I'll offer my understanding...I believe - though I could be wrong - that this would be at present volumes, the 'days' required to close the position out.
e.g. If there are 100 million shares that are being shorted, and turnover is 20 million a day, it would take five days of trading to clear their positions.
My stab aside, let's just say that an announcement hits, it's positive, the market loves it and there's a BIG uptake in volume traded; that figure may change drastically, but the volume and the price at which you have to buy back the shares to give them back to the original owner (who lent them to you to short) - are to me, two sides of the same coin and are interrelated. Volume is created by a demand to buy or sell.
I just can't see how the price is going to oscillate around a set figure (e.g. 60c) in sufficient volumes (to close out a position) when there's nothing in the market to shift it (in terms of an announcement, ignoring longs / shorts and general market sentiment around Russia and inflation for the moment); it's just not that big enough to be popular for people to trade large volumes around differences of a few cents (e.g. your BHPs or STW).
Average market volume (at least, at this size of market cap) isn't going to be wide enough to absorb all of these short positions; if the average volume is 5 million shares per day (as per the ASX and the picture above) and we have 102 million reported shorts, I don't know how they arrive at 12 days; surely 20 ?
If we get a significant enough announcement; for example - a takeover or unsolicited bid - that valued the company at $X.YZ, then straight away, you would see a move in the price as the shorts try to close their position; unfortunately, they are not wide enough to accommodate everyone and so, there is a rate determining step / bottleneck there, as there can only be a certain volume of people who take the other side of the trade and sell to them. If they are unable to buy (to return the shares they borrowed), then even with the best intentions of buying back in, it could run away from them over the course of a number of days.
(I hope so. I really do).
I'm way out of my depth on this topic, but i have been trying to understand whats going on. I added up the trades in the last 2 MQG holding BET announcements.
13,737,751 : On market purchase
975,307 : On market sale
1,676,754 : Stock - Purchase
50,331,125 : Stock - Sale
56,097,986 : Borrow delivery
501,000 : Bortow return
60,000,001 : Derivative Sale
This doesn't add up to the 100million shares held by mqg as stated on the last announcement- which means I'm missing something.
It does however give an incite into what theyre doing previous to Feb 15.
What Im thinking is either:
A) does the % shorted (found on shortman) equal to the amount of shares borrowed,
or is it
B) the amount of borrowed shares sold - need to be bought back.
The 2 amounts in either A or B will be different.
The point im tryimg to make is that there may not be 102 million shares that need to be bought back - as you were saying -> thats alot of days buying - would be extraordinary movement to get done quickly.
