2 Answers: Short Selling Stock to ZERO, What Happens?

Question

What happens when you short a stock and it eventually ends up going all the way to zero?

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Timmy 6 months 2 Answers 58 views 0

Answers ( 2 )

  1. You make the most money possible in that situation.

    While you need to close your position by Buying the stock, If trading has been suspended. You have to wait until it get de/listed to for the broker to close it off. If its still trading at 0, you put in a buy at .01 and see if someone will buy it so you can close it off.

  2. I don’t think it is easy for a ‘normal’ company’s stock to suddenly become zero.

    So, I assume it is a penny stock which is already going at a very low price and eventually become zero.

    I’d say that one should quickly buy back the stock (short covering) even before it hits $0.

    If you successfully shorted a penny stock at $2 and it falls to 20c, you would have made a substantial profit and should buy back quickly and not wait till it goes to $0 where it will be suspended and eventually be delisted.

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