HELP NEEDED: Regarding Short Selling

[theacolyte]

Dear All,

I know there are several threads here regarding Short Selling and Auction process.

What I want to know is this...

Today, I sold a scrip in BSE. I do not have delivery of the scrip. So basically, I have gone short on the scrip. It will go for auction that is for sure.

I want to know, what can I do to make sure that I make the least loss because of the auction on this scrip.

P.S.: The possibility for this scrip to go for MARKET AUCTION are very high.

Any help would be appreciated. I stand to lose a maximum of Rs. 34000 on this scrip because of the auction.

Thank You in Advance...

 

[AW10]

In auction, u may get very poor execution price. (generally it is poorer then the market price). Cause broker who is putting the auction has no interest in getting u best price.
Other party who is filling the auction also knows that..

sorry, I can't think of any preventive mechanism. Maybe someone else can give some pointers to handle such situation.

If it had been during market hours, then probably u could have opened bullish OPTION position (buy Calls or sell puts) to hedge your short stock position. But now it is too late.

Take it as a price paid for a learning from market and move on to next trade.

Happy Trading

 

[bunny]

I am not sure of this, but I have seen this advise being given to someone before.

Get hold of a friend/contact of yours who has delivery of the shares in required quantity(or partial). Request him to transfer the shares in a off-market transaction. He will need the "delivery instruction book" that is given while opening the account.

Do this as soon as possible to avoid the penalty.

 

[rajeshn2007]

May be you can post your query here:
http://www.traderji.com/equities/29292-stocks-keep-close-eye-chapter-ii.html

 

[anuragmunjal]

hi..
there are only two things u can do under present circumstances
1. if u can arrange the delivery get it sold in auction through some other broker at the time ur shares are getting auctioned.
2. if u cannot do that, buy the shares 2morrow 2 hedge urself and sell them at the time of auction. this way u would be paying just the auction premium,and would be saved from any adverse movement in the stock.

finally, if ur outlook on the stock is bearish, just leave it as it is. if the rate goes down, u may just escape by paying a small penalty.

regards

Anurag