They just banned short selling in US

Quote from Sky123987:

why would you say this?
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If you don't understand the critical role Shorts play in the markets, you really shouldn't be trading.
 
Quote from dhpar:

This is one of the worst intervention ever but:

A. SEC will very likely extend this crap rule to help the consolidation of financial sector. This will enable to recapitalize financials at less stupid prices and bring back some Chinese again.

B. Once they repeal the rule they will repeal it "temporarily", i.e. conditional on behavior of financial shares. This will in effect disallow excessive shorting as shorters will be scared that something like this Friday will occur again.

C. They will likely try to come up with something that makes naked shorting ban enforceable - something that should have happened long time ago.

D. lastly, uptick rule will be likely reinstated.

cheers
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A. is already happening - just japanese instead of chinese. MUFG goes into MS...
 
People may want to look through this:

http://www.interactivebrokers.com/en/trading/shortableStocks.php

IB also explains:

Interactive Brokers Bulletin Board

URGENT NOTICE REGARDING TRADING IN OPTIONS ON RESTRICTED SECURITIES The SEC has imposed emergency rules for short sale and economically similar dealing in approximately 800 financial services companies. Part of the new rules impact options trading strategies that can lead to a short sale, even if temporarily. The following limitations on option trading have been put in place to conform to the SEC regulations. Additional information, and updates to the SEC rules as they become available, can be found on: http://www.interactivebrokers.com/en/trading/shortableStocks.php

Allowed:
(A1) purchase of call options and exercise of long call positions
(A2) sale of call options against an existing long stock position in a ratio less than or equal to 1 call per 100 shares
(A3) purchase and sale of put options (A4) purchase of single stock futures

Not Allowed:
(NA1) exercise of puts that would lead to a short stock position
(NA2) selling uncovered calls or uncovered single stock futures (coverage via stock)
(NA3) selling long stock if so doing will expose an uncovered short call position

Please be aware that the actual rules and interpretations on the rule are being refined by the SEC on an ongoing basis. We kindly request clients do not contact the help desk for interpretation of the option restrictions. Customer Service operations may not be aware of the rule modifications due to the speed with which they are being issued and modified. Instead, please monitor the above web page for updates.
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nitro
 
Quote from Joab:

If you don't understand the critical role Shorts play in the markets, you really shouldn't be trading.
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You said volatility is toast if there is no short selling. I know in France you can't short sell. However whenever i check on Yahoo.com and look at how their mkt did at least in my opinion it has equal volatility.
 
who agrees with tme?

people want to short but they can't. nobody wants to buy either. therefore, we are going to be range bound.
 
Quote from Sky123987:

I know in France you can't short sell. However whenever i check on Yahoo.com and look at how their mkt did at least in my opinion it has equal volatility.
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Get your facts straight.
Interactive brokers - Shortable: 327 Listed for Trading: 1174
 
What's the big deal. Market makers are exempt from the Short Sale rule ban?. You can get decent markets in Single Stock Futures (SSF). This will only open the door for more traders to use them. You don't have to change your strategies just use SSF instead.SSFs are an alternative way to invest and trade equity products. IB will have a webinar about them on Oct. 9th. If you can't wait they have it in their archives. You can also get more information by going to the website (www.onechicago.com) or you can contact me directly at hrd@onechicago.com.
Thanks and good trading!
 
Vol will disapear on the other hand Kurtosis will explode.

In other words will be range bound for days and then suddenly explode, then range bound, then suddenly explode.

I promise the people who think this will help will regret it when they see the jumps that are coming.
 
More from IB:

URGENT NOTICE REGARDING TRADING IN OPTIONS ON RESTRICTED SECURITIES [revision 1]
REVISION 9/22/2008 09:51 EST: An amendment of the SEC order reduces the restriction on short call trading. Accordingly, selling calls (NA3 below), creation of call spreads, and selling long stock against a short call position (NA3) will be permitted until further notice.

ORIGINAL NOTICE:
The SEC has imposed emergency rules for short sale and economically similar dealing in approximately 800 financial services companies. Part of the new rules impact options trading strategies that can lead to a short sale, even if temporarily. The following limitations on option trading have been put in place to conform to the SEC regulations. Additional information, and updates to the SEC rules as they become available, can be found on: http://www.interactivebrokers.com/en/trading/shortableStocks.php.

Allowed:
(A1) purchase of call options and exercise of long call positions
(A2) sale of call options against an existing long stock position in a ratio less than or equal to 1 call per 100 shares
(A3) purchase and sale of put options
(A4) purchase of single stock futures

Not Allowed:
(NA1) exercise of puts that would lead to a short stock position
(NA2) selling uncovered calls or uncovered single stock futures (coverage via stock)
(NA3) selling long stock if so doing will expose an uncovered short call position

Please be aware that the actual rules, and interpretations on the rule, are being refined by the SEC on an ongoing basis. We kindly request clients do not contact the help desk for interpretation of the option restrictions. Customer Service operations may not be aware of the rule modifications due to the speed with which they are being issued and modified. Instead, please monitor the above web page for updates.
More...

nitro
 
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