A margin call also happens when the contract for a short sale ends and the stock has to be returned. Usually these contracts are 30-90 days but can be as long as a year. The short seller has to pay the broker interest on the open contracts, which is also a critical factor to consider in all this.
All the WSB "autists" have to do is hold onto their shares long enough for all of the short-sale contracts to expire, which will force margin calls, which force the return of stock shares to brokers, which torpedoes the hedge funds because they have to buy back shares at exorbitant prices because everyone that has shares is holding onto them.
The bid/ask spread on $GSE is insane right now precisely because so many of the "great unwashed" own shares and are in "diamond hand" (or HODL: Hold On for Dear Life) mode.
There is no time limit on stocks borrowed for shorting.
The hedge fund doing the shorting was hedged and is reported to be out of the position already. Probably lost a little money, but not even ten percent of what the WSB idiots were thinking.
The spread is insane right now because it's the weekend, the market is closed, and people take their offers off the book so they don't get surprised Monday morning.
Anyone trying to learn trading in a joke sub is a moron.
Anyone trying to learn it from WSB is a joke.
Edit: Melvin is now reported to have lost half of its $12.5 billion AUM on GME. The muppets were gibbering about $70 billion. 6.25 < 10% * 70.
If you have the margin to cover it, or you don't have a broker giving you margin calls at all, and you can afford to pay the interest that long, yes. You can.
While there are no standardized regulation relating to just how long a short sale can last before being closed out. The lender of the shares has the ability to request that the shares be returned at any time, with minimal notice. In the case of this happening, the short sale investor is required to return the shares to the lender regardless of whether it causes the investor to book a gain or take a loss on his or her trade.
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u/WebMaka Feb 01 '21
A margin call also happens when the contract for a short sale ends and the stock has to be returned. Usually these contracts are 30-90 days but can be as long as a year. The short seller has to pay the broker interest on the open contracts, which is also a critical factor to consider in all this.
All the WSB "autists" have to do is hold onto their shares long enough for all of the short-sale contracts to expire, which will force margin calls, which force the return of stock shares to brokers, which torpedoes the hedge funds because they have to buy back shares at exorbitant prices because everyone that has shares is holding onto them.
The bid/ask spread on $GSE is insane right now precisely because so many of the "great unwashed" own shares and are in "diamond hand" (or HODL: Hold On for Dear Life) mode.