Hi folks,

Been a casual stock trader for 10+ years (buy and pray), about a year ago started a more disciplined approach in evolving and adopting a strategy that works for me plus implementing proper account/risk management.

Amazing how little I knew before, and how little I still know now. Still after lots of reading, paper accounts, backtesting etc. started trading real funds in Sept, going well but it will be a long evolving process.

Limiting myself to equities only for the sake of simplicity will likely evolve to currencies in a year or so.

Great to see the depth of info and maturity in this site!

Quick question please: when holding a short position what happens if the company goes under?

Thanks in advance,

Ralph

Then you're rich!
There are few famous examples with LEH bankrupt.

sam028 

Then you're rich! There are few famous examples with LEH bankrupt.

Ok, so the one with the liability in that case is the one that loaned the shares, not the one with the short position? Buy back at $0?

RalphQ,

I am a new NexusFi (formerly BMT) member as of a few minutes ago. I saw your question about shorting a stock that goes bankrupt. In summary, you have hit the jackpot.

If the company goes under before you cover your short, you will probably have to be patient as the courts liquidate the company to pay off the investors. When the court declares the bankruptcy, it cancels any shares still trading and the exchange delists the stock if it hasn't already done so. The stock is no more -- it has ceased to exist.

Hope this helps!

welcome to the foro!