Norbert
TSLA will win
So our brokerages are possibly making 40% annually from our TSLA stock, and we see nothing of that? 
And on top of it, that reduces the value of our shares?
And on top of it, that reduces the value of our shares?
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So our brokerages are possibly making 40% annually from our TSLA stock, and we see nothing of that?
over the past month i think it's averaged closer to 60%. some brokers will pay you some of it.
generous schwab pays 6%.
interactive brokers will pay half the going rate.
some of the other big houses will pay 15-25% too.
the main thing that sucks is your shares are effectively "gone" and replaced by an i.o.u. in a lot of ways it's similar to the scenes from dumb and dumber where the money is borrowed from the suitcase and replaced with the shorts' i.o.u.'s. of course the brokerage firm maintains adequate collateral on the short, but in the event of a broker failure many longs would be shocked to find out that they don't own shares any more that are covered by the sipc.
google "fully paid share lending program" or "stock loan program" or similar terms.
here's one good brochure:
https://www.interactivebrokers.com/...ampleView?doc=Agreements/showSLDisclosure.jsp
that is a big premium- I'm looking to add jan 15 $30 calls, but wasn't noticing the put price; maybe I'll sell some puts to pay 40% of the cost- puts closed at $6.30 bid, calls $15.80 ask
Just so people aren't confused, they can't do this without your permission, correct?
agreement has to be signed with your broker to receive interest on borrowed shares;
schwab has run a program in past that pays a smaller rate, but allows you to sell shares anytime (they front a poll that allows borrowed shares to be sold, then find more to replace)- not sure if they still run that program- but either way- yes, you have to agree to lend your shares
ModelS8794
Member
You will probably find, if you read through the paperwork you signed if/when you signed up for a margin account, that you have already agreed to allow your broker to lend your shares out.
That's true, it's often included in margin accounts. Although I think (at least it is with my broker) that margin account shares lent can be sold anytime. They become part of a broker pool and the broker manages the pool. Probably different for each broker I imagine
updated table. even though the cost of shorting is down a lot recently, there are still very few shares available to borrow.
14-Apr-13 -38.72%
13-Apr-13 -38.72%
12-Apr-13 -38.78%
11-Apr-13 -38.97%
10-Apr-13 -44.23%
9-Apr-13 -49.97%
8-Apr-13 -56.28%
7-Apr-13 -57.34%
6-Apr-13 -57.34%
5-Apr-13 -60.92%
4-Apr-13 -75.23%
3-Apr-13 -82.24%
2-Apr-13 -82.25%
1-Apr-13 -83.00%
31-Mar-13 -84.45%
30-Mar-13 -84.45%
29-Mar-13 -84.45%
28-Mar-13 -82.66%
27-Mar-13 -77.29%
26-Mar-13 -85.35%
25-Mar-13 -75.84%
24-Mar-13 -60.69%
23-Mar-13 -60.69%
22-Mar-13 -59.51%
21-Mar-13 -54.77%
20-Mar-13 -49.85%
19-Mar-13 -49.04%
18-Mar-13 -44.88%
17-Mar-13 -43.94%
14-Apr-13 -38.72%
13-Apr-13 -38.72%
12-Apr-13 -38.78%
11-Apr-13 -38.97%
10-Apr-13 -44.23%
9-Apr-13 -49.97%
8-Apr-13 -56.28%
7-Apr-13 -57.34%
6-Apr-13 -57.34%
5-Apr-13 -60.92%
4-Apr-13 -75.23%
3-Apr-13 -82.24%
2-Apr-13 -82.25%
1-Apr-13 -83.00%
31-Mar-13 -84.45%
30-Mar-13 -84.45%
29-Mar-13 -84.45%
28-Mar-13 -82.66%
27-Mar-13 -77.29%
26-Mar-13 -85.35%
25-Mar-13 -75.84%
24-Mar-13 -60.69%
23-Mar-13 -60.69%
22-Mar-13 -59.51%
21-Mar-13 -54.77%
20-Mar-13 -49.85%
19-Mar-13 -49.04%
18-Mar-13 -44.88%
17-Mar-13 -43.94%
Are shorts feeling "a tsunami of hurt" yet? Or are we not there yet?
[Flashback: http://www.siliconbeat.com/2012/09/...nami-of-hurt-coming-for-those-shorting-tesla/]
[Flashback: http://www.siliconbeat.com/2012/09/...nami-of-hurt-coming-for-those-shorting-tesla/]
Citizen-T
Active Member
updated table. no shares available at the moment according to my broker.
