Is Naked short selling of stocks real or bs?

Question

Mostly this is done(supposedly)with sub-penny stocks.

But is this REAL....or nothing but a convenient excuse for struggling, and/or unscupulous companies with extreme bloated O/S.

Answer 1

Hey Phil, why do people answer at all, if they don't know?

Short selling completely legal. Most people don't realize there are two sides to every market. You can bet on the upside by going Long, or you can bet on the downside by going Short.

The actual mechanics of selling short involve some different rules, e.g., the Uptick Rule, and your broker has to borrow the shares from someone else so that you can sell them short, and you agree when selling short that you will at some point buy the shares back.

There are particular rules for short selling, but it is entirely viable, just not for all stocks. Penny stocks below $5 are not available.

Most people just aren't familiar with the terminology. You are probably long a car, and maybe a house. Your long position in the car and house is "covered" by insurance. Your long stock position is usually "naked," unless you sold a Call Option as insurance.

I'm not sure how you could sell short and be "covered." Generally, whether Long or Short, the "naked" part is implied, and not usually stated as being "naked short." There's no other way.

Um, just curious, Straturn, how can "most stocks go down more than they go up"? Wouldn't that be a negative price?

Answer 2

Yep, it's real alright, and quite profitable. Actually most stocks go down more than they go up, and it's a daily thing too. Most stocks can be shorted intraday, or longer term. Smart people hedge their money by betting against certain stocks, as many are overvalued and not at a proper price for many different reasons or news. Take a look at ACOR's recent run up. Or consider BAD market news or FEAR news. The market is a psychological entity in itself and reacts in its complexity with world events. This reaction or series of reactions trigger price fluctuations, and price fluctuations trigger buying and selling of stock - as most stocks are bought and sold through computer programs designed to do just that.

Shorting has to do with the float and supply and demand on a stock.

Anyways, if you want to see a list of stocks to SHORT, go to http://clearstation.etrade.com. It's free. They have what's called a Z list. The Z list is a list of stocks recommended to be "shorted" based on their technicals, not necessarily on their fundamentals.

And yes, you seem frustrated. Everything goes down. What you might want to consider is a stop loss.

I can tell ya more later, I have to go see my son's school project in the kitchen. He just built a "waterfall".

Answer 3

What do you mean by "Naked" short selling. Naked is usually referred to in the sale of "naked" put options which an ordinary person cannot do do to capital limitations.

Answer 4

I dont think its legal.

Answer 5

http://www.fool.com/news/commentary/2005/commentary05032407.htm?source=mppromo

It's real and common.