Brainlet her

brainlet her

what does it mean when a trader bets against a company?

They open a short position on their stock
IE Borrow a shit load of their stock
Sell right away
Buy back after stock tanks
Pay back lender
Keep the difference

Sell shares they don't Own

Replace them with a cheaper price.

Borrow stocks, sell, buy back cheaper, keep profits.

Another brainlet here. So they buy the originally borrowed stocks when the price tanks?

If so, what time window do you have in order to do this?

Does your brain just not work? Is there even one in there?

If the price starts going up, you're at some point forced to buy back at a loss to pay back the loan. Do some research, friend. You will find mostly scorn and ridicule here. Investopedia is a good resource.

If the stock keeps dropping in price you can buy back whenever you want.

No I get that. I was asking what's the time in which you need to pay the lender more specifically? So how long is this short supposed to last? Can it be hours, days or mere minutes?

You can also buy shares and put contracts to sell at the price before it tanks.

before it tanked

Lines are always too fucking long and no drive thru horrible service

>brainlet her

you can not say it better. anyway, in case nobody explained it to you yet, it means shorting: you borrow an asset, sell it and hope prices go down, so you can buy back at a lower price. then you give back the asset and keep the difference.

In shortest simplest way.
A signs a contract with B to get X shares of company Y.So A borrows Bs shares and sells them on market so now A has cash and commitment to hand over X shares there is nothing about value of these shares.
So if price goes down you need less money to get these shares back off the market and this is your profit but other way it goes against you and often for heavly shorted stocks increasing there are wawes of closed shorts that need to buy stock causing further price increase by additional demand for it.

Time and % loss before margin call depends on structure of your instrument and what kind market participant you are

How do you borrow stock?

Have you ever gambled before? It's that.

Thank you lots good user! Don't know why it took so long for me to get this, maybe language, but now it's crystal clear. Kudos.

SO when they borrow shares initially, company B doesn't care what the shares are worth in the deal? When A pays back the borrowed shares to B isn't B pissed that it has a bunch of useless shares?

some are insiders

that is illegal.

Yeah there's usually a comission for the lending party, but it's usually small because it's not a risky operation for them
>I own 1000 btc
>You own 100 btc, and have a strong feeling its value will drop
>You borrow my 1000, offering your own 100 as collateral
>You sell all 1100 btc. Let's say you sell them for 5k a piece. You got 5500k fiat now.
Then it can go two ways:
>A: btc goes up. You have 5500k usd and owe me 1000 btc. If btc goes above 5.500 each, you no longer own the funds to repay me. That's why you get liquidated at this price. All funds are used to repay your debt with me. I now own 1000btc, same as before, you now own nothing.
Or, hopefully,
>B: Btc goes down. We'd agreed on a time limit when you borrowed my btc, let's say a year. Within this year, you can buy back btc whenever to pay me back. Let's say thay after two months btc has crashed to 3k. You now buy back 1000btc for 3000k, pay me some commision (probably less than 3%, so let's say 30 btc) and keep the 2.49million for yourself.

About the useless shares thought, the thing is that it's a bet on both sides. When I lend you 1000 btc for a short position, I'm very aware that you're betting against the market. If I had also thought shit was going down, I wouldn't have lent you in the first place. I'd have sold aswell.