When I go short on a stock,. That is Selling First, from where am I actually getting the shares to sell?

General
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First and foremost, you should be aware of settlement cycles. You are not required to have stocks to sell in the market because the expectation of the market is that when the buyer wants the stock, you would have completed your pay in. So, you have some time a day in best case to make up your mind on getting the stock either at a higher rate or a lower rate and pay in or go the standard defined route of shortfall.

Secondly, a typical short seller is neither interested in buying the stock at a higher price nor going in for a shortfall scenario. He is interested in making a profit from the market movement. This means, he is planning to square off the trade before he is asked to make the delivery. So, you are not worried about where the stock comes from, since you are not long enough in the market to go in for securities settlement. So, what remains then is only cash settlement.

2 Likes
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When you short, you wont actually have the shares (you are only entering into an agreement, that you are obliged to give the shares to the person whom to you sold).

So to give the shares to him, you have got say one day time, whithin this time if you buy back the shares from somebody else and settle your obligation, it is said you have closed your deal. Most people who short in intraday buy back the shares on same day and close their deal.

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Ahh I see… thank you KKR :slight_smile: