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Call it a scantily-clad short then. A share that is already lent out to a short seller should not be eligible to be lent out again for the same reason I can't g
by dpiers 6y ago
Call it a scantily-clad short then. A share that is already lent out to a short seller should not be eligible to be lent out again for the same reason I can't get two mortgages to buy the same house - the underlying collateral would be owed to multiple parties.
- ZephyrBlu 6y agoThis is ok because all instances of borrowing the share don't need to be settled simultaneously.
- 314 6y agoThis is not true. Party A has a contract that party B owes them a share - not the share that they originally loaned. The whole idea is for party B to buy a share later to balance the trade. A better analogy to understand why short interest can rise above 100% is fractional reserve lending and the effect that it has on money supply.
- rokobobo 6y agoA share is a share is a share. You can’t tell which one was loaned out and which one wasn’t. And it’s not used as collateral, money is posted as collateral instead.