Only for STOCK investors– part II..:)?
haha i put part II cuz i already asked more quetions, I’m a 20 year old guy, beginner with stocks , reading a lot and traning myself before invest real many, i’m learning how to use sell shorts.and have quetions about it.
if u sell short 739 stocks from CL (colgate-palmolive), but.. the next day it went up. obviously u are loosing money.
1, how long can u hold it? (so it can went down and recover ur money)
2. u must to ”BUY TO COVER” the shares that u sell short the day before?, i mean its an obligation?, what are other options?
3. when the shares went down and u gain money, why can’t u just sell them. or give then back to the company, without do ”buy to cover”, im confuse right here.
4- different one… FFH (Fairfax Financial Holdings). went up today 5.92. i bought from it 41 shares when it was at 1.62 (before going up)
but when i did it, it didnt show up in my positions. why that happened?, i mean the day wasn’t close at all, and FFH went up really fast. it just showed up in my ORDERS. but it wasnt trading.
* did I won if i bought it before it goes up but it didnt show up in my positions?, probably that will be trading tomorrow, but why tomorrow if bought it before the day close, it supposed to be trading in that right moment. or maybe will i see my earnings tomorrow?
just to let u know, im not investing real money yet. but i’m investing virtual money with differents simulations programs.maybe there is something wrong there. or maybe its me
thanks! 
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October 29th, 2010 at 5:01 pm
A1: you can hold it for as long as the broker lets you… i.e. until you ran out of "margin", so the broker have to do a margin call.
A2: you hold that until the broker wants you to put in enough money to cover the amount of margin you’re generating. The further it goes up, the more money you need to put in
A3: you CAN, but what if the shares don’t come down for a LONG time? or just don’t come down AT ALL? You willing to bet on that? Do you have the $$$ to cover the bet, basically?
A4: most likely, your order couldn’t be processed at your specified price level, esp. when it went up THAT fast.
October 29th, 2010 at 5:01 pm
You can continue to hold a short as long as you can cover a margin call (or preferably, prevent one).
If you short $10,000 USD of CL and the value of the short position falls to $4,500, you would likely receive a margin call of at least $500 (assuming a 50% margin requirement). If you add $500 to your account, your short position does not have to be covered.