Re: Newbie Question- Shorting a stock
If a stock is shortable, it can be shorted on any old day.
Why would you want to short it specifically on the ex-day? I would think it would make more sense to short it the day
before it goes ex-div. Sure, you'll have to reimburse the lender for the dividend they forego - because it goes to the person you sold the borrowed stock to. But very often, a stock will drop on ex-div by more than the dividend amount, especially when it's on the slippery-dip already.
Why don't more traders do it?
Because there's no certainty that any stock will drop by more than the dividend amount. Which makes it a risky business - probably even riskier than shorting per se.
Have you ever thought about the magitude of risk?
If you go Long a stock and the worst happens, you can lose 100% of your investment.
If you short a stock today and it goes into a Trading Halt next day, announcing a major find or take-over bid at three-times today's price, you've lost twice your "investment", plus borrowing costs and brokerage on top.
PS: Ours crossed, Boggo.