Currently I'm in a play that will be giving out shares of another company as the dividend for the spin off. Shorts have borrowed over 50m shares on this play and the option chain is loaded before the distribution date. With this Friday being the last day to purchase shares to be eligible for the spin off I believe Shorts and MMs will through the kitchen sink at us so it doesn't create a MOASS. I've seen a lot of brokers state that if you short a stock on a company that has a spin off and is giving cash or shares for the dividend the shorts are the ones that have to pay for it. Has anyone been in a play that has been apart of a spin off like this and can give some insight on what do expect if shorts don't cover on distribution date. All the shares that will be distributed will be accounted for which is why I'm curious how HF that used naked and synthetic shares will go about this. One of the catalyst for the company is that it will be a tax free dividend on distribution. I also heard if shorts don't cover they forfeit the right for the tax free distribution. Just curious if anyone has been in a play like this and can give me any insight on what could play out.
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