Buy, sell, or hold? - page 2. | Bitcointalksearch.org

evolve

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RE: shorts vs naked shorts

Quote from: notme on January 30, 2013, 04:06:27 PM

WTF, how is that supposed to work?

Ok, a regular short requires you to sell shares you dont own, with a promise to buy back later.

With a naked short, you are doing the same thing, only without securing a loan first. Basically it's an IOU for a short sale.

http://www.investopedia.com/terms/n/nakedshorting.asp#axzz2JUcuT28I

Edit:
this article explains it better than I did

http://online.barrons.com/article/SB50001424053111904184504577518792352585660.html#articleTabs_article%3D1

Quote

NAKED SHORTING—selling stock that the seller doesn't have and hasn't borrowed, in the hope that its price will quickly fall, letting the seller repurchase it at a lower price and then deliver the stock to the buyer—is generally illegal. Usually, sellers must borrow a stock, or at least determine that they can borrow it, before they can sell it short.

CurbsideProphet

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Quote from: notme on January 30, 2013, 04:42:42 PM

Quote from: cypherdoc on January 30, 2013, 04:34:47 PM

Quote from: notme on January 30, 2013, 04:20:51 PM

Quote from: cypherdoc on January 30, 2013, 04:11:39 PM

Quote from: notme on January 30, 2013, 04:06:27 PM

Quote from: cypherdoc on January 30, 2013, 04:04:30 PM

Quote from: notme on January 30, 2013, 03:54:46 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:45:42 PM

Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

Serious question, not trying to be a smartass:

If borrowing the shares is required to call it shorting, why does the term naked short mean? I thought a naked short was shorting without actually owning the asset to begin with, and therefore "regular" shorting would be shorting when you do start out owning the asset. Am I mistaken?

naked shorting is when you don't even have to borrow the share from a long to put on the short.

WTF, how is that supposed to work?

example:

i'm an account holder at Fidelity. suppose, in aggregate, they have 100 customers who hold 100,000 shares of Apple.

i am a short seller. for simplicity let's say i have enough money in my account to allow me to borrow and sell those 100,000 shares to buyers looking to go long. if Fidelity is an ethical firm, they won't allow me to do that with any more than the 100,000 shares held at the firm, even if i want to short 150,000 shares. if they aren't ethical, they might allow me to naked short the extra 50,000 shares.

in other words, sell what they don't have.

So if you made too much profit, they would have to pay up themselves to cover the difference?

not sure what you mean. you actually have to have your own USD's initially in your account to be allowed to short shares. if you have a margin acct like me (allows leverage), you must hold around $1 of your own money for every $3 in share value that you short.

if the short trade starts going against you (shares go UP in value instead of DOWN like you were betting) then you have to wire in more USD's to keep the ratio in line.

But what if you are right?... If they (broker) let you(short seller) sell 50k more shares than they(broker) had, they(broker) have to pull profits out of their ass(Bernanke) to pay you.

He has a margin account, it's just an extension of credit.

notme

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Quote from: cypherdoc on January 30, 2013, 04:34:47 PM

Quote from: notme on January 30, 2013, 04:20:51 PM

Quote from: cypherdoc on January 30, 2013, 04:11:39 PM

Quote from: notme on January 30, 2013, 04:06:27 PM

Quote from: cypherdoc on January 30, 2013, 04:04:30 PM

Quote from: notme on January 30, 2013, 03:54:46 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:45:42 PM

Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

Serious question, not trying to be a smartass:

If borrowing the shares is required to call it shorting, why does the term naked short mean? I thought a naked short was shorting without actually owning the asset to begin with, and therefore "regular" shorting would be shorting when you do start out owning the asset. Am I mistaken?

naked shorting is when you don't even have to borrow the share from a long to put on the short.

WTF, how is that supposed to work?

example:

i'm an account holder at Fidelity. suppose, in aggregate, they have 100 customers who hold 100,000 shares of Apple.

i am a short seller. for simplicity let's say i have enough money in my account to allow me to borrow and sell those 100,000 shares to buyers looking to go long. if Fidelity is an ethical firm, they won't allow me to do that with any more than the 100,000 shares held at the firm, even if i want to short 150,000 shares. if they aren't ethical, they might allow me to naked short the extra 50,000 shares.

in other words, sell what they don't have.

So if you made too much profit, they would have to pay up themselves to cover the difference?

not sure what you mean. you actually have to have your own USD's initially in your account to be allowed to short shares. if you have a margin acct like me (allows leverage), you must hold around $1 of your own money for every $3 in share value that you short.

if the short trade starts going against you (shares go UP in value instead of DOWN like you were betting) then you have to wire in more USD's to keep the ratio in line.

