IB available shorts
- Thread starter roger2
- Start date
D
dkamp
ddefina:
The SEC rule (as I understand it) is that you're "short" in a stock based upon your net position. In other words, if you sell from your long position while maintaining an offsetting short position, then they consider this as a short sale subject to the uptick rule. (That's why the professionals use "bullets", and don't just do what you're doing.)
BTW, I'd be happy to be wrong about this...but I'd be a little worried about creating an SEC violation every time you sold long from a balanced position.
The SEC rule (as I understand it) is that you're "short" in a stock based upon your net position. In other words, if you sell from your long position while maintaining an offsetting short position, then they consider this as a short sale subject to the uptick rule. (That's why the professionals use "bullets", and don't just do what you're doing.)
BTW, I'd be happy to be wrong about this...but I'd be a little worried about creating an SEC violation every time you sold long from a balanced position.
Thanks for the advice. I read the post at http://www.elitetrader.com/vb/showthread.php?threadid=1229 describing bullets and reversals.
I think I'll look into the options route.
I think I'll look into the options route.
I may have to open a second account at Datek for shorts only.
A while back, I wanted to short KKD. It was available at Datek but not at IB.
Yesterday, I wanted to short MANU rallying into it's 20 EMA and resistance. It was not shortable at IB but it was at Datek.
It seems the only thing I can short at IB are the big names such as CSCO MSFT NVDA VRTS CIEN MSFT MERQ etc...
The question is, is IB going to get a bigger short list?
A while back, I wanted to short KKD. It was available at Datek but not at IB.
Yesterday, I wanted to short MANU rallying into it's 20 EMA and resistance. It was not shortable at IB but it was at Datek.
It seems the only thing I can short at IB are the big names such as CSCO MSFT NVDA VRTS CIEN MSFT MERQ etc...
The question is, is IB going to get a bigger short list?
If you place a "Market" "stop" order to sell securities from your long account, which is offset with an equal position of short shares, would this violate the uptick rule? You always get filled at the ask or above the bid with a market order, so it would seem you would be in compliance with the uptick rule?
D
dkamp
The market order to sell your long shares will sell them at the bid (i.e., you lose the spread). If the price is falling (probably the case since your stop was hit), then you're likely to be in a downtick, and the uptick rule would be violated. (The SEC saw you coming way back in 1934.
)
From what I've read, the SEC is pretty serious about this, and has even considered eliminating the loopholes such as bullets, although there are also many who think that all the restrictions on shorting are nonsense, and only serve to make life more difficult for the smaller players.
)From what I've read, the SEC is pretty serious about this, and has even considered eliminating the loopholes such as bullets, although there are also many who think that all the restrictions on shorting are nonsense, and only serve to make life more difficult for the smaller players.
You would still be subject to the uptick rule under those circumstances. In fact, it's likely that the brokerage system would reject the order automatically on a downtick. The Stop Market order is really just a regular market order that gets triggered when the stock trades through the stop price. I've heard some brokerages will "hold" the short sell order until an uptick is in place but I've never seen this done personally.
IMO, it's usually possible to trail the stock down at the ask...dropping the sell order a penny at a time so that your sell order is always on the inside. In this case, you can avoid the uptick rule because someone is buying from you. There are almost always Stop Market buy orders sitting out there from retailers who aren't paying attention. They get triggered on the way down and there are always a few folks in denial who will buy in the teeth of a downdraft. If you can maintain the inside ask, you're likely to get filled.
Good Luck
IMO, it's usually possible to trail the stock down at the ask...dropping the sell order a penny at a time so that your sell order is always on the inside. In this case, you can avoid the uptick rule because someone is buying from you. There are almost always Stop Market buy orders sitting out there from retailers who aren't paying attention. They get triggered on the way down and there are always a few folks in denial who will buy in the teeth of a downdraft. If you can maintain the inside ask, you're likely to get filled.
Good Luck
def
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Here's the info I rec'd regarding IB's short list:
"We compile a list of available securities from inventory files provided by 6 of our largest stock loan counterparts. The current combined list has over 6000 stocks on it. It is true that hard-to-find stocks (stocks ungoing corp actions or "in play") will not appear on these lists. "
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I'm not sure if the stocks talked about were in play. If not, maybe one of you can send me an e-mail next time this happens with the stock, date, time, etc. I assume the list mentioned above is compiled correctly. However, at least I can pass this information forward to investigate.
