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Thanks for the explanation! What happens when someone shorts a stock and then the company goes under? In this case of SVB, you short a stock, company gets taken by FDIC, trading is halted and I'm assuming the company will be sold/dissolved? So what happens with the shorts?

Edit: Answered already by someone in other thread https://news.ycombinator.com/item?id=35107107



At that point, the stock is worthless and the borrower doesn't have to return it. They keep all of the money from the initial sale.


It's a bit more complicated.

Companies are often in limbo for a long time before they officially go under.

The borrower has to keep paying borrow costs during that time. Which makes shorting companies that go down rather risky.




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