I am sure Melvin didn’t have the majority of its assets tied up in short options of a single stock...
If they did they deserve to go out of business.
I’m sure the losses aren’t fun... but hardly should 1 stock dissolve a fund.
If they did they deserve to go out of business.
The danger of shorting a stock is that you can lose a lot more than you put in. If I borrow a stock at $20 to short it and it goes to $500 where I have to bail out, I've lost 25x my initial investment.