HOLLYWOOD STOCK EXCHANGE
THE ENTERTAINMENT MARKET
THE ENTERTAINMENT MARKET
Shorting and liabilities
When buying a stock you know the number that caps your risk. When you short, you don't.
Let's look at two Traders who took positions on AVATR - one buys and the other shorts, both at H$100. The Buyer knows that he is risking, at most, H$100 a share. If the film shows up in theaters and only James Cameron shows up to see it, it cashes out at H$0 and he loses his investment. But the potential gain is unlimited - and in this case the Trader would have made H$350 a share or so.
Now look at the reverse. The short seller's total possible gains are known, but the risk is not. At most the Trader can make H$100 per share if it cashes out at H$0. But - as in this case - the potential loss can be many times greater than the investment.
Now, on a financial Exchange using real money the Seller would be getting constant margin calls from their broker demanding collateral to maintain the short position. But we don't want to call people on the phone about owing money in a game, so we just settle up at delist, and yes you can have a negative cash out.
Summary - The only difference between HSX and a true financial Exchange here is the speed with which your account is debited.
negative cash out shouldnt be possible Feb 07, 15:27
no, this is not the real world Feb 08, 06:22
Shorting and liabilities Feb 08, 09:13
That's a very good explanation. You should put that in the FAQ or HELP. {nm} Feb 08, 16:49
Agreed! Well put! {nm} Feb 08, 22:31
Tell that to the credit card companies {nm} Feb 13, 09:18
Tell that to the credit card companies {nm} Feb 13, 09:18
