Short Selling Say $A shares are selling at $100, but I think they’re overpriced. So I borrow 10 shares, pay my brokerage interest and post some collateral. I then sell the shares for $1,000.
Whoever buys my shares has no idea that I do not own them. In a naked short, I do not actually borrow or ensure that the security can be borrowed within the standard 3-day settlement period....