Others   

What is CDP action for short sell

Can anyone explain this:

I wrongly keyed in to sell 1 lot Riverstone at 36 cts without script.  CDP bought in for me on T+4 on 4th June at 42.58 cts.  The highest price done on 4th June is 35.5 cts and the highest price on the previous trading day (Friday) was also around there.

 

Not true, sometimes if the price goes up a little and you buy back, you may be on the winning side, if many people followed you and short sell, then when buying in takes place, the price could rise a lot. So on the day when buying in takes place, you may consider selling the shares you bought, i.e contra.

If the price goes down and you don't buy back, you may also be winning as the price may just keep falling till buying in takes place. In this case, you could win even by not buying back the shares.

So it depends on which direction you expect the stock to move. Hope this helps.

 

Hi Terencefok,

   From what u said,

If i shorted at $0.10, then buy back say at $0.07 the next day if the price drop. On the day CDF buy in for me say, $ 0.09 (2 bid up if market price at $0.08). In this way, i'll still make a profit right?

What if the market price raise?
From the above method, say i'll buy at $0.11 the next day if the price rise. On the day CDF buy in for me say, $0.12 (2 bid up if market price at $0.11). In this way, i'll make a lost right?

So does it mean that hedging is only used if the price drop?

 

 

If you short sell on whichever day, and the next day if the stock goes down by say more than 2 bids from the price you shorted at, you can buy back first. Then on the day when they buy in for you, the price will go up because of the 2 bids rule, so when the price goes up, then you sell off the shares that you buy after shorting. This is called hedging.

 

Instead of shorting... try using CFD instead. 

 

ya, agree with u joey. Hedging is not a sure thing cos no one can predict accurately the movement of stock.

 

well, u never know until the last moment. 

alternative, some may ask u to do hedging.. which again really depends on the movement of the stock.

 

Tks again. I've checked my security co., they told me that CDP will buy back on T+4 morning after 1115hrs at T+3 closing price or the market price at that time whichever higher and plus 2 bids :((( I'm so very unfortunate making this costly mistake of wrong keying. 

 

erm, paiseh for the confusion caused.

i forgot that he already short sell on fri.

what i thought was that he shorted today, then can cover by buying back today. 

 

The answer is NO. If u short sell, u have to buy back on the same day.

 

tks u everybody for the info. Can I buy back before due date like what j3r0m3 said???

 

ya, just note that there is a penalty of 2 bid


i.e. taking gemTV as an example, if u short at 0.7 last friday, and thursday before noon price is 0.68, CDP will charge u 0.69 (assume per bid is 0.05) 

so u compare 0.69 with the closing price on wed 

 

From CDP website FAQ:

If an investor does not have the required shares in his account on the due date (the third market day following the trade day), CDP will buy-in shares on the market to satisfy the delivery obligation.

Buying-in starts the day after the due date, and will start at two minimum bids above the closing price of the previous day, the current last done price or the current bid, whichever is the highest.

The investor will pay the difference between his selling price and the buy-in price, including brokerage and other costs.

 

 

you can also close your position by buying back before hand right?

 

Tks Joey. Yes, I typed wrongly last Fri and ended a short sell. So, CDP will buy back on either Wed closing price or Thur before noon whichever price is higher?

 

CDP will but back on the 4th day (i.e. T+3).

 

the price u pay will either be the closing price on the 3rd day or whatever the price CDP buy (around 1100hrs or later), on the 4th day (whichever is higher)

 

so if u short on last friday, your price will either be the closing price on Wed or Thurs morning (whichever is higher)

 

Hi,

I made a mistake in my trading and now ended up with a position of short sell :((( Can someone pls enlighten me what will cdp do to me? Many thanks.