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They still recall them from person B, who has no choice but to buy them at whatever price is available to cover their position.
by ineedasername 6y ago
They still recall them from person B, who has no choice but to buy them at whatever price is available to cover their position.
- esrauch 6y agoThere are realistic scenarios here where the liquidity of a stock can't cover the short though, as in there being not enough shares listed for sale at any ask price. I understand shorts are said to be unbounded risk, but surely there's some escape hatch: if the top hedge fund shorted 30% of some penny stock presumably a competitor that buys out 71% of shares doesn't get to take over the whole hedge fund by only selling that last share back at a price of 100% of the funds value: instead the fund will default on their recall responsibility and pay out some reasonable amount (and some true end stock holder just surprise loses their share?)