banning short-selling

but, seriously, I understand (sort of) some banning of naked short selling… but what´s wrong with standard short selling using borrowed shares? what is going to do everybody who is short stocks because they are hedging every put traded in the market during the last months? and those long-short funds? hope their official release tomorrow before market opens contains some answers

You aren’t allowed to open new shorts or extend open postions. So if you are currently hedged you’re ok.

yes, but what if delta increases? should I early terminate the trade because I no longer can hedge myself? tell the client who bought the put that everything is going to be terminated at market value (I guess) because of this…

Then you’re screwed. But I haven’t found anything against writing calls at the moment so I think ol’ Put-Call parity might get me through.

hala_madrid Wrote: ------------------------------------------------------- > yes, but what if delta increases? should I early > terminate the trade because I no longer can hedge > myself? tell the client who bought the put that > everything is going to be terminated at market > value (I guess) because of this… He’s going to tell you to get bent and he’s happy owning puts. Think what happens to skews when you can’t hedge yourself by getting short stock.

total ban on short-selling won’t happen. at worst the gov’t would only temporarily allow a ban. i think we’ll see enforcement of the naked short selling rules and probably a reinstitution of the uptick rule.

iamemmittsmith Wrote: ------------------------------------------------------- > total ban on short-selling won’t happen. at worst > the gov’t would only temporarily allow a ban. i > think we’ll see enforcement of the naked short > selling rules and probably a reinstitution of the > uptick rule. All would be good. Temporary short ban on financials. Uptick rule, no naked shorts. Thumbs up.

If you haven’t taken out your copy of Kindleberger’s “Manias, Panics, and Crashes: A History of Financial Crises”, now would be a good time. In it, one of the remedies to stop a panic is to take your ball and go home. Basically, you stop trading by shutting down the market mechanism, whatever that may be. It could mean closing the exchange, implementing curbs, or breakers. History is full of examples of this kind of controlled interference on the part of governments and regulators. We should have seen this coming, I mean with that stupid no-shorting list that came out previously, the writing was on the wall. At the end of the day I doubt this will work.

Will option market makers be restricted as well? If not, there’s no point in this, other than a little vote currying. Correct me if I’m wrong, but… Bears will now just buy puts rather than naked short. The market makers who sell the puts will hedge their positions by shorting the shares. Unless of course the market makers are restricted from shorting. At which point we no longer have fully functional markets.

Uptick= Fine No naked shorts = Good No short selling at all = as manipulative as naked shorting Good work politicians. Start an unsustainable bull rally. I’ll be setting up my puts for the impending pullback.

I always thought America was the home of free markets, I’m watching the news with the idea that I may wake up all of a sudden. The IB who screwed up are going bankrupt, that’s sad but there will be new ones in the market. It’s not the end of the world.

America is the home of “free” market as long as the people with money and power can still freely make money from everybody else freely. :wink: