What happens if you're short a stock and it goes to zero?

Like if you shorted LEH a few weeks ago. Does your position expire and you lose all your money? Do you get automatically cashed out at whatever price it was delisted at?

 

you win the game and its game over!!

horaaay

 

you say to yourself old chap, well done!

 

ding ding ding you get an extra ball

 

You receive a congratulatory telegram from the Queen.

 

That's when you really bitch about commission slippage.

 

What happens?

You wished that you bet the entire farm, your folk's farm, the neighbors farm, and put everything you had into the trade.

 

I was told once that you're not responsible for capital gains taxes as you never actually covered the position... not sure if that's true, but it does have some logic behind it.

 

q12 is right.....you never "closed" the position.....
no tax on gains.

 

wow, not one response related to te question.

the closest i got was riding one down from the late teens to about 20-30 cents. it stopped trading not because it went out of business, but for some reason i cant recall. i made the entire profit.