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That is not naked short selling. Naked short selling is when you sell a stock short without first borrowing it. The parent to your comment describes someone bu
by fractionalhare 6y ago
That is not naked short selling. Naked short selling is when you sell a stock short without first borrowing it.
The parent to your comment describes someone buying a stock from someone who sold it short, and turning around and it selling it short themselves. This happens organically and is not "naked."
Beware the incredible amount of false and misleading information about this situation online. Things catch on in the zeitgeist and don't really get fact checked.
- delaaxe 6y agoOk thanks I think I got your point but you probably worded it wrong. Some can’t buy a stock and then “short sell” it, right? He just sold it
- puetzk 6y agoRight. But you can buy a stock (without knowing it was a borrowed share in a short sale), and then lend it to someone else (who intends to sell, it, thus creating another short sale). So to unwind this, the one existing share has to get bought (by someone who short-sold it), and returned (to the owner who lent it out), twice.