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Originally Posted by ME_Andy
That makes sense. Thanks.
Again, 260% of float was short. What happens when it's time to replace the borrowed shares and there just aren't enough to go around? How is that possible?
(Assuming the contracts all have the same end date)
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The contracts can't have the same end date. You can only loan stock in the window that you own it. Loaning it outside that window is illegal.
It can all fall apart if people in the chain can't afford to buy back the stock and default. Say if the stock you bought and shorted at $20 suddenly jumps to $450 a share in a week.