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You get paid immediately when opening a short position
by shukantpal 5y ago
You get paid immediately when opening a short position
- jfrunyon 5y agoSure, you get "paid", but in reality you're still out money because you had to put down more than you got paid as collateral. That collateral can disappear.
- shukantpal 5y agoYou pay collateral to your broker, not the counterparty. Also, if you have margin, the broker will lend you collateral and in that case you wouldn't have put up anything from your side (apart from interest payments).
- JumpCrisscross 5y ago> You get paid immediately when opening a short In what? By whom? If they go bust, you’re just another claim on a bankrupt estate.
- shukantpal 5y agoIf I short tether, I am borrowing tether and selling it immediately. I get the proceeds from the sale immediately. The person who lent me the tether can be left holding the bag - I can't. That's because I, the short seller, am not owed anything but the counterparty. It's like taking out a loan - if the bank goes bankrupt, you don't lose anything since you _still_ have the cash.