adiggs
Well-Known Member
As of 9/14 or 9/15, Fidelity is now paying 5.75% to borrow TSLA (up from 5% previously).
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As of 9/14 or 9/15, Fidelity is now paying 5.75% to borrow TSLA (up from 5% previously).
Dang! And I just pulled my shares out of the program so I could vote and do my bit to contribute to this epic short squeeze we are all enjoying.
adiggs
Well-Known Member
My hypothesis is that if a short squeeze gets started, an early manifestation will be increasing rates being paid to borrow shares.
When are we getting the next outstanding short interest report? I'm wondering if there has been significant short covering going on over the last few weeks or not. The lower rate today (5.75%) over about a month ago (9%) suggests to me lower demand to borrow shares, or higher supply of shares to borrow, over the last week. Due to share recalls for the merger vote, the latter seems unlikely, so I'm expecting we'll see at least some decrease in outstanding borrowed shares.
When are we getting the next outstanding short interest report? I'm wondering if there has been significant short covering going on over the last few weeks or not. The lower rate today (5.75%) over about a month ago (9%) suggests to me lower demand to borrow shares, or higher supply of shares to borrow, over the last week. Due to share recalls for the merger vote, the latter seems unlikely, so I'm expecting we'll see at least some decrease in outstanding borrowed shares.
I recall someone saying that the rate to borrow shares is based on the demand to short a stock, and not on the availability of shares to loan (or at least not directly)?
With available shares being in the 5-digits, it seems supply is pretty low (due to share recall), yet with rates being super low (compared to recent rates), new demand must be low as well.
Wouldn't it be accurate to assume that short-term shorts (as opposed to die-hard/long-term shorts who comprise most of the 25 million shares borrowed) are waiting it out on the sidelines to see how the deal goes through? The recent slow SP rise today was due to long-term shorts probably covering enough to meet their obligations to return recalled shares? Maybe we'll get more of the same tomorrow until whenever they announce the final record date for the voting rights? I wish I had access to the short interest charts!
adiggs
Well-Known Member
I freely admit to being very new to this market - I've only been lending out my shares for a little over a month. The act of getting them lent out and signing the paperwork, and then seeing the reporting on a daily basis has been very instructive about how this process works transactionally.
It's very possible that you have a more accurate and nuanced view of how things go. I tend to filter everything through my own view of the market which is decidedly long term in nature (I usually don't need all the fingers on one hand to count annual transactions).
Seeing market level short interest seems like an intentionally vague piece of information on the part of the market. I honestly expect this to be an area to receive some regulator or other transparency / reporting attention sooner or later. Not having daily updates, at a minimum, to the size of the short interest seems like something that is valuable to a subset of market participants, and harms other market participants.
So yeah - I'd like to have easy access to daily or real time short interest data (sort of like how easy it is to find out the number of shares outstanding for a company - I see no meaningful difference).
It's very possible that you have a more accurate and nuanced view of how things go. I tend to filter everything through my own view of the market which is decidedly long term in nature (I usually don't need all the fingers on one hand to count annual transactions).
Seeing market level short interest seems like an intentionally vague piece of information on the part of the market. I honestly expect this to be an area to receive some regulator or other transparency / reporting attention sooner or later. Not having daily updates, at a minimum, to the size of the short interest seems like something that is valuable to a subset of market participants, and harms other market participants.
So yeah - I'd like to have easy access to daily or real time short interest data (sort of like how easy it is to find out the number of shares outstanding for a company - I see no meaningful difference).
I don't know if this is true, but I recall reading that one can kind of track short interest via Puts/Call ratios which I think update more quickly (daily since they are derivatives). That being said, I haven't looked into it myself yet.
adiggs
Well-Known Member
I think that the former is incorrect, but this is based on a supply/demand view of markets in general, rather than actual knowledge of how rates are set. I suspect that the latter is correct - that the rates paid/charged, are directly tied to availability of shares to borrow, and demand to borrow those shares.
Within a larger context I think this market is surprisingly manual. I keep thinking bean counters in suits, manually matching up demand with supply in spreadsheets, and occasionally making an adjustment to the rates paid/charged when one side or the other gets too difficult to balance things out. (Don't take this as actually true - this is my impression based on how my interactions with Fidelity works, the frequency of interest rate changes, and some of what I've seen from the lending side in other's comments).
