/--/ If they want to 'unshort' then they have to buy the shares back at the current market price.
Are you sure? I don't know, but I am not willing to accept that at face value, even if there are "tax consequences" and even if brokers or money people have specific regulations...again, I don't know, but I think that all trades (covering shorts would be a buy I guess) get recorded - right?
A very long time ago I to worked at an investment / stock trading firm to get the IT part going so I do know a little bit about it. If you sell short you are selling the shares just as if you own the shares. In the background you 'borrow' the shares from an entity who actually owns those shares. At some point that entity will want the shares back which forces the short seller to buy the shares at the market price. There is more information here:
https://www.investopedia.com/terms/s/shortcovering.asp
Yes, I think I have an idea of what shorting a stock is. My question was specifically in reference to this part of your quote "at the current market price" as I hoped was clear by the thread that I linked. I don't think you answered that question nor did the link that you posted. It looks to me like I could, in theory and in practice, sell you 100 shares of Gamestop for $1, regardless of the current market price. I don't see any law preventing me from doing that although it would pretty much constitute a bailout of sorts. Not saying this has, or will, happen, I am raising the question.
Additionally, I could, conceivably, keep my short position for a very long time as long as there was no margin call and I kept paying interest on the loan. Again, this would sound more like a bailout as margin requirements are set with a brokerage account - at least for the smaller guy, but what about a margin call that would doom a large fund - that is a relevant question in my view.
What changed in the short time that buying, not selling, was halted at numerous brokerage firms? Was there an infusion of investor cash that changed RobinHood's mind about allowing buying; did they meet those requirements that quickly- the requirements that the CEO was going on about? Or was their decision to briefly not allow buying out of "an abundance of caution"? Ameritrade's decision was "to mitigate risk for our clients and our company" - which is it primarily?
The Reddit group WallStreetBets has spiked from under 1 million to over 5 million members in a CoVid year. The story is on the front page of most US "papers" today and the story is not over. This is something that sounds to me like it will demand answers to a lot of questions.
I'm really not trying to to argue about it, but I do have investment experience and those questions come to mind although I will plainly admit that I am no expert. Still, when those shorts no longer exist, you don't have to be a stock expert to speculate on what happens to the price.