In the previous two installments of The Finance Professor, I covered the
|Returns of Long Buying vs. Short-Selling|
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- Short-selling must take place in a
- The short sale must be collateralized by the short sale proceeds plus 50% of the market value of the short sale. The short sale proceeds are posted as
collateral for the "stock borrow" (see "How Short Selling Works"). However, the 50% market value must be collateralized by cash or marginable securities.
- For a short sale that you have on or are considering, identify the short interest, short ratio and percentage of shares short.
- Observe a buy-in.
- Observe a short squeeze.