Austin Private Wealth LLC shorted 12,000,000 shares of $DJT on 7/12/24.
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Austin Private Health may not be so wealthy now that they have to purchase those shares at a higher price in order to return them to their owner(s). It serves them right for betting against PDJT. For those who may not know:
Short selling occurs when an investor borrows a security and sells it on the open market, planning to repurchase it later for less money. Short sellers bet on and profit from a drop in a security’s price. Short selling has a high risk/reward ratio, offering big profits, but losses can mount quickly and may result in margin calls (request for additional funds in the account).
Don’t “Puts” work a bit differently?
Not exactly right - these were Put contracts which you pay for up front and not short the stock where you have to buy back the stock to close.
It would still be a loss, but unlike a short it is limited to your contract price instead of potentially infinite loss on a short. Plus the contracts are good until their expiration date so while still taking a loss, the value of the contract just went down and has since rebounded a bit - so unless they used margin to buy the contracts and were forced to cover that margin then they are likely only down about 50% of their contract price which is much much less than just buying/shorting the stock.
“Short selling occurs when an investor borrows a security and sells it on the open market, planning to repurchase it later for less money.”
There is a oft times used phrase from a savvy investor which is never quoted fully (just like DJT stating: ‘peacefully and patriotically’ is often not quoted).
The full quote:
“The sky is falling. Sell sky”
- C Little
Leaving out the last two words changes the meaning quite a lot...
Austin Private Health may not be so wealthy now that they have to purchase those shares at a higher price in order to return them to their owner(s). It serves them right for betting against PDJT. For those who may not know:
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what you’re describing is a “short squeeze”
if austin has to cover their short stock borrowings at a higher price, it may drive the price even higher especially if there are no willing sellers of $DJT shares.
if austin illegally sold $DJT “naked” without having borrowed the 12mm shares sold short it could compound the risks to covering austin’s short position at any price and drive the share price even higher
PS: soroz has made a multi billion dollar career out of manipulating markets by short selling. iirc, one of his early “scalps” was destroying the british pound
how long can they hold the short position before they have to cover ?
ah...i see. there is a contract end date.
nice explanation here.
https://www.nerdwallet.com/article/investing/put-options