What happens if you're short a stock and it goes to zero?

[The Swordsman]

put your damn buy stop at .01 and you'll be all good

 

[Red_Ink_inc]

Quote from Q12:

I was told once that you're not responsible for capital gains taxes as you never actually covered the position... not sure if that's true, but it does have some logic behind it.

Don't quote me on this but I seem to recall that when all forms of trading in the security stop. For example, it's even booted off the pink sheets, that the government assigns it a per share value of something like $.000000001, and deems the transaction closed and the profit realized and therefore puts their hand out to collect their share from your winnings.

 

[Bushido]

Well I was short and my position did get closed automatically at the last traded price (.19 approx) and an equivalent size got allotted in the new symbol i.e. LEHMQ, I finally closed the position at 0.06 approx yesterday.

 

[Thermactor]

Quote from Bushido:

Well I was short and my position did get closed automatically at the last traded price (.19 approx) and an equivalent size got allotted in the new symbol i.e. LEHMQ, I finally closed the position at 0.06 approx yesterday.

which, incidentally, would have been the perfect time to go long

 

[Bushido]

Quote from Thermactor:

which, incidentally, would have been the perfect time to go long

I actually did. Else I would have waited for zero. Did a decent move (400%) today too.

 

[DanR]

May someone explain if the same applies also to put options not yet expired?

 

[LEAPup]

Quote from NoProblem:

What happens?

You wished that you bet the entire farm, your folk's farm, the neighbors farm, and put everything you had into the trade.

So true!

Causes the weaker traders to stard doing the math on "how much would I have made had I bet the farm on this one trade? I won didn't I? I bet I'd be rich!!! Maybe I'll do it next time around."
:eek: :eek: :eek:

 

[tommylove3]

If the stock goes to zero you own the company , it happens all the time. With Lehman I would pimp out the secretaries or any other hot Lehman employees as we know they are not too good at math. I am sure they will bring you a higher returns in other activities.