What happens if you are short a stock that gets acquired?

Say you short a stock in company A. Company A is being purchased by Company B a few months from now in a stock-for-stock merger transaction on Oct 1st.





What happens to the short position in company A, if an investor holds on up until the merger date (Oct 1)?|||You'll need to cover. No matter what's the price.|||This would be a bad position to be in. You'd have to cover the short position, and in the event of a merger, the acquired company's stock usually gets run up because the purchaser usually winds up paying a premium for it.|||The broker will call your position and demand you cover.