Thanks for that article, Oak. BTW, according to IBKR data (which is the source of the following website), the fee to borrow stands at 8%+
This fee to borrow varies daily, is based on share price, and is calculated pro rata per day. The fee is adds to the losses in addition to Dividends and 'true losses'. https://www.iborrowdesk.com/report/DEC
Interesting article looking at the numbers. However, are shorts a human analysis of fundamentals or a bot driven analysis of historic share price which then infers a future trajectory? If the former then perhaps some melting shortly due. If the latter, then closing decisions may be lagging economic performance by a period - until algorithms work out that SP is now on a differing trajectory.
Additionally, no one likes to admit they’re wrong so that builds another lag into closing shorts - I know, I considered selling DEC at £1.40 but didn’t!
Individuals might be waiting for a balancing profit elsewhere to enable closing of a short with a profit across both trades.
A further possibility is that the shorts are a hedge for IIs with big holdings to cover downside losses.
It’s all a bit more complex than does the short make sense in isolation 😀
Thanks for that article, Oak. BTW, according to IBKR data (which is the source of the following website), the fee to borrow stands at 8%+
This fee to borrow varies daily, is based on share price, and is calculated pro rata per day. The fee is adds to the losses in addition to Dividends and 'true losses'. https://www.iborrowdesk.com/report/DEC
Interesting article looking at the numbers. However, are shorts a human analysis of fundamentals or a bot driven analysis of historic share price which then infers a future trajectory? If the former then perhaps some melting shortly due. If the latter, then closing decisions may be lagging economic performance by a period - until algorithms work out that SP is now on a differing trajectory.
Additionally, no one likes to admit they’re wrong so that builds another lag into closing shorts - I know, I considered selling DEC at £1.40 but didn’t!
Individuals might be waiting for a balancing profit elsewhere to enable closing of a short with a profit across both trades.
A further possibility is that the shorts are a hedge for IIs with big holdings to cover downside losses.
It’s all a bit more complex than does the short make sense in isolation 😀
Very good points Jim - the pairs trade would make a lot of sense.
JP Morgan seem to have closed their short position.
OB flamed 'em. Right who's next?