Beginner here...

B

believezz

Hi All, I am new to this forum and also new to trading. Nice meeting you all.

Hopefully someone could answer below 3 basic questions! Thanks very much in advance. (I use Interactive Brokers and I am from HK, trying to learn trading slowly knowing it's a life long journey...)

1. Short fee for TSLA is 15% which seems very high for a liquid stock, how come?

2. What's the cheapest way to gain short exposure to US markets? (S&P / Nasdaq)?
- Short QQQ? Expense ratio is 0.20% which looks ok to me.. right? But then there's also dividend factor which I don't know if it's relevent (cancels out by stk price movement?)

- Long SQQQ? Expense ratio is 0.98% - does it mean it's absolutely worse than shorting QQQ? what happens to dividends here?

- Short ES? I know it's rigid (~100K USD / contract, but we can disregard this here), but is it cheaper? There's also a whole science behind the futures yield / roll yield etc. involving an implied interest, but on average is it cheap to short ES than the 2 options above?

- or something else?

3. I am not a US citizen - am I able to claim any withholding tax on dividends or anything else?

Sorry these aren't really the exciting questions like most others but I wish to get these basic right first as these would be the "stupid money" to lose.

One thing I notice and want to warn any other beginners out there, is that we should try to keep all currency balance positive to avoid paying interest (assuming you are not speculating on FX movements...)

Thanks all! Pls let me know if there are any other hidden things I should know!
 
cheapest exposure to US is ES ... there is a market to borrow a stock.. if the market is paying 15% to borrow tesla.. then your going to pay it.. its hard to borrow
 
believezz said:
Hi All, I am new to this forum and also new to trading. Nice meeting you all.

Hopefully someone could answer below 3 basic questions! Thanks very much in advance. (I use Interactive Brokers and I am from HK, trying to learn trading slowly knowing it's a life long journey...)

1. Short fee for TSLA is 15% which seems very high for a liquid stock, how come?

2. What's the cheapest way to gain short exposure to US markets? (S&P / Nasdaq)?
- Short QQQ? Expense ratio is 0.20% which looks ok to me.. right? But then there's also dividend factor which I don't know if it's relevent (cancels out by stk price movement?)

- Long SQQQ? Expense ratio is 0.98% - does it mean it's absolutely worse than shorting QQQ? what happens to dividends here?

- Short ES? I know it's rigid (~100K USD / contract, but we can disregard this here), but is it cheaper? There's also a whole science behind the futures yield / roll yield etc. involving an implied interest, but on average is it cheap to short ES than the 2 options above?

- or something else?

3. I am not a US citizen - am I able to claim any withholding tax on dividends or anything else?

Sorry these aren't really the exciting questions like most others but I wish to get these basic right first as these would be the "stupid money" to lose.

One thing I notice and want to warn any other beginners out there, is that we should try to keep all currency balance positive to avoid paying interest (assuming you are not speculating on FX movements...)

Thanks all! Pls let me know if there are any other hidden things I should know!
More...
 
You could open an options account and sell a call on Tesla or buy a put (both are short the underlying, Tesla). The ins and outs of options trading is a bit much to get into here, but as a substitute for shorting stock, it's pretty clear cut.
 
Tesla short is expensive because of the Tesla-SolarCity deal...

A common merger/takeover strategy is to buy SCTY and sell short Tesla... hence a large interest in shorting Tesla and therefore more difficult and expensive to short.

Don't think too much about shorting Tesla through selling calls and buying puts on them like @Beyondbreakeventrading says, the short rate will already be absorbed in the options market...

Short Tesla might still be profitable, it will depend on how long you will be holding the position. If only for a month, it's going to cost about 1% in short fees....
 
newwurldmn said:
@JackRab , what's shocking isn't the short rate on TSLA. it's the short rate on SCTY! At one point last month it was approaching 50% annualized!
More...

Yeah, but it makes sense... neither stock would be easy to borrow. SolarCity shareholders would prefer not to lend out because they want full control... Currently through IB that rate is 35%.

But I don't know who in this case sets that rate... if you're HFT or hedgefund, you will look a bit more actively for them and probably get a different rate.... short rates are not like easily comparable bank rates. Also, you could negotiate a fixed term with a better fixed rate...
 
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