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That lender becomes the short seller when the broker is the short seller. When the broker performing as an choices market maker does a unadorned short sale, he needn’t borrow shares and as a substitute collects all the interest on the proceeds for himself. A collar is nothing greater than a simultaneous sale of an out-of-the-money call and the purchase of an OTM put with the identical expiration date.

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These cash transfers happen precisely the same way whether you do an everyday short sale or a naked brief sale. There are related future transfers in case you have bought calls or bought single stock futures. Naked shorting is the illegal apply of brief promoting shares that haven’t been affirmatively determined to exist.