GM Stock Is Trading Above $1 Because of the Shorts

There are still many millions of shares short on GMGMQ.PK.

Today GMGMQ is trading at $1.16 in the pre market.

The current price of GMGMQ takes into account:

1. the cost to borrow GM stock to remain short;
2. the estimated but unknown rate of time decay on GMGMQ;
3. end value of GMGMQ, if any.

Think of an institution or hedge fund that owns 1 million shares of GM. They can sell it today for $1.16 or they can loan it to a short seller and get, let's say, 50 cents a month for the loan.

What would you do? It's like owning a slum with very high rent.

Disclosure: no positions

Comments

[fireball:]

i took a trade on gmgmq. a quick one. after the low. that reverse stock split haunted me until it was finished. later another sa poster told me it was 12 to 18 months away. it will have to get below the old low for me to try it again.

Jun 27 08:30 AM

[a. palmer jr.:]

I'd probably not have anything to do with GM stocks. It's a bad enough climate for good companies which I don't own much of either.

Jun 27 11:33 AM

[dw54:]

are short sellers required to cover position , if stock goes bankrupt and is delisted ? What is SEC rule , anybody know ?

Jun 29 11:25 AM

[dw54:]

are shorts required to cover a stock that goes bankrupt and is delisted ? anybody know SEC rule on this ?

Jun 29 11:28 AM