[quote=Colombo]There is no “Ban” on short selling as long as the underlying options market remains viable.
You want proof? OK, here goes. Synthetic stock ( a position which mirrors the profit-loss curve of the underlying security) is constructed by 1] purchasing an at-the-money call and 2]selling an at-the-money put on the stock in question.
If you can create a synthetic LONG position you can just as easily create a synthetic SHORT position by reversing the above trade, i.e., 1]purchase an at-the-money put and 2]sell an at-the money call on the same security.
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I suppose that’s true for the small potato stock market player (except then you have to deal with the variability of option price premiums and expiration dates.) But assuming the small potato players aren’t the market movers, is this even feasible for say a hedge fund?
In those cases, it’s not just a few hundred puts and calls. Would a hedge fund be able to find a market participant willing to reciprocate the transaction and find someone willing to sell all those puts?
