Cleaning Up - Short Selling Shares ????

[Gizmonster]

Am I missing something on short selling shares; or did ITV make a boo boo with the short selling on cleaning up tonight??

Apparently they went in with £6k, when the shares were £16.13 and they closed the short when the shares were £5.91.
In the programme, the account said £16 130 .... how is this even possible when shorting a share??
I was under the impression that shorting a share is VERY risky, as your maximum potential gain can be no greater than your initial investment; but your losses could be far greater .... so how could they have made more than £6k profit?? I worked it out at approx £3800 profit, so there should have been £9800 in the account .....

Anyone know anything about shorting shares, that I'm missing here??

[goodgoalie]

Exactly what I thought, Giz; but this was just the last of a mounting pyramid of unbelievable plotlines, and I only stayed with it to see how it was going to be resolved. Can home investors even 'short' shares in that way?
And the trading woman boss was working for the FCA? EH? When she hesitated when asked if there was anything else she wanted to report, I thought ' oh no, there not leaving this open for another series, are they?' I, for one, would not be watching.

[Gizmonster]

I only stuck with it because I'd seen so many episodes, I was curious as to how it ended. To be honest, I wish I'd never bothered :(

[goodgoalie]

I spent most of the time looking to see how they were avoiding showing the tattoo Sheridan Smith has had done on the back of her hand. What I daft thing for an actor to do!

[elliemay1]

I also think they will have another series as I expect she will eventually get back with her husband. The most annoying thing IMO is that her gambling addiction seems to be solved instantly. That doesn't happen in real life.

[-Talbot-]

They;re selling @ £16.13 and buying back @ back @ £5.91


Sounds about right...without doing the maths.

[ToraToraTora]

sounds about right, shorting works if you know the share will fall, they made £10.22 per share. You don't actually need any money at all but the site they used would demand a margin deposit so that's why they couldn't just sell a million shares and buy them back cheaper to satisfy what they sold.

[retrocop]

My wife and I started watching this from the start with interest.After episode 3 we both thought the plot was too ridiculous to be true. Tonight's ending was a disappointment and that was 6 hours out of my life wasted.
If there is a follow up series I won't bother.

[ToraToraTora]

to see this done properly watch the classic Trading Places.

[Bazile]

I will be watching whatever, just to see Sheridan Smith - she's gorgeous

[Gizmonster]

They went in with £6k and the way this works when shorting - you borrow the shares; sell them immediately; buy them back for a cheaper price and you keep the profit.

So in this example, they'd borrow 372 shares (372 x £16.13 = £6000.36)
Price dropped to £5.91 so to buy the 372 shares back would cost £2198.52)
They then give the 372 shares back and they're approx £3800 up.

[TonyV]

TTT Trading Places, one of my all time favourite films.

[Peter Pedant]

you are meant to borrow someone else shares
and sell a thousand at 16
so that is 16k
then you buy at 5/91 - which is six thou
and pocket the difference - ten thou
and give the shares back to the original owner

No I havent shorted
nor would I

[Patsy33]

I watched all episodes. If it had been anyone other than Sherridan Smith, I probably wouldn't have watched passed episode 3. If they do make another series, I won't be watching it.

[-Talbot-]

Price dropped to £5.91 so to buy the 372 shares back would cost £2198.52)

They could buy back more than 372 shares (that was the 16 quid price)

[Gizmonster]

//// They could buy back more than 372 shares (that was the 16 quid price) ////

.... yea they could, but shorting doesn't work like that. They borrowed 372 shares and immediately sold them for £16.13 per share. When the price dropped, they bought the 372 shares back for £5.91 leaving them approx £3800 in profit. They only bought 372 shares back, as that's what they needed to give back to the loaner.

[-Talbot-]

Did you see how they were shorting?

They may have been spread betting?

[Gizmonster]

They were investing in one company in particular, as they knew one of the top guys in the company was about to be arrested, so they were guessing that the share price in that particular company would drop after the news of his arrest was released.
By the very nature of short selling, you can't make more than your initial investment .... yet these somehow did ..... or at least ITV somehow managed it :)

[Gizmonster]

The more a share drops in price, the more you make when you short it - but the share price can only drop so far (worst case scenario = £zero)

Hypothetical scenario:
You want to short a share that's currently trading at £1.25 per share and you have £10 000 to invest.
You borrow 8000 shares and immediately sell them for £10 000.
The next day the company all but collapses and now trades at 1p per share. You buy the 8000 shares back, so you can give them back to the loaner, at a cost of £80 .... you're now £9920 up :)

[DarceyK123]

What annoyed me most is that Sam used Jess' 6k, they made 16k and Sam went and used it to pay off HER debt with the loan shark!

So Jess looses out and so does the poor lodger.

Too many untied ends, bet they were leaving it open for a second series.