"What do you mean they're gone?" Doc's voice was tight with fury. "We're going after them," he said to Freakboy. "Let's ride."

It took them almost an hour to get to the boatyard in the fog. They ran down the pier to the Olivia de la Mer. The engines rumbled. Doc cast off the stern line, flipped up the collar of his jacket against the cold and watched the fog devour the dock as they pulled away.

The boat began to pitch and yaw when it hit open water. Doc groped his way forward to the cabin. Freakboy, at the helm, turned and grinned. "There," said Doc, staring at a small screen. "That must be them."

Freakboy looked at the charts, adjusted his headings and began to whistle softly.

----------

A slim white sloop, The Stock, with sails down, bumped against the channel marker. In the small boat, Lily and Johnny huddled together in a blanket hoping the Coast Guard had heard the Mayday before the radio went dead

The Olivia de la Mer nosed alongside the port side of the sloop. The sea went suddenly flat, but the two small boats spun as if caught in a whirlpool. The fog formed a funnel cloud and swirled around them. A blinding flash of green light threw the cutter's crew, now some nautical miles off, to the deck.

When the cutter reached the area, the Olivia was gone. The small sloop was still tied to the channel marker, but it was in two pieces. The Stock, split from bowsprit to stern, lay dead in the water. The fog vanished. Stars hung low over the water in the deep night sky.

What happens if the shorted stock splits or pays a dividend?

1. The short-seller must cover the position within 30 days
2. Short-seller must return borrowed shares the next trading day
3. The short-seller pockets the dividend
4. The short-seller must pay the dividend to the lender of the shares

The correct answer is 4) The short-seller must pay the dividend to the lender of the shares.

If you are short as of the ex-dividend date, you are liable to pay the dividend to the person whose shares you have borrowed to make your short sale. However, if you are correct in your judgement to sell the issue short, your profits achieved will certainly outweigh the small dollar amount of the dividend payout.

Let's say we're speaking of a two-for-one split. In that case, you must cover your short position with twice as many shares as you opened it. If you shorted 100 shares, you must cover with 200. Don't forget, though, that the magnitude of your investment hasn't changed, for while you now have twice as many shares, each one is only worth half as much as before! So, while your original cost basis for the 100 shares may have $36, now, with 200 shares, it is only $18.

There is no predetermined limit to how long you can keep your short position open. Technically, you could be forced to cover at any time, but typically, having the shares you have borrowed called back is unusual.

The Coast Guard crew stood stunned. A pulsing sound, like the heavy slowed beat of a copter's rotor, grew steadily louder. The first mate looked up. The Olivia, now empty, spiralled down out of the sky.

"Incoming!" he hollered and grabbed for the rail as the impact wave broached the cutter.

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