Naked short selling - cellar boxing


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Reveals the evil form of naked short selling known as cellar boxing.

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Naked short selling - cellar boxing

  1. 1. www.investing-performance.comNaked Short Selling -- Cellar Boxing
  2. 2. DisclaimerStock speculation is very risky and may not besuitable for youDo not trade with more than you can afford tolose.Seek professional investment advice.This is not investment advice.No warranties, you are on your own.
  3. 3. Short Selling Short selling --selling thestock first hoping that it willgo down and you can buy it cheaper Sell at $10, buy back at $2 = $8 profit
  4. 4. Naked Short SellingShort sellers have sold the stock and need to deliver stock to the buyer They borrow this stockIf a short does not borrow stock, he is “naked”
  5. 5. Predatory Short SellingCompanies with negative cash flow need to sell new stock to survivePredatory short sellers can drive the price down and stop the company from raising money
  6. 6. Predatory Naked Short SellingNaked short sellers can sell an unlimited amount of stock and will have huge profits if the stock is down
  7. 7. Taxing Short SellersWhen the short seller buys the stock back, he has recognized a profit and has to pay tax
  8. 8. Keeping the trade openIf the short seller keeps the trade open, the broker lets him use his profits, but the short pays no tax and can use all the profits
  9. 9. Cellar Boxing Thus, the short wants the stock to stay “in the cellar”He sells more stock to keep it down
  10. 10. The PatternThe cellar boxed stock may trade at zero bid, $0.0001offered – the minimum quote allowed – or at $0.0001 bid offered at $0.0002
  11. 11. Market Maker Profits If the market maker buys stock at $0.0001 from disheartened shareholderand sells at $0.0002, he has a 100% profit
  12. 12. Cellar BoxingAs cellar boxing is a form of predatory naked short selling and as the short wants the company to stay down for no good reason, cellar boxing is wrong
  13. 13. Learn More Buy “How the Shorts Raid Your Stock, Destroy Your Company and What to Do About It
  14. 14. Professional Traders Always Want to Learn More They know the value ofinformation if you want toswim with the Wall Street Sharks
  15. 15. Subscribed to my videos and blog free www. Investing- Performance. Com Go towww.
  16. 16. Get my books on Amazon.comHow to Find Hot Reverse Merger Penny Stocks How to Find a Home Run Stock
  17. 17. John LuxTrader, investment banker, former OTC market maker and attorney Lux.Investor@ Copyright ©John Lux 2011