Comment on Open thread, Aug. 10 - Aug. 16, 2015

Fri, 14 Aug 2015 14:29:16 GMT

Maybe if you have the right connections, and the broker really trust you.

It doesn't have anything to do with connections or broker trust. It's standard operating practice for all broker clients.

The issue is suppose you short a stock, the price goes up and you can't cover it.

If the price goes sufficiently up, you get a margin call. If you can't meet it, the broker buys the stock to cover using the money in your account without waiting for your consent. The broker has some risk if the stock gaps (that is, the price moves discontinuously, it jumps directly from, say, $20 to $40), but that's part of the risk the broker normally takes.

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