LogFAQs > #951584567

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Topic	Stock Topic 24
Corrik7 03/11/21 12:54:17 AM #316:	CoolCly posted... What impact would returning borrowed shares have on the price? Just giving shares back to the borrower wouldn't be a trade that impacts price at all. It's just changing ownership of those shares That explanation had a lot to say about borrowing happening but then skipped right over the part where it explains how price is impacted and then concluded that it caused the price change. If you are talking about shorting, the problem with returning borrowed stock is that to short it you have sold your borrowed stock to someone else at the high rate. When it comes time to return the borrowed stock, you are supposed to buy a stock at the new lower price to return the stock you borrowed. Thus netting the money you gained by selling your borrowed stock at the higher price after you deduct the cost of the price of the stock you had to buy after to return it. If the stock goes up, you are buying at a higher price to return the borrowed stock. Thus, you lost money. --- Xbox Live User Name - Corrik PSN User Name - Corrik7 Currently playing: Control (X1) <cite>Corrik7 posted [p:951584567] in Stock Topi... [t:79332153]...</cite> <quote>CoolCly posted... </cite> <quote>What impact would returning borrowed shares have on the price? Just giving shares back to the borrower wouldn't be a trade that impacts price at all. It's just changing ownership of those shares That explanation had a lot to say about borrowing happening but then skipped right over the part where it explains how price is impacted and then concluded that it caused the price change.</quote>If you are talking about shorting, the problem with returning borrowed stock is that to short it you have sold your borrowed stock to someone else at the high rate. When it comes time to return the borrowed stock, you are supposed to buy a stock at the new lower price to return the stock you borrowed. Thus netting the money you gained by selling your borrowed stock at the higher price after you deduct the cost of the price of the stock you had to buy after to return it. If the stock goes up, you are buying at a higher price to return the borrowed stock. Thus, you lost money. --- Xbox Live User Name - Corrik PSN User Name - Corrik7 Currently playing: Control (X1)</quote> ... Copied to Clipboard!
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