2 ms·
Lenders make money on a short squeeze. The only time you lose money is if you want to sell and can't because you've loaned out your shares. But with a large in
by SatvikBeri 8y ago
Lenders make money on a short squeeze.
The only time you lose money is if you want to sell and can't because you've loaned out your shares. But with a large index fund, that's extremely unlikely: you can easily lend out a small portion of your shares all the time (say 5%) with virtually no chance that too many customers will want to cash out all at the same time.
- modeless 8y agoLenders only make money on a short squeeze if the shorts can cover. If they default, the lender loses shares. And if the lender is an index fund that is required to maintain a certain balance of shares then they will have to replace those lost shares, becoming a victim of the short squeeze themselves.