Mcsnacks H Tupack
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You have to remember these positions have interest rates on them. When interest rates outweigh the risk they are accepting it’s better to cover because they can get stuck with high interest rates and heavy losses if they cover combined. Especially if their leverage is running low because they lose that then they lose all their positions in the market.
Mike Hunt
OP
Mcsnacks H Tupack
:
Perhaps retail shorts covering is adequate surplus demand to move stock price? But I don’t see institutional shorts being forced to buy to cover on the 1-3 days the price spikes
Mcsnacks H Tupack
Mike Hunt
OP
:
These positions are all tied together for them. If they have a lot of short positions and the market increases it will put stress on what leverage they have. And they have to maintain their leverage if not the whole company can be bankrupted in a single day. One crack and it could be their downfall.
Mcsnacks H Tupack
Mcsnacks H Tupack
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Plus they hedge stocks that have options. So they can work it up and down. Sometimes them covering helps if they have call options.
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