$SPDR S&P Retail ETF (XRT.US)$in the event the stars & moon lined up & drove a 15-20% spike up would shorts get regular margin calls & if so could they buy SPY to “cover” their nakedness?? Because with the limited shares in ETF & since it TRACKS SPY massive naked short interest couldnt really force a squeeze on a track ETF, right? or… huh. Allowing naked shorts on a tracking ETF seems wrong. Any “experts” out there wanna Weigh Way in!??
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MrNastyPaws OKMoo
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OK, so I’m gonna answer my own question. I decided to ask ChatGPT and this is the answer and it makes perfect sense. An ETF (Exchange-Traded Fund) like XRT, which tracks the S&P 500 or other index baskets, is less likely to experience a classic short squeeze compared to an individual stock. Here’s why: 1. Diversified Basket: ETFs represent a collection of stocks rather than a single stock. For an ETF to experience a short squeeze, all or a significant portion of the underlying stocks would need to face the same upward pressure from short interest. For example, in the case of XRT, it tracks the S&P 500 Retail Index, so the squeeze would need to affect the majority of its holdings, which is highly unlikely. 2. Creation and Redemption Mechanism: ETFs have an open-ended structure, meaning that new shares can be created or redeemed as needed by authorized participants (typically large financial institutions). This allows the ETF to adjust to market demand and keeps the price close to the net asset value (NAV) of the underlying securities. If a short squeeze were to occur, new shares could be created to meet demand, making it hard for a supply squeeze to impact the ETF’s price significantly. 3. Tracking an Index: Since XRT tracks the S&P 500, its price moves are designed to mirror the index. For an ETF like this to squeeze, the entire S&P 500 would need to experience an immense rally caused by the short covering of many or all of its constituent companies, which is improbable due to the diversified nature of the index. 4. Naked Short Selling and Market Mechanics: Naked short selling, while illegal in most regulated markets, refers to selling shares that have not been borrowed or located. In ETFs, the ability to create new shares if demand increases makes it less likely that naked short selling would lead to a squeeze. There’s simply more liquidity available to prevent the scarcity of shares that typically drives a short squeeze.
More and more friends around me are buying$Invesco QQQ Trust (QQQ.US)$. A friend has always lamented that they should have bought it sooner, not counting dividends. The coupon price alone has gone up quite a bit, and they don't know what the heck it would be to buy a-shares. What is the overall pattern of the US stock bull market over the past ten years? People often ask me about my experience in investing in US stocks. I...
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Ishah
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Well, due to the fact that a man who are married will increased their income by 4 + folds, I would say that the woman has a right to claim her husband's wealth. Even Jeff Bezos, he accredited his success to his exwife. A billionaire status is not a one man project. All the billionaires are or were married when the work was put in to make all their money. Do you know of any single men who have been single all their lives who have billions of dollars? I can't recall. Similar to a wife who is your mother, Elon Musk and Maye Musk, they operate as husband and wife... now that marriage brings the downfall of companies and legacies.
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Any “experts” out there wanna Weigh Way in!??
What is the overall pattern of the US stock bull market over the past ten years?
People often ask me about my experience in investing in US stocks. I...
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