If you want to know what stocks are getting shorted on the asx, these ones should help you.
Short sellers can create a short squeeze, which can make a make a stock price move in sudden spikes. It is good to know if a stock is being shorted to know what to expect and make your trading move with caution. short selling can affects market prices in many ways.
In recent times Gamestop had a short squeeze happen on its price , all originating from good intentions of users from reddit.
As of January 28, 2021, the all-time highest intraday stock price for GameStop was $483.00 (nearly 190 times the low of $2.57 reached 9 months earlier in April 2020). In pre-market trading hours the same day, it briefly hit over $500, up from $17.25 at the start of the month.
ASX.com.au holds a lot of data from the stock market in Australia as the transaction company for the Australian stock market. Below is the link to official data with website links also featuring short selling data based on this.
- ASX SHORTSELLING DATA – https://www.asx.com.au/data/shortsell.txt
- SHORTMAN – https://www.shortman.com.au/
- ASIC SHORT DATA – https://asic.gov.au/markets/short-selling/
What stocks get shorted?
There is no particular reason for a trader shorting a stock, however a trader can short a stock because he thinks the stock is overvalued and it will eventually fall in price making him a profit. A trader can also short a stock as he can see a stock price falling in a sector.. say for example the trader thinks iron ore prices are going to fall – he could short iron ore stocks like BHP and FMG.
Hedge funds use the short selling strategy a lot.
The asx shortselling data link shows, Daily Gross Short Sales reported for 30-Sep-2020, ASX Limited (ASX) & Chi-X Australia (CHI-X). The short website data is sourced from ASIC, and is the aggregate short positions for each stock.
What is shorting of stocks?
Short selling is remarkably like “buying stock and then selling the stock” except everything is exactly in reverse.
Shorting or short-selling can be defined as when you are selling an asset which you do not own at the time of selling. When shorting you first sell the asset and then buy it back at a later point of time.
Shorting is very useful for risk hedging purposes by traders or professional investors. For example, traders can use shorting to hedge their exposure whenever they feel that the price of an asset might go down in the future.
Short selling stocks is a strategy to use when you expect a security’s price will decline or if you think the stock is overpriced and so you can profit from a decline.
Short selling by Put Option
Another way to bet against a fall in share prices is to buy a put option (exchange traded options), which is a contract giving the holder the right, but not the obligation, to sell a specified amount of underlying stock at a specified price within a specified time. If the share price rises, the maximum loss is the premium paid for the contract.
Short Squeeze from short sell
A short squeeze happens when there are a number of short sellers of a stock and the stock price of that stocks starts to rise rather than drop because of a large trader taking buy positions possibly with good buy support from mum and dad investors too.
When this happens, the short sellers have an urgent need to buy the stock before the price increases more, but the effect of many open short positions looking to buy the same stock can actually have the effect of forcing the price even higher, thus the short sellers end up squeezing themselves.
Short selling and a Short squeeze has no time limit and depends on the pockets(funds) and the determination of the short sellers
Naked short selling
A naked short sale happens when the trader does shorting without borrowing the stock or arranging to borrow them. When the trader does not borrow the shares before the clearing period, he is unable to tender the shares to the buyer. The trade is then considered “failed to deliver” unless the trader either closes the position or borrows the stock. Naked short selling is illegal in most countries as it defies demand and supply rules.
Example of a short sell
Below is a short selling example
In normal trading, when you think a stock is going to go up, you buy at say $10 and then sell it later at $20 and make a $10 profit, right? . In short selling you do the opposite.
Say you short sold an company (Code XXX) , 100 shares, at $30.
You just sold/received $3,000. (100 shares x $30$).
That money you used to short-sell $3,000 you have in your account, is pretty much a loan. Instead of giving back $3,000 though, you have to give back the x number of shares you borrowed of the company you shorted.
That’s why you make money when prices for that company go down, and you shorted it’s shares.
Since all you have to do is buy those XXX -100 shares back, and you hypothetically bought those shares back at a lower price, say $20, you just made $10 per share ($30 -$20), or $1,000 ($30-$20) x 100 shares).
That’s also why you lose money when prices of the shorted company’s shares go up. You’re buying high, selling low. (it should be sell high, buy low to profit)
Short Selling Platforms /Brokers in Australia
Many popular trading platforms or brokers allow you to short sell stocks. In Australia you can short stocks with CFD traders like CMC markets and ig.com.au. Share brokers like Interactive brokers and Macquarie Prime offer shorting , however it is best to check with them how many stocks they have on their shorting list before you sign up.
CFD SHORT : You can go short on stocks, and you can also go short with CFDs. Going short is as easy as going long and although opening a CFD trade using a sell order might sound odd, it’s simply the equivalent of closing out your exposure to the market.
At CommSec, you are not able to sell shares that you do not own (short sell), however you may be able to establish a Short exposure to a stock by using Exchange Traded Options (ETOs). CommSec, among others, offers trading in ASX-listed exchange traded options and company options, and also offers the ability to trade US options.
You can short stocks on American platforms Robinhood and Etrade
A trader can short practically any asset or instrument – stocks, bonds, currencies, commodities, hybrid securities – however this article looks mainly on the aspect of short selling stocks.
Market manipulators often resort to illegal use of the short-selling method to deflate or push down prices of a company. This increases volatility poses a significant risk to markets that can be destabilised by huge short sells. The deliberate reduction in stock prices can also impact the company’s stock price and reduce its fund-raising capability.