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Then you are not paying attention. The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shar

Then you are not paying attention. The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shares to cover the short's position.

thaumasiotes 6y ago
So what? The same share can be bought more than once in just the same way it can be sold more than once; in fact, the one necessarily entails the other.
- PartiallyTyped 6y ago
  What happens if nobody sells? Say 40% of total shares are floating. You the hedge fund owe 60% of the shares because you shorted them. Even if your position is closed immediately (hint, it won't), you would still need to find the remaining 20% of the shares that you owe. Who will give you that 20%? Well I of course, but the difference is, I get to dictate what the market price is. We saw this happen in 2008 with Volkswagen. 1% of the total shares were floating because Porché had purchased the remaining, the rest of the shares were owned by institutions and they were not selling them.
  - thaumasiotes 6y ago
    > What happens if nobody sells? This has nothing to do with the ratio of short shares to float. What happens if there are 300 shares floating, 20 short shares, and nobody sells?
    - PartiallyTyped 6y ago
      They owe more shares than there are available and they pay interest on said shares. Even if nobody sells, the interest gets accumulated and they are bleeding.
      - thaumasiotes 6y ago
        ...yes? That's all shorting. You have to pay the borrow costs as long as you're borrowing the stock. But how is having short interest of 140% of the float different from having short interest of 80% of the float?
      - bombcar 6y ago
        And that interest can get very VERY high - the cost to borrow shares when no shares are available can run to $shareprice A DAY (see "hard to borrow").
      - nico_h 6y ago
        yeah, but how much can they bleed? Can they just give up, default and declare bankruptcy? And then all the people hoping for a short squeeze end up holding stock that is not worth much anymore?
        PartiallyTyped 6y ago
        They will get margin called, their assets will be liquidated and the stocks covered.
        nico_h 6y ago
        yeah, but how will the stock be covered, and by whom? If there is no enough stock to buy to cover the outstanding contracts?
        PartiallyTyped 6y ago
        GME can always issue more shares and that will give them a sizable injection of cash.
        SilasX 6y ago
        I thought that takes a lot of time though, because of SEC filings, after which the bubble could be over. Or are they allowed to hold on to a bunch of ready-to-go shares? (Honestly asking and don't know, everyone please only answer if you have knowledge of how these kinds of things work and are able to identify and explain away the relevant confusions.)
riffraff 6y ago
> The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shares to cover the short's position. that's not necessarily true. Quoting Matt Levine[0] > There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but 190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It's fine. [0] https://www.bloomberg.com/opinion/articles/2021-01-25/the-game-never-stops https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...
- PartiallyTyped 6y ago
  Sure. What if they can't borrow them though? What if they are owned by retail/institutions/board? Some conservative estimates put WSB holding 7-8% with some people owning .2-0.4% and that is without the lurkers. Same thing happened to Volkswagen, only 1% of the shares was available for purchase and they had to close their positions.

Then you are not paying attention. The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shares to cover the short's position.

thaumasiotes 6y ago

So what? The same share can be bought more than once in just the same way it can be sold more than once; in fact, the one necessarily entails the other.

PartiallyTyped 6y ago
What happens if nobody sells? Say 40% of total shares are floating. You the hedge fund owe 60% of the shares because you shorted them. Even if your position is closed immediately (hint, it won't), you would still need to find the remaining 20% of the shares that you owe. Who will give you that 20%? Well I of course, but the difference is, I get to dictate what the market price is. We saw this happen in 2008 with Volkswagen. 1% of the total shares were floating because Porché had purchased the remaining, the rest of the shares were owned by institutions and they were not selling them.
- thaumasiotes 6y ago
  > What happens if nobody sells? This has nothing to do with the ratio of short shares to float. What happens if there are 300 shares floating, 20 short shares, and nobody sells?
  - PartiallyTyped 6y ago
    They owe more shares than there are available and they pay interest on said shares. Even if nobody sells, the interest gets accumulated and they are bleeding.
    - thaumasiotes 6y ago
      ...yes? That's all shorting. You have to pay the borrow costs as long as you're borrowing the stock. But how is having short interest of 140% of the float different from having short interest of 80% of the float?
    - bombcar 6y ago
      And that interest can get very VERY high - the cost to borrow shares when no shares are available can run to $shareprice A DAY (see "hard to borrow").
    - nico_h 6y ago
      yeah, but how much can they bleed? Can they just give up, default and declare bankruptcy? And then all the people hoping for a short squeeze end up holding stock that is not worth much anymore?
      - PartiallyTyped 6y ago
        They will get margin called, their assets will be liquidated and the stocks covered.
        nico_h 6y ago
        yeah, but how will the stock be covered, and by whom? If there is no enough stock to buy to cover the outstanding contracts?
        PartiallyTyped 6y ago
        GME can always issue more shares and that will give them a sizable injection of cash.
        SilasX 6y ago
        I thought that takes a lot of time though, because of SEC filings, after which the bubble could be over. Or are they allowed to hold on to a bunch of ready-to-go shares? (Honestly asking and don't know, everyone please only answer if you have knowledge of how these kinds of things work and are able to identify and explain away the relevant confusions.)

riffraff 6y ago

> The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shares to cover the short's position. that's not necessarily true. Quoting Matt Levine[0] > There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but 190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It's fine. [0] https://www.bloomberg.com/opinion/articles/2021-01-25/the-game-never-stops https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...

PartiallyTyped 6y ago
Sure. What if they can't borrow them though? What if they are owned by retail/institutions/board? Some conservative estimates put WSB holding 7-8% with some people owning .2-0.4% and that is without the lurkers. Same thing happened to Volkswagen, only 1% of the shares was available for purchase and they had to close their positions.