Why This Matters
First, here’s the link (click).
The point here is that for every long position, there is a short position. The problem is that those investors (seems to be a Chinese producer) has had to post collateral in order to borrow, in order to take that position. Now, those short positions have lost a lot of money, and have to pay back the losses.
How? The have to either sell something they own, or they default. The parties that have lent the money, to start, are on the hook for those losses. Who are they? Well, there will also be banks and brokers, who are not going to tell you who they are.
This is uncommon, but not unparalleled. Here’s Gamestop, 10 months ago, and the birth of the term “meme stocks.” Wut, you thought that all of a sudden, a video game retailer instantly was worth 17 times more valuable (from 17/share to 340/share) in a single month?
