This may be a dumb question, but...

Quote from TGregg:

A talks to C, and A decides he thinks it's going down as well, so he dumps it. Does the broker borrow from B to sell A's shares so C stays short? Or does C get nailed? I presume it's the former, but don't know for sure. . .
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I think I read in my margin account agreement that the broker will try to borrow the stock from another account, and that will usually be possible, but in the unlikely event that he cannot find stock to borrow on your behalf, your short can be covered (I think they call it "called back from you") at any time without prior notice to you.
 
Quote from AAAintheBeltway:

Just to complicate matters further, what about dividends? Who gets them? We know both longs won't get them. It seems reasonable to think that the original owner of the stock that got lent for shorting would lose the dividend, but again I've never heard of that happening.
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AFAIK, if you are short the stock, you must pay the dividend, i.e. you get a "negative dividend" for your negative position.

But I don't think they can do that with voting rights. Maybe they let you vote yes or no and if you vote yes it counts as negative yes, which is no.

But then again, if that were true, then buying a call would also be the same as writing a put.

You could probably prove that one equals zero in a world like that.
 
Quote from Lobster:



AFAIK, if you are short the stock, you must pay the dividend, i.e. you get a "negative dividend" for your negative position.

But I don't think they can do that with voting rights. Maybe they let you vote yes or no and if you vote yes it counts as negative yes, which is no.

But then again, if that were true, then buying a call would also be the same as writing a put.

You could probably prove that one equals zero in a world like that.
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Very funny - thanks for the laughs
 
Quote from Lobster:



AFAIK, if you are short the stock, you must pay the dividend, i.e. you get a "negative dividend" for your negative position.
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That is correct, the short must pay the dividend.
 
Oops, brain lock on my part. Of course, the short has to paythe dividend. That voting thing still has me scratching my head however. Wonder if the margin agreement addresses that issue?
 
if you are long a stock you own the rights.
If your broker loans the stock to short, the
person who buys from the short owns the
rights too.

This works out fine until an owner of the
stock wants to use these rights.
your broker owes you the rights, so if you
vote your proxy or want to tender your stock,
the broker who loaned your stock has to get
it back, They call the short and tell them to buy
the stock or the broker will buy it for them (a buy-in.)

So a short squeeze ensues.:) :( :p :confused:
 
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