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You're also missing the fact that these hedge funds are bleeding interest per day. So buying 20% only will not suffice.
by stevofolife 6y ago
You're also missing the fact that these hedge funds are bleeding interest per day. So buying 20% only will not suffice.
- jfengel 6y agoI take it the interest is based on the current price? If so, that would make some sense: if they're paying (say) .1% per day on a stock that is worth 100x the amount you got for shorting it, you'll gradually burn through all of the cash you got for the short. You're still in a kind of race to see whether it will stay that high for long, or if people will eventually want to take their profits. But it definitely puts pressure on you to reduce your exposure to that, even at the inflated price.