This Little-Known Way to Profit From Short Sellers Is Worth Exploring
The rising stock market, and especially the explosive moves higher in some stocks, has prompted many institutional investors to look to short selling as a way to make money. Short sellers hope that the price of a stock will go down rather than up, as they borrow stock from shareholders and then sell it at current high prices. If the price drops, then they can repurchase the shares, return the stock to the original owner, and pocket the profits.
But there are a couple ways short sellers can lose money. One is obvious: If the stock price moves higher, then they'll have to pay more to replace the shares, taking extra money out of their own pockets. What's less well-known is that brokers can charge short sellers to borrow a stock that's particular popular as a short-sale candidate -- and increasingly, ordinary investors like you and me can get a chunk of that cash to keep for ourselves.
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Source Fool.com
