I am searching for exact accounting example of Stock right position in Portfolio when someone is short sell.

Searched a lot over Google, contacted local Brokers as well..Didn't get any response.

Please help to understand the secanrio with examples.



If you shortsell a stock, then you are short all the rights (no pun intended) that a stockholder has including dividends, spinoff shares, rights, warrants, whatever. You will owe the rights as well.

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  • $\begingroup$ Agreed..let me change the question to...Can I short sell Rights? $\endgroup$ – Atul Agarawal Apr 19 '17 at 15:22
  • $\begingroup$ yes - the rights are tradable instruments for a period of time and can be shorted if you can secure the borrow. $\endgroup$ – FinanceGuyThatCantCode Apr 19 '17 at 15:24
  • $\begingroup$ So the position in Portfolio can be negative for a time being..once covered all equal. $\endgroup$ – Atul Agarawal Apr 19 '17 at 15:25
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    $\begingroup$ yup. Also imagine shortselling stock X which spins off stock Y. after the spinoff, you are still short the residual of stock X and short the appropriate units of stock Y. TO close your position, you need to buy back both. The rights issue is similar to this situation. $\endgroup$ – FinanceGuyThatCantCode Apr 19 '17 at 15:27

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