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Not always true. I've had brokers force me to close short positions (esp in '08-'09) because 'no shares available' which forced me to buy at the market in orde
by blihp 6y ago
Not always true. I've had brokers force me to close short positions (esp in '08-'09) because 'no shares available' which forced me to buy at the market in order to close out the position. It had nothing to do with interest or margin.
(Granted, they were some pretty illiquid stocks so I suspect that the broker had managed to get into a naked short situation when they allowed the trade to execute before actually trying to go out and borrow them. Of course, their mistake was made my problem.)
- nrmitchi 6y agoI'm not saying that your example isn't valid, but it's kind of different than what you are responding to. Your short position may have been called, but (I am assuming) you didn't take out a short position with an explicit expiration date. Ie, it wasn't "due" on Friday, and you likely didn't know days/weeks in advance of when it was going to be called.
- blihp 6y agoNo, it wasn't called. The broker would inform me, after executing the trades, (typically after the close on the day of the trade) that they literally could not borrow the shares and would send me a 'sucks to be you' message saying I had to close the position before the end of the settlement period or they would close it for me at the market price on settlement day. IIRC, it was less than 72 hours notice and I was given no option for any amount of money to keep the position open. Since these were thinly traded stocks, there were no options available on them so I couldn't keep it going that way either.