I wonder how many of our readers have ever taken a short position in a security, at least beyond any strategies designed to mitigate risk, such as the use of 'put' options. The inherent dangers of speculative shorts, where investors borrow shares and then sell them to bet on price falls, has been highlighted by the resurgence in the market value of Tesla (US:TSLA) over the past three months. The green-tech carmaker remains one of the most heavily shorted US stocks, but some funds have taken sizeable losses because once it became clear there was a sustained, albeit volatile, recovery under way, some felt compelled to cover their bearish positions (by buying Tesla shares) either out of trepidation, or because of leveraged margin requirements.
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