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adiggs
Well-Known Member
The process of moving over to Fidelity is, thus far, amazingly straightforward and simple. Less than 30 minutes to start the wheels spinning to move 2 accounts, and about 10 days of waiting for the moves to actually happen.
But the hamsters are running and the wheel is spinning. I expect that early next week, I'll be able to bring valuable additional inventory to the market for those looking for resources to borrow to short TSLA
But the hamsters are running and the wheel is spinning. I expect that early next week, I'll be able to bring valuable additional inventory to the market for those looking for resources to borrow to short TSLA
I'd say shorts closing out their positions. Just like you, my SCTY shares have been returned to me. With the SP staying stagnant despite a "poor" Q2 earnings, I think the smart shorts are covering.
Unfortunately, if there's no catalyst within the next few weeks (to get new buyers), then the SP will stay stagnant as shorts cover and shares are recalled.
Same here. Funny how it goes from 30% to nothing, you would think the rate would slowly decrease before they get to the point where they return the shares.
I'm now feeling smart for selling more puts instead of buying more shares outright. At the 30% lending rate, it was seeming like a close call. But by selling puts, I effectively locked in a 25%+ interest rate for several months. I lose out on upside if the stock price skyrockets, of course.
Mario Kadastik
Active Member
The way to lock in both the interest rate and to benefit from the upside is to finance calls through selling of puts
If you have enough disparity between call/put options (i.e. high interest rate), then you can buy ITM calls and sell OTM puts for net 0 cost and just on margin requirement. This way if the share price stays flat or goes up you benefit and if it goes down you have some buffer (difference between ATM and OTM strikes). The interest rate is that allows you to move down on the strike price for this, without it it still works if you assume upside, but you have to do ATM if you don't want to put anything upfront yourself. If you have enough margin you can make it even safer by buying one call for every two puts sold for the same dollar value totaling 0. This way I could for example buy TSLA 215 call and sell 2x 195 puts for september when TSLA was at 215. Now at 230 the puts are almost no value and the call is worth 15$ EDIT: in addition with the default strategy described you are theta neutral as the put and call decay equally making it net 0 theta. But with the latter strategy of 2x put for 1x call you are actually gaining on time decay as you have positive theta overall
Thanks. I know the basics. I did it a couple of times with a plain "synthetic long", but I don't like the time decay or the pricing on the calls... *and* in the US, the tax treatment can get really complicated, so I'm trying to restrict my tax headache.
If you have enough disparity between call/put options (i.e. high interest rate), then you can buy ITM calls and sell OTM puts for net 0 cost and just on margin requirement. This way if the share price stays flat or goes up you benefit and if it goes down you have some buffer (difference between ATM and OTM strikes). The interest rate is that allows you to move down on the strike price for this, without it it still works if you assume upside, but you have to do ATM if you don't want to put anything upfront yourself. If you have enough margin you can make it even safer by buying one call for every two puts sold for the same dollar value totaling 0. This way I could for example buy TSLA 215 call and sell 2x 195 puts for september when TSLA was at 215. Now at 230 the puts are almost no value and the call is worth 15$
EDIT: in addition with the default strategy described you are theta neutral as the put and call decay equally making it net 0 theta. But with the latter strategy of 2x put for 1x call you are actually gaining on time decay as you have positive theta overall
Mario Kadastik
Active Member
Ah, in Estonia it's simple, you only get taxed if you withdrew more from an investment account than you put in and only on the part in profit. Rest of the time buy/sell/trade, do what you want as often as you want. Dividend is the exception, that's taxed before it arrives on your account, but after that it shows up as payment into the account and can be withdrawn freely.
adiggs
Well-Known Member
The process of moving over to Fidelity is, thus far, amazingly straightforward and simple. Less than 30 minutes to start the wheels spinning to move 2 accounts, and about 10 days of waiting for the moves to actually happen.
But the hamsters are running and the wheel is spinning. I expect that early next week, I'll be able to bring valuable additional inventory to the market for those looking for resources to borrow to short TSLA
Update - I learned today that the Fully Paid Lending Program at Fidelity is an invite program. With the resource provided earlier, and now that my accounts are moved to Fidelity, I plan to call Fidelity Capital Markets and ask them about getting an invitation
If you're looking around on the Fidelity website for documentation, this might explain why you have trouble finding anything (I still haven't found anything on their website).
Here is collation of the TSLA and SCTY IB lending rates provided by KnowLittle with the Fidelity lending rates discussed here.
adiggs
Well-Known Member
It was exactly that easy. They've emailed me the agreement, and I'll be sending it back tomorrow.
I chose Fidelity over IB because Fidelity looks like a place I can have my accounts, and not have minimum activity charges (or minimum balance requirements), and generally feel more welcome as an infrequent trader (<10 / year).
Fidelity:
Lend TSLA: 9.75%
Short TSLA: 16.5%, 0 shares available to short
Lend SCTY: 33.0%
Short SCTY: 63.0%, 0 shares available to short
July 8th marked the peak, ever since the rates have been continually coming down.
I attribute that to voluntary covering, tiny amounts every other day. MarkIt data suggests so. This behavior in my view is what is providing a strong support to the stock price, especially given very low volumes lately.
I also think the voluntary covering is happen to a large degree as shorts get anxious if they will be forced to cover at the wrong time due to recalls. It's best to stay away and hence they are trying to stay away.
I attribute that to voluntary covering, tiny amounts every other day. MarkIt data suggests so. This behavior in my view is what is providing a strong support to the stock price, especially given very low volumes lately.
I also think the voluntary covering is happen to a large degree as shorts get anxious if they will be forced to cover at the wrong time due to recalls. It's best to stay away and hence they are trying to stay away.
Chickenlittle
Banned
Interesting but contradicts my experience. Fidelity returned 1000 shares to me this morning. Still have 28000 loaned but if none to short why are they returning shares?
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