I ve a really stupid question. If a trader, investor, fund manager etc is not allowed to invest long using the money of short positions (eg just leave the cash unused), what s the name or buzzword for that?

the cash is posted as collateral against the short

QuoteOriginally posted by: pdaley2the cash is posted as collateral against the shortyes this was what i asked. I was just ask myself if there is an eye catching word for that.

If a trader, investor, fund manager etc is not allowed to invest long using the money of short positions (eg just leave the cash unused), what s the name or buzzword for that?I do not believe the cash is "unused" as such, but is held by the lender of the securities as collateral against the securities borrowed by the trader so that they could effect a short sale. The flipside of the coin is borrowing money from a bank to buy securities. The bank will typically hold the securities as collateral until the loan is repaid.Typically a securities lender may require an extra margin, or "haircut" above the value of the securities lent or repo'd ie you borrow 100k worth of securities, sell them & receive 100k cash. The security lender will typically hold that 100k as collateral, and often require an additional 5k "haircut" to ensure adequate collateral against the securities loan. If the value of the securities were to rise, the short seller is typically required to top up the collateral = market value of securities borrowed.

Thank you, pdaley and vega! "haircut" sounds good.

Try "margin", too, particularly if with exchange-traded instruments.

to be precise (and isn't this website all about precision) the haircut is not the cash you receive from doing the short. the haircut is the amount above and beyond the cash you receive from the short that you have to post as additional collateral or margin. Vegawizard has a good example. if you use haircut to mean the sum of the two you will sound more like norm crosby than an experienced trader with a good set of buzzwords.