10 Things You MUST Know Before Shorting a Stock
Michael Shulman, September 9, 2009
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#2 Finding the Stock
You may want to short a stock that is hard to find. The process of finding shares is called a "locate." If your broker cannot find them, then you cannot short the stock.
Some stocks are hard to short because their shares are not easily available to borrow, which could happen for a variety of reasons. If you are finding it hard to locate the shares to conduct the transaction, it likely means that the stock is not held by a large number of individual shareholders (more on this in #3) or that there is a large short position in the stock already (more on this in #4). It is also virtually impossible to short a stock with a price under $5, and you cannot short a stock within a specified period from its IPO, depending on the exchange the stock trades on.
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