- def
"We compile a list of available securities from inventory files provided by 6 of our largest stock loan counterparts. The current combined list has over 6000 stocks on it. It is true that hard-to-find stocks (stocks ungoing corp actions or "in play") will not appear on these lists. "
------
I'm not sure if the stocks talked about were in play. If not, maybe one of you can send me an e-mail next time this happens with the stock, date, time, etc. I assume the list mentioned above is compiled correctly. However, at least I can pass this information forward to investigate.
- def
def,
thanks for looking into this issue...
but i think your report pinpoints the problem...when a stock is 'in play' is exactly when many short traders start watching for an opportunity to short
what goes up must come down (not always, but it often works this way, especially for the past year)
your report also explains why many of them do become available later, when they are no longer in play, but when they also do not represent a short trading opportunity
As one good example, PCLN comes to mind: 1.7B mkt cap, 6M avg vol (3 month) and 100M float. PCLN reported 7/31 AC but was not available to short on 7/31. It is available today and, no, I don't know at what point it became available. When I checked the short list 7/31 and it was not there I moved on. But PCLN gapped on 8/1 and rose to @ 10.50 then dropped to @ 9.50 throughout the rest of that day. That move represents approximately a 10% gain for anyone who was able to short it.
Another thing that seems strange: PCLN was not available to short even BEFORE it moved up. I speculate that, like me, some traders anticipating a rise in price see this as a future (in a day or so) short opportunity. From the behaviour I have observed with PCLN and other stocks, it seems like somebody with clout (unlike me!) may somehow be reserving shares to short when the time is right. Is it possible for certain industry insiders to set aside shares, so that they are at their disposal to short if they so choose? You mention that IB uses borrow lists from other entities. Is it possible that somebody at one of these other entities is being stingy? I am simply trying to come up with some type of theory to explain these observations.
P.S. i am not down on IB, quite the contrary. things change fast, as we all know, and a more comprehensive shorting capability would be a positive change for IB. it would further enhance IB's philosophy of a 'level playing field'
IB traders are extremely lucky to have someone like def actually getting into the trenches, filtering through our complaints and our ideas, and making recommendations to IB decision makers. I believe that the Best_ECN routing was a result of this type of interaction.
thanks for looking into this issue...
but i think your report pinpoints the problem...when a stock is 'in play' is exactly when many short traders start watching for an opportunity to short
what goes up must come down (not always, but it often works this way, especially for the past year)
your report also explains why many of them do become available later, when they are no longer in play, but when they also do not represent a short trading opportunity
As one good example, PCLN comes to mind: 1.7B mkt cap, 6M avg vol (3 month) and 100M float. PCLN reported 7/31 AC but was not available to short on 7/31. It is available today and, no, I don't know at what point it became available. When I checked the short list 7/31 and it was not there I moved on. But PCLN gapped on 8/1 and rose to @ 10.50 then dropped to @ 9.50 throughout the rest of that day. That move represents approximately a 10% gain for anyone who was able to short it.
Another thing that seems strange: PCLN was not available to short even BEFORE it moved up. I speculate that, like me, some traders anticipating a rise in price see this as a future (in a day or so) short opportunity. From the behaviour I have observed with PCLN and other stocks, it seems like somebody with clout (unlike me!) may somehow be reserving shares to short when the time is right. Is it possible for certain industry insiders to set aside shares, so that they are at their disposal to short if they so choose? You mention that IB uses borrow lists from other entities. Is it possible that somebody at one of these other entities is being stingy? I am simply trying to come up with some type of theory to explain these observations.
P.S. i am not down on IB, quite the contrary. things change fast, as we all know, and a more comprehensive shorting capability would be a positive change for IB. it would further enhance IB's philosophy of a 'level playing field'
IB traders are extremely lucky to have someone like def actually getting into the trenches, filtering through our complaints and our ideas, and making recommendations to IB decision makers. I believe that the Best_ECN routing was a result of this type of interaction.