First of all, a short seller DOES NOT borrow stock from either the broker or any other lender, it is the brokerage firms responsibiity to borrow the stock. Firms borrow stock so that they do not have an open "fail" in delivering the stock sold to the buyer.
It all depends on the market and the stock you are selling as to how long you can keep the short position open
If the stock is a popular stock then you can keep the short position open for a long time.
If the price of the stock goes higher, you will be asked to deposit additional money in your account, if you fail to do so then the brokerage firm will cover the short for you
If the stock price drops below $5 a share, the lender may need to have the stock back and once again your firm will force you to cover
If the stock bellies up, then you can keep the short open for a long period of time
Once again, the short seller DOES NOT borrows the stock, their brokerage firm does and when you cover the short position, the short seller DOES NOT return the stock to the lender their brokerage firm returns the stock
I'm still short Braniff Airlines from the 1980's...
"First of all, a short seller DOES NOT borrow stock from either the broker or any other lender, it is the brokerage firms responsibiity to borrow the stock."
This is complete nonsense.The brokerage firm has no responsibility here at all. If you want to short a stock, you ask your broker if he has it or can get it for you to borrow and short. He says yes or no. He sells the stock for you and takes care of delivery. But you have absolutely borrowed the stock.
I can tell you that I have seen my Treasury guys spend hours and hours on the phone looking for good borrow and there is never any doubt about who is doing the borrowing...
Covering a short has no time-limit; its all your choice.
But, a person asking this question shouldn't be shorting stocks at this point in their trading career. Depending on the days-to-cover, you could get burned badly.
when i short stocks, or borrow the stocks from broker, how long of a time period do i get b4 i have to actually buy the stock and return it to the brokerage account??
example: if i shorted fb today, till what time frame should i need to return the stock (buy to cover)?? 3 months or 6 months.... how does this work....
thank u
