Short Sell

[boosami]

I know short selling isn't a great idea, and I don't do it myself, but I have a question about it. What happens if you short a stock and then they go under and the common stock is wiped out? Since there's no stock to buy to replace your borrowed shares, are you off scott free?

[simpletron]

I believe that once the shares are delisted, that you don't owe the lender of the shares anything. but if the company didn't liquidated you may have to go into the secondary market of pink slips or OTCBB, but I doubt it. and in the rare event that shareholders get money from the liquidation, you probably owe the lender that money similar to how you owe dividends to the lender.

[Broken Arrow]

You're going to like this.

Basically what simpletron said.

[boosami]

Interesting. Thanks for the answers.

[Slug]

You could always buy a put option to limit the risk if the stock takes off too.

[conancare]

hi boosami,
I agree with Slug's comment. One thing you should remember that Short Selling is a gambles so losses can be infinite, it involves borrowed money, squeezing shorts can wring the profit out of your investment and it all about one's fortune in this business.

Regards
Conan