Remember that trader who appealed to the public for assistance after his short sale turned into a -$106K loss overnight? If you don’t then you could read the full story here.
The trader had bet that KaloBios (KBIO) would decline in price instead of rise. Unfortunately, the opposite occurred, putting the trader in the unlikely position of going from a cash positive brokerage account to a deficit of more than -$100,000.
Irony of all ironies, KaloBios Pharmaceuticals ends up filing bankruptcy on December 30, 2015 after Chief Executive Martin Shkreli was arrested for securities fraud. Below is the price history of KBIO from 2014 to the present.
What’s the moral of the story? Anything can happen and the chasm between entering and exiting a transaction can be wide and deep. Always prepare for the worst.