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When you sell short, you must constantly monitor your position especially if your short position is in a "momentum" stock. With after hours trading, this is a big problem. You can minimize any potential loss by placing "buy-stop" orders or selling a covered put (covered by the necessity to buy back the short position). However, if the stock price is rising or gyrating too fast, the broker may not be able to execute your stop orders.
He was trying to trade KBIO and it was a stupid move. His "target" was 2.00 per share and his maximum loss was effectively unlimited. He did not mention having any stop in place; he just "assumed" e-trade would take care of him if the trade went against him. There are no options traded on KBIO and it is an extremely thin stock with an average of 900k shares traded per day (prior to this announcement). There are only 4 million shares outstanding and this genius decides he should short it for 2 bucks?
I trade futures and to me this is insanity. You are asking to get burned shorting a thin stock in biotech. He just learned a valuable lesson in liquidity.
Is this really a true story or a fake? This just smells like a fake.
If it is fake somebody went to a lot of trouble to replicate an e-trade account page. I did check out the "Gofundme" page when it was active. If it were fake in order to scam people out of some donation money you would think the guy would have made it a more worthy cause like a kid with cancer or something.
I don't remember if it was here or another forum where I commented, but this is a great example of why you don't leave your shorts naked. There is practically no floor to the downside risk.
Is this really a true story or a fake? This just smells like a fake.
It is a true story/real situation.
The buyer bought 70% of the outstanding shares. Even after all of the buy ins from the guys who thought they were getting free money by shorting the stock at $2.00 after the company said they were shutting down operations, the outstanding short position is still 38% of the outstanding shares. With 108% of the shares owned or sold short, if the large buyer pulls the stock loans, it becomes impossible for the shorts to cover, literally.
Hence why they say when you short a stock your potential loss is infinite. It doesn't happy very often, but when it does..... Ouch. A LOT of pain. Shares hit $45.82 today...... Up from $.50 or so ten days ago.
The 'money' owed isn't even real. Stuff like this is only possible on a game board that uses fiat currency created out of thin air by the Federal Reserve.
The 'money' owed isn't even real. Stuff like this is only possible on a game board that uses fiat currency created out of thin air by the Federal Reserve.
Its all just a facade of smoke & mirrors.
This is jibberish, the debt is real and won't be viewed as smoke and mirrors by etrade
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