An interesting article popped up this week regarding the outstanding short positions on Silverado’s stock. The article was carried by PRNewswire-FirstCall referring to Buyins.net who said:
“From November 2005 to October 2007 approximately 1.9 billion total aggregate shares of SLGLF have traded for a total dollar value of nearly $184 million. The total aggregate number of shares shorted in this time period is approximately 143.4 million shares. The SLGLF SqueezeTrigger price of $0.099 is the volume weighted average short price of all short selling in SLGLF.
The first of several short squeezes is expected to begin when shares of SLGLF close above $0.08, where approximately 12 million shares have been shorted”
We are not experts on the practice of short selling shares but it appears to us that short selling involves the need to buy the stock at a later date in order to close the trade. So, sooner or later these short positions have to be closed out which should have a positive effect on the stock price.
If they are correct in their assessment then any rise in the stock price will put pressure on the shorters to close their positions. Yesterday Silverado closed at $0.08 having traded above this level during the session. It appears to us that this is a knife-edge situation where a rally will force closure of the short positions and put more upward pressure on the stock price.
If you are familiar with this sort of practice and can add more light to this situation please send us your comments so that all of our readers can benefit from your insights.
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