Welcome to GuruFocus Investment Space.

Please Join Us to share your investment ideas with more than 100,000 GuruFocus users.

Join      Log in

investmentcontrarians Blog

investmentcontrarians's Space » All Blogs » View Blog

Why Short Selling Can Be Viewed as Bullish

290 views  2013-04-20 01:57   Tagsdifference  blank  selling  between  initial 
Read More : http://www.investmentcontrarians.com/stock-market/why-short-selling-can-be-viewed-as-bullish/1868/

Traders bearish on stocks often employ a short selling strategy and hope the stock subsequently declines in value, thereby profiting off of the difference between the initial shorted price and the lower price at which the short trader hopefully buys back the stock.

While some argue that stocks with large short positions are bearish, I would counter that by saying heavy short selling means there’s an opportunity to make money on the stock.

When a shorted stock with heavy short selling begins to rise in value, you will likely see a big influx of short sellers moving back into the market and buying back the shorted stock to replace the initial position. If enough short sellers do this, a short squeeze would likely materialize, helping to drive up the price of the stock in the market.


Comments Comments (0 )

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)