Talk of The Villages Florida - View Single Post - Does this mark Peak Stupidity?
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Old 12-23-2021, 09:51 AM
tvbound tvbound is offline
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It's obvious that a lot of the hate and vitriol toward Musk, is in large part driven by those who have lost a whole lot of money shorting his stocks. The ultimate irony being, that to cover the shorts when the margin is called, more stocks have to be purchased therefore driving the stock prices up even more - increasing losses. As noted below, when just purchasing a stock the most you can lose is the price paid for the stock. When shorting, you can lose a whole lot more than just the original opening position/cost of the stock(s). THAT can leave a large mark.

Short Selling Definition: What Is Shorting Stocks?

" Selling short can be costly if the seller guesses wrong about the price movement. A trader who has bought stock can only lose 100% of their outlay if the stock moves to zero.

However, a trader who has shorted stock can lose much more than 100% of their original investment. The risk comes because there is no ceiling for a stock’s price, it can rise "to infinity and beyond"—to coin a phrase from another comic character, Buzz Lightyear. Also, while the stocks were held, the trader had to fund the margin account. Even if all goes well, traders have to figure in the cost of the margin interest when calculating their profits."