18-Apr-13 -37.34%
17-Apr-13 -37.59%
16-Apr-13 -36.66%
15-Apr-13 -37.34%
14-Apr-13 -38.72%
13-Apr-13 -38.72%
12-Apr-13 -38.78%
11-Apr-13 -38.97%
10-Apr-13 -44.23%
9-Apr-13 -49.97%
8-Apr-13 -56.28%
7-Apr-13 -57.34%
6-Apr-13 -57.34%
5-Apr-13 -60.92%
4-Apr-13 -75.23%
3-Apr-13 -82.24%
2-Apr-13 -82.25%
1-Apr-13 -83.00%
31-Mar-13 -84.45%
30-Mar-13 -84.45%
29-Mar-13 -84.45%
28-Mar-13 -82.66%
27-Mar-13 -77.29%
26-Mar-13 -85.35%
25-Mar-13 -75.84%
24-Mar-13 -60.69%
23-Mar-13 -60.69%
22-Mar-13 -59.51%
21-Mar-13 -54.77%
20-Mar-13 -49.85%
19-Mar-13 -49.04%
18-Mar-13 -44.88%
17-Mar-13 -43.94%
18-Apr-13 -37.34%
17-Apr-13 -37.59%
16-Apr-13 -36.66%
15-Apr-13 -37.34%
14-Apr-13 -38.72%
13-Apr-13 -38.72%
12-Apr-13 -38.78%
11-Apr-13 -38.97%
10-Apr-13 -44.23%
9-Apr-13 -49.97%
8-Apr-13 -56.28%
7-Apr-13 -57.34%
6-Apr-13 -57.34%
5-Apr-13 -60.92%
4-Apr-13 -75.23%
3-Apr-13 -82.24%
2-Apr-13 -82.25%
1-Apr-13 -83.00%
31-Mar-13 -84.45%
30-Mar-13 -84.45%
29-Mar-13 -84.45%
28-Mar-13 -82.66%
27-Mar-13 -77.29%
26-Mar-13 -85.35%
25-Mar-13 -75.84%
24-Mar-13 -60.69%
23-Mar-13 -60.69%
22-Mar-13 -59.51%
21-Mar-13 -54.77%
20-Mar-13 -49.85%
19-Mar-13 -49.04%
18-Mar-13 -44.88%
17-Mar-13 -43.94%
another weekend is upon us. the way it's going it will cost shorts $48.50 x 39% x 3/365 = 15.5c per share to stay short over the weekend. that's going to bring the total cost for the week to between 35-40c. plus the $5-6 increase in tesla's price. it's basically a disaster for a short.
meanwhile the volume is still very low, which makes it really hard for them to cover.
consistent with that, i am constantly seeing at most 10,000 shares available to short the last few days. a lot of times it's 0, sometimes 2000-5000. but never more than 10,000. most other stocks with a similar float usually have at least 100,000 shares available for shorting.
in other stocks like gm and citi i have seen where institutions will use etf's to short. for example with gm when it was tanking it was still in the dow. it was almost impossible to get shares of gm to short, so what institutions would do is short the dia or the dow futures, and then buy the other 29 dow stocks. this used a lot of balance sheet capital, but allowed them to get short gm.
with tesla it's not in any liquid indexes and the largest etf holders are totally illiquid too. so there's no way to short using that trick.
the puts are pricing the high cost of shorting and now the volatility, so that's also really expensive for shorts.
of course we have the 3 stooges doing their thing, but they are limited by the amount of open interest available at strikes with zero time premium. the total there is just a few hundred thousand shares, not nearly enough.
for those who are wondering what the squeeze looks like, imo it has started. we're probably sometime in the first to third week of the process. i think the squeeze has really only started the the last 10 days or so, but regardless.
luv says: "sound the tsunami alarms!"
meanwhile the volume is still very low, which makes it really hard for them to cover.
consistent with that, i am constantly seeing at most 10,000 shares available to short the last few days. a lot of times it's 0, sometimes 2000-5000. but never more than 10,000. most other stocks with a similar float usually have at least 100,000 shares available for shorting.
in other stocks like gm and citi i have seen where institutions will use etf's to short. for example with gm when it was tanking it was still in the dow. it was almost impossible to get shares of gm to short, so what institutions would do is short the dia or the dow futures, and then buy the other 29 dow stocks. this used a lot of balance sheet capital, but allowed them to get short gm.
with tesla it's not in any liquid indexes and the largest etf holders are totally illiquid too. so there's no way to short using that trick.
the puts are pricing the high cost of shorting and now the volatility, so that's also really expensive for shorts.
of course we have the 3 stooges doing their thing, but they are limited by the amount of open interest available at strikes with zero time premium. the total there is just a few hundred thousand shares, not nearly enough.
for those who are wondering what the squeeze looks like, imo it has started. we're probably sometime in the first to third week of the process. i think the squeeze has really only started the the last 10 days or so, but regardless.
luv says: "sound the tsunami alarms!"
LOL, love this post (both because of well-written prose, and because I am SO long in the stock).
One question: Would not a short squeeze be identified by more shares available to short (as the positions got covered)?
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...and: Do you have any thoughts on when the right time is to take profits in the squeeze? By nature, a squeeze takes the stock above fundamental value, so it is good to take advantage of it while it lasts.
One question: Would not a short squeeze be identified by more shares available to short (as the positions got covered)?
- - - Updated - - -
...and: Do you have any thoughts on when the right time is to take profits in the squeeze? By nature, a squeeze takes the stock above fundamental value, so it is good to take advantage of it while it lasts.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Yes this is the squeeze. It will be more drawn out than some believed but none the less a squeeze. I was able to buy some Jan14 and Jan15 calls last week (50 and 55 strike respectively) - feeling good about that. Also equally happen to not have taken any profit during this last rally. We won't see the 30's ever again.
Citizen-T
Active Member
I agree. This is a squeeze, whether it be THE squeeze or not, I do not know.
This is pure luck, but as I mentioned elsewhere, I bought some May 18 '13 calls about a week ago for $1.85 and others for $2.40. Pure luck. I was only looking for about 25% gain. What timing.
This is pure luck, but as I mentioned elsewhere, I bought some May 18 '13 calls about a week ago for $1.85 and others for $2.40. Pure luck. I was only looking for about 25% gain. What timing.
CyberDutchie
Active Member
I just realized today, after my own little experiment with options trading, that the gain on the calls I bought yesterday currently is 15%, whereas if I had bought the shares outright, they are up only about 2% (currently at $48) for the day.
Is that typically the case, or did I just get lucky? Looks like options trading might be more lucrative?
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
It's typically the case that you either make greater gains or that you lose everything. The chance of losing everything in normal stock is slight (only if the company goes bankrupt). The chance of losing everything in options is totally normal (it can be just about timing). So both the risk and reward are much greater than normal stock trading.