out of thin air. Bearish sentiment can still remain and attract additional selling and short-selling potentially driving down the issue. :cool:
 
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