Idea for future tutorial, how to check real time short availability, I know you’ve told me before but I still use the semi-real time webpage as opposed to TWS to check availability of borrows. Thanks

Look at it this way: as the reverse split becomes closer and closer the risk of it not happening decreases. People then have an incentive to buy 249 shares (if they don’t have any) at higher and higher prices. They will thus tend to drive the price up to the price at which shares are getting cashed out (otherwise there would be a risk-free profit by buying the 249 shares just prior to the reverse split). However, this process could be hindered if large shareholders sell.

One way or the other, it is very likely that the stock price will be very close to the cash out price when the reverse split occurs. So at that point your long shares would be cashed out and you would be short a stock that is priced about where your long shares were cashed out. Thus, to obtain any profit you would have to remain short and hope the stock then goes down as the buying pressure would decrease.