If stocks go to zero, it's generally easy to get your hands on them, since people holding those shares will want to realize capital losses for tax purposes. Even if the stock is delisted from exchanges, brokerages routinely "buy" such shares from their clients, and I'm sure they would make the shares available to anyone wanting to close out a short position.

The Adani Group is massive, transnational, and has resource partnerships that cross continents with multiple joint companies and government relations.

There are relationships with Indian banking giant ICICI that are questionable and that also cross continents.

And more (it's big wall map tiny font material here).

Point being, shaking up the Adani Groups reputation has flow on effects that can be capitalised upon in many ways by shorting many other associated companies that may fail due to governments losing confidence to proceed on large projects, choosing other partners, etc.

If it is vaporised there is nothing really to return. I presume the contract details what happens then.

Since these guys are professional investors I assume they have access to more complex financial instruments they can use for a short position.

Maybe the company being vaporized is always a risk of shorting though, not a finance guy so I have no idea.

> the company being vaporized is always a risk of shorting

why is that a risk tho? If you shorted something, the money is already in your hands (aka, you "sell" short presumably, where you make a buck selling it now, and have to put up cash in the future to make the short whole).

If in the future, the company vaporized, then wouldn't you no longer owe the shorted stock?

No, you still owe the stock, but if trading is halted or the stock's registration is revoked, you cannot close the position. That means that (a) you still owe (daily!) stock borrow fees, and (b) you are still required to keep collateral posted against the shares with your broker (because the stock is not trading, the last posted price can be considerably above zero, so this can tie up a non-trivial amount of money).

In recent memory, this has happened to Longfin Corp. [0], Cynk Technologies [1], China Biotics [2], and surely others. If it does happen before you can close out a short position, that's bad. You can be stuck that way for years [3].

[0] https://www.sec.gov/enforce/information-longfin-investors [1] https://www.sec.gov/litigation/suspensions/2014/34-72594.pdf [2] https://www.sec.gov/litigation/opinions/2013/34-70800.pdf [3] https://www.barrons.com/articles/getting-caught-short-152306...

The issue is one of margin calling, and other institutions being unwilling to lend you infinite amounts of money.

Even if your investment strategy is sound, if in the short term, you on paper owe stock that is "worth" billions of dollars, the institutions that you are owning this paper billions of dollars too, could be unwilling to just trust that you will be able to pay it.

Thus, they bake in contractual provisions, such as margin calls, which require you to automatically sell/buy the stock back, if you ever reach certain loss limits. Thus, forcing you to accept the loss now, even if your long term strategy is hypothetically profitable.

Or, at least that is the simplest/most common ways that this work. I am sure that margin calls are more complicated than that, for large financial institutions.

But if the stock goes to zero and you are shorting it the trade was massively profitable. why would you then be at risk of a margin call?

If trading is halted or it's delisted, how can you prove the value of the stock is zero?

You don’t have to “prove” anything, you already got the money

You're still stuck paying borrow fees and posting collateral, potentially forever.

This is just wrong. If the stock is delisted you no longer are "borrowing" anything. There is nothing to borrow.

An unlisted stock is still a stock, you still have to have a borrow for it until the company is fully wound up (which could be years after being delisted).

> something that makes the actual public stocks untradable, how do you get out of a short position?

If it's illiquid - you don't.

Jeopardy with market crashes isn't that you'll be forced to sell your stocks low but that there will be no one to sell to and you'll sit on assets devaluing to zero or close.

If you buy a PUT option on a stock, at a low strike (far OTM) as the stock is tanking your PUT becomes more valuable and you can sell that.

If the stock is near zero and you have a contract to sell at $5 - that's profit.

But the put option will be hedged by options market makers taking a (net) short position in the stock.

So in so far as you have technical concerns about the risks of not getting completely paid on your short position if you have a borrow on a delisted bankrupt company whose shares are tied up in litigation, the market maker will have the same concerns about the same arcane risks and will pass the cost on to you in the form of a worse price on your option.

It might still be a better way for you to make this trade - the options trader has a whole settlement team to figure this out - but it's a service you're paying for.

It depends on the structure of the contract. There are a few famous cases of short positions being locked out of value for some arcane reasons.

https://www.bloomberg.com/opinion/articles/2018-04-11/-go-to...

It depends what you mean by "untradeable". If the market or regulator decides that the stock cannot be traded at all, you might end up paying a lot of money in fees for years even if you were right.

https://www.reuters.com/article/muddy-waters-asia-short-sell...

They could have used put options or Credit Default swaps.