But what if you are right?... If they (broker) let you(short seller) sell 50k more shares than they(broker) had, they(broker) have to pull profits out of their ass(Bernanke) to pay you.

cypherdoc

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Activity: 1764

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Quote from: notme on January 30, 2013, 04:20:51 PM

Quote from: cypherdoc on January 30, 2013, 04:11:39 PM

Quote from: notme on January 30, 2013, 04:06:27 PM

Quote from: cypherdoc on January 30, 2013, 04:04:30 PM

Quote from: notme on January 30, 2013, 03:54:46 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:45:42 PM

Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

Serious question, not trying to be a smartass:

If borrowing the shares is required to call it shorting, why does the term naked short mean? I thought a naked short was shorting without actually owning the asset to begin with, and therefore "regular" shorting would be shorting when you do start out owning the asset. Am I mistaken?

naked shorting is when you don't even have to borrow the share from a long to put on the short.

WTF, how is that supposed to work?

example:

i'm an account holder at Fidelity. suppose, in aggregate, they have 100 customers who hold 100,000 shares of Apple.

i am a short seller. for simplicity let's say i have enough money in my account to allow me to borrow and sell those 100,000 shares to buyers looking to go long. if Fidelity is an ethical firm, they won't allow me to do that with any more than the 100,000 shares held at the firm, even if i want to short 150,000 shares. if they aren't ethical, they might allow me to naked short the extra 50,000 shares.

in other words, sell what they don't have.

So if you made too much profit, they would have to pay up themselves to cover the difference?

not sure what you mean. you actually have to have your own USD's initially in your account to be allowed to short shares. if you have a margin acct like me (allows leverage), you must hold around $1 of your own money for every $3 in share value that you short.

if the short trade starts going against you (shares go UP in value instead of DOWN like you were betting) then you have to wire in more USD's to keep the ratio in line.

notme

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Activity: 1904

Merit: 1002

Quote from: cypherdoc on January 30, 2013, 04:11:39 PM

Quote from: notme on January 30, 2013, 04:06:27 PM

Quote from: cypherdoc on January 30, 2013, 04:04:30 PM

Quote from: notme on January 30, 2013, 03:54:46 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:45:42 PM

Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

Serious question, not trying to be a smartass:

If borrowing the shares is required to call it shorting, why does the term naked short mean? I thought a naked short was shorting without actually owning the asset to begin with, and therefore "regular" shorting would be shorting when you do start out owning the asset. Am I mistaken?

naked shorting is when you don't even have to borrow the share from a long to put on the short.

WTF, how is that supposed to work?

example:

i'm an account holder at Fidelity. suppose, in aggregate, they have 100 customers who hold 100,000 shares of Apple.

i am a short seller. for simplicity let's say i have enough money in my account to allow me to borrow and sell those 100,000 shares to buyers looking to go long. if Fidelity is an ethical firm, they won't allow me to do that with any more than the 100,000 shares held at the firm, even if i want to short 150,000 shares. if they aren't ethical, they might allow me to naked short the extra 50,000 shares.

in other words, sell what they don't have.

So if you made too much profit, they would have to pay up themselves to cover the difference?

notme

legendary

Activity: 1904

Merit: 1002

Quote from: notme on January 30, 2013, 04:10:40 PM

Buy! Buy! Buy!

https://twitter.com/jgarzik/status/296709252351926273

Even better: http://garzikrants.blogspot.com/2013/01/once-upon-time-in-china-package-shipped.html

cypherdoc

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Activity: 1764

Merit: 1002

Quote from: notme on January 30, 2013, 04:06:27 PM

Quote from: cypherdoc on January 30, 2013, 04:04:30 PM

Quote from: notme on January 30, 2013, 03:54:46 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:45:42 PM

Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

Serious question, not trying to be a smartass:

If borrowing the shares is required to call it shorting, why does the term naked short mean? I thought a naked short was shorting without actually owning the asset to begin with, and therefore "regular" shorting would be shorting when you do start out owning the asset. Am I mistaken?

naked shorting is when you don't even have to borrow the share from a long to put on the short.

WTF, how is that supposed to work?

example:

i'm an account holder at Fidelity. suppose, in aggregate, they have 100 customers who hold 100,000 shares of Apple.

i am a short seller. for simplicity let's say i have enough money in my account to allow me to borrow and sell those 100,000 shares to buyers looking to go long. if Fidelity is an ethical firm, they won't allow me to do that with any more than the 100,000 shares held at the firm, even if i want to short 150,000 shares. if they aren't ethical, they might allow me to naked short the extra 50,000 shares.

in other words, sell what they don't have.

notme

legendary

Activity: 1904

Merit: 1002

Buy! Buy! Buy!

https://twitter.com/jgarzik/status/296709252351926273

creativex

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Activity: 434

Merit: 250

Right. Like JPM does with paper silver. The paper silver contracts are counterfeit because there's no silver to back them.

Quote from: notme on January 30, 2013, 04:06:27 PM

WTF, how is that supposed to work?

It works by counterfeiting something. It's done with stocks by selling more shares than exist.

notme

legendary

Activity: 1904

Merit: 1002

Quote from: cypherdoc on January 30, 2013, 04:04:30 PM

Quote from: notme on January 30, 2013, 03:54:46 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:45:42 PM

Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

Serious question, not trying to be a smartass:

If borrowing the shares is required to call it shorting, why does the term naked short mean? I thought a naked short was shorting without actually owning the asset to begin with, and therefore "regular" shorting would be shorting when you do start out owning the asset. Am I mistaken?

naked shorting is when you don't even have to borrow the share from a long to put on the short.

