Naked shorts are merely a trade where the underlying commodity (say
silver) is not delivered or covered during the trade operation.
Essentially, the trader is merely selling (say silver) short to a
hypothetical buyer who does not desire to own any silver and has no
intention of receiving any silver to cover the transaction. The trade is
basically a ‘phantom’ trade which occurs electronically on one’s
computer but with no real person’s involved. I call this a ‘phantom’
transaction and others call this a ‘paper’ trade. In reality, however,
there is no ‘paper’ being traded (between a seller and buyer)…all is
electronic and within the computer screen (within cyberspace). We should
really call this an ‘imaginary’ transaction between ‘phantom’ and/or
‘virtual’ traders. Does this strategy have anything to do with
Capitalism or helping our economy? I don’t think so!