1851
mfw i learning what a hedgefund and shorting is after 4 coffee at 6am (media.patriots.win)
posted ago by Peaceful-Riot ago by Peaceful-Riot +1851 / -0
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– DeepMind 2 points ago +2 / -0
  • "So the stock owner is no better or worse off because even if he didn't loan out the shares, he still would have lost value due to price drop"

Yes. For the stock owner it doesn't matter.

The stock owner doesn't even know he lends shares except broker pays him a commission that comes from the short seller, after some broker cut, of course. It's usually tied to the one of the FED interbank overnight rates. But this commission actually can be very high is the stock is heavily shorted and is in demand.

So if the commission is high, the short seller accumulates losses via commission accruals even if the stock doesn't move down as he expects.

Yeah, it's a complicated mess :)

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