The only company I own that is lent out is TSLA. I do own shares in other companies, and they are eligible for the Fully Paid Lending program, but they don't get lent out. At least one of them probably has more total shares lent out, but the company is so much bigger than TSLA in # shares outstanding, saying more shares are lent out is .. silly
In reality, there are 2 rates here - one that owners of shares are paid to borrow their shares (by the market maker), and a second rate paid by the short to borrow shares from the market maker. With Fidelity at least, these two rates maintain a roughly 1:1 ratio (50% of the cost to borrow shares to go short goes to market maker, 50% goes to original owner). From previous research with Interactive Brokers, they explicitly maintain that 50/50 ratio. Fidelity is sometimes paying a little over 50%, and sometimes a little under 50%.
Anyway - the rate Fidelity pays me to borrow shares is a way to attract more volume on the lending side. A higher rate will draw more lenders into the market, at least to some degree. In practice, I'm a rate taker - whatever Fidelity is paying, I'm happy to take it down to around 1-2% (based on my own assessment of the risk/reward of having my shares lent out).
Meanwhile, the rate Fidelity charges to lend shares out is a mechanism to balance demand for shares with available supply.
I'm pretty sure I could go find out what Fidelity is charging to establish a new short position - I just haven't bothered (it takes more mouse clicks for me, than to look at my Loaned Securities report to see what I'm being paid to lend out shares).
adiggs
Well-Known Member
Dang! And I just pulled my shares out of the program so I could vote and do my bit to contribute to this epic short squeeze we are all enjoying.
Thanks Yonki! I'm sure that extra 0.75% I'm getting is because of the restriction in supply you created. I appreciate the assist.
adiggs
Well-Known Member
TheTalkingMule
Distributed Energy Enthusiast
My hope is that short interest will continue to increase(get tighter) as we head toward the election and then the bears get hit with further CA battery contracts for Tesla Energy combined with a successful all-in-one solar offering to Model 3 res holders from a still standalone SCTY. Then both gigafactories get rolling and off we go.
adiggs
Well-Known Member
Fidelity now paying 7.00% to borrow TSLA, up from 5.75%.
Fidelity now paying 8.50% to borrow TSLA.
Thanks for taking up my slack - I lost a lot of interest in tracking interest after we lost all that interest.
Good to see the rate's on the rise again (as is, I believe, the stock price).
adiggs
Well-Known Member
My pleasure Yonki. It's not in the spreadsheet - my own inspiration hasn't extended that far In combination with the actual short interest report, it looks like this is the best information we can get about the supply/demand balance for being short Tesla.
In combination with the actual short interest report, it looks like this is the best information we can get about the supply/demand balance for being short Tesla.
adiggs
Well-Known Member
Fidelity now paying 9.25% to borrow TSLA.
For those curious, I believe the timing is that sometimes soonish after market close, Fidelity updates the published rate being paid. I believe that mechanically, the rate fluctuates throughout the day based on bids by shorts looking to establish / maintain a position, with the rate paid for the day determined by the rate at the end of the day. (To be clear, the latter bit is me guessing at a process that sounds sensible to me when I write it out - I don't know how it actually works).
As one point of comparison, when I got started with this in early August, TSLA was paying 9.x% (can't remember if it was 9.25 or 9.75 - somewhere in this range). So we dropped from that point in time down to 5%, and are back up to 9.x%.
IB Short interest rate increased to 106,86% on TSLA today
SCTY 14,47% 36,2k available.
Exciting
adiggs
Well-Known Member
Fidelity now paying 10% to borrow TSLA (which means charging ~20% to lend TSLA). I think this is 3 increases in the rate Fidelity is paying in the last week.
adiggs
Well-Known Member
Fidelity adjusted AGAIN today - now paying 11% to borrow TSLA. That's up from 5.75% last Thursday (like 5 trading days).
There is clearly a strong change in the balance of supply and demand for shares to short. Whether it is more of a decrease in supply or an increase in demand, I can't say. I'm very interested to see the next outstanding short interest report.
There is clearly a strong change in the balance of supply and demand for shares to short. Whether it is more of a decrease in supply or an increase in demand, I can't say. I'm very interested to see the next outstanding short interest report.
OK, so my enthusiasm for tracking this data seems proportional to the interest rate... Here's a new chart (it will be automatically updated over time when you come back to this post):
And here's the link to an interactive version that definitely will be updated over time (at least until interest rates drop and I lose interest again): Interactive Interest Chart
With the interactive chart you can hover over a datapoint and get the exact value if you wish.
And here's the link to an interactive version that definitely will be updated over time (at least until interest rates drop and I lose interest again
): Interactive Interest ChartWith the interactive chart you can hover over a datapoint and get the exact value if you wish.
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