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A naked short seller doesn't need to deliver the share(s) at the time of the sale, but must deliver according to the terms of the contract, whatever those may b
by xapata 10y ago
A naked short seller doesn't need to deliver the share(s) at the time of the sale, but must deliver according to the terms of the contract, whatever those may be.
Kind of like selling things online. You take the cash, then you ship the product. Or like the extreme form of "Lean Startup Method" -- sell the product, then build it.
- llccbb 10y agoThe problem with naked short selling is the ability for rampant, cheap, and extremely profitable manipulation to cause "artificial" price-drops. There is basically no penalty for failure-to-delivers and companies share price can be gutted while no real shares have been traded.
- xapata 10y agoFraud is illegal. If you try that often or too big, you'll get caught.