WTF, how is that supposed to work?

cypherdoc

legendary

Activity: 1764

Merit: 1002

Quote from: notme on January 30, 2013, 03:54:46 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:45:42 PM

Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

Serious question, not trying to be a smartass:

If borrowing the shares is required to call it shorting, why does the term naked short mean? I thought a naked short was shorting without actually owning the asset to begin with, and therefore "regular" shorting would be shorting when you do start out owning the asset. Am I mistaken?

naked shorting is when you don't even have to borrow the share from a long to put on the short.

notme

legendary

Activity: 1904

Merit: 1002

Quote from: Spaceman_Spiff on January 30, 2013, 03:45:42 PM

Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

Serious question, not trying to be a smartass:

If borrowing the shares is required to call it shorting, why does the term naked short mean? I thought a naked short was shorting without actually owning the asset to begin with, and therefore "regular" shorting would be shorting when you do start out owning the asset. Am I mistaken?

Spaceman_Spiff

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Quote from: cypherdoc on January 30, 2013, 03:39:28 PM

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

It's not even close. If you are caught on the wrong side of a naked short you are looking at huge losses.
On the other hand, if you missed the train on an upmove after you just sold your bitcoins you don't have any losses, you just don't have the profit you otherwise would have had.

cypherdoc

legendary

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Quote from: ianbakewell on January 30, 2013, 03:32:42 PM

I think the important part is the forced buyback , most people here who claim "short" have no obligation to cover because they have usually sold coins they owned, not borrowed.

yes, this is a huge difference. the psychological pressure to "cover" can be unbearable to the average investor and can help propel markets higher as well as provide support in down drafts.

i do understand the conversation that took place earlier about "selling" essentially being equivalent to "shorting" but most professionals don't view it that way.

evolve

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daytrader/superhero

Quote from: adamstgBit on January 30, 2013, 03:27:38 PM

I thought we went over this, shorting doesn't need to be leveraged to be considered shorting.

Shorting is (by definition) selling a stock or commodity that you don't own, with a promise to buy it back at a later date with interest (hopefully at a lower price). How is this done without leverage?

source:
http://www.investopedia.com/university/shortselling/shortselling1.asp#axzz2JUcuT28I

Spaceman_Spiff

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Quote from: adamstgBit on January 30, 2013, 03:27:38 PM

Quote from: cypherdoc on January 30, 2013, 03:24:38 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:16:51 PM

Quote from: evolve on January 30, 2013, 12:57:03 PM

I keep hearing people talk about shorting bitcoin, but how are you doing it without bitcoinica or similar leveraged trading platform? Or are you just shorting through private btc loans? Or is the term "shorting" just being misused on this forum?

The "shorting" term is frequently misused on this forum, used instead of plain old "selling".

yeah, its annoying.

I thought we went over this, shorting doesn't need to be leveraged to be considered shorting.

Yes I pointed this out before. Apparently you still believe you are right. I once again invite you to look at your own wikipedia link http://en.wikipedia.org/wiki/Shorting and see the "share borrowing" and "share return" part in the schematic. (no hard feelings Adam, but you are wrong on this one).

adamstgBit

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Quote from: cypherdoc on January 30, 2013, 03:24:38 PM

Quote from: Spaceman_Spiff on January 30, 2013, 03:16:51 PM

Quote from: evolve on January 30, 2013, 12:57:03 PM

I keep hearing people talk about shorting bitcoin, but how are you doing it without bitcoinica or similar leveraged trading platform? Or are you just shorting through private btc loans? Or is the term "shorting" just being misused on this forum?

The "shorting" term is frequently misused on this forum, used instead of plain old "selling".

yeah, its annoying.

I thought we went over this, shorting doesn't need to be leveraged to be considered shorting.

cypherdoc

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Quote from: Spaceman_Spiff on January 30, 2013, 03:16:51 PM

Quote from: evolve on January 30, 2013, 12:57:03 PM

I keep hearing people talk about shorting bitcoin, but how are you doing it without bitcoinica or similar leveraged trading platform? Or are you just shorting through private btc loans? Or is the term "shorting" just being misused on this forum?

The "shorting" term is frequently misused on this forum, used instead of plain old "selling".

yeah, its annoying.

Spaceman_Spiff

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Quote from: evolve on January 30, 2013, 12:57:03 PM

I keep hearing people talk about shorting bitcoin, but how are you doing it without bitcoinica or similar leveraged trading platform? Or are you just shorting through private btc loans? Or is the term "shorting" just being misused on this forum?

The "shorting" term is frequently misused on this forum, used instead of plain old "selling".

creativex

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Activity: 434

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"High price" is a relative term. USDs are total crap so as they(and other fiats) continually devalue due to endless printing, BTC prices that seemed high previously will become bargains. The same is true for PM prices.

Topic: Buy, sell, or hold? - page 2. (Read 5483 times)