Short Selling & Securities Lending
The mechanics of selling what you do not own — locating and borrowing stock, collateral and the rebate rate, daily financing, margin, recalls and buy-ins, squeezes, settlement fails, and the securities lending business sitting on the other side of every short.
Start here
What is the difference between owning a share and owing one?
Start the first lessonUnit 1 The Short Position
- What is the difference between owning a share and owing one?
- Whose shares are you selling when you short a stock?
- Why is a short seller's loss unbounded when a buyer's is not?
- What does a short position look like from open to close?
Practice Check · Unit 1 A short check · cannot be failed Start
Unit 2 The Borrow and Its Cost
- Who actually lends the shares, and what do they get for it?
- How does a share travel from a pension fund to a short seller?
- What is the rebate rate, and why is it the real price of a borrow?
- Why does one stock cost 0.3% to borrow and another 80%?
Practice Check · Unit 2 A short check · cannot be failed Start
Unit 3 Margin, Recalls and Squeezes
- Why is time the short seller's enemy?
- How does margin work on a short, and why does the requirement grow when you are wrong?
- What happens when the lender wants the shares back?
- How does a short squeeze actually feed on itself?
Practice Check · Unit 3 A short check · cannot be failed Start
Unit 4 The Lender's Side and the Bigger Picture
- What is naked shorting, and what is a fail-to-deliver?
- Who actually shorts, and why is most of it not a bet against a company?
- How does lending shares become a yield business, and how did it lose money in 2008?
- Short selling and securities lending — course checkpoint
Practice Check · Unit 4 A short check · cannot be failed Start
Last Course exam
One exam, the whole course Unlocks when you have read all 16 lessons
Passing it earns the course certificate.