low volume small caps/penny stocks and short squeeze

L

luisHK

Hi

I was looking at short availibility on some microcap stocks today on IB, and saw some with a couple/few hundred thousand USD availibility but only 1 or 2 lenders .
Considering the stocks have very low volume, it can easily become disastrous if someone borrow all those shares, build a position over a few days, than the shares get recalled and they must buy the shares back quickly in the market.
It's also very easy for the lender to understand what's going on, so the temptation must be great from his side to recall them..
How do guys go on making money shorting those stocks ? Do they mostly day trade, which is not possible with any size ?
I undersand Tim Sykes claims to have made more than a few bucks shorting penny stocks, and a bunch of followers piggy back him . How can they short those penny stocks with size, especially over longer periods ?

Thanks in advance for all related feedback.
 
luisHK said:
Hi

I was looking at short availibility on some microcap stocks today on IB, and saw some with a couple/few hundred thousand USD availibility but only 1 or 2 lenders .
Considering the stocks have very low volume, it can easily become disastrous if someone borrow all those shares, build a position over a few days, than the shares get recalled and they must buy the shares back quickly in the market.
It's also very easy for the lender to understand what's going on, so the temptation must be great from his side to recall them..
How do guys go on making money shorting those stocks ? Do they mostly day trade, which is not possible with any size ?
I undersand Tim Sykes claims to have made more than a few bucks shorting penny stocks, and a bunch of followers piggy back him . How can they short those penny stocks with size, especially over longer periods ?

Thanks in advance for all related feedback.
More...

Most guys involved with penny stocks blew up at some point. On the long side for obvious reasons, on the short side due to recalls and squeeze.

Anyone saying otherwise is trying to sell you bullshit

Tim Sykes blew up his hedge fund for that exact reason and never got real money from real investors, that's probably the main reason why he's now selling stuff to retails.
 
wintergasp said:
Most guys involved with penny stocks blew up at some point. On the long side for obvious reasons, on the short side due to recalls and squeeze.

Anyone saying otherwise is trying to sell you bullshit

Tim Sykes blew up his hedge fund for that exact reason and never got real money from real investors, that's probably the main reason why he's now selling stuff to retails.
More...
Who is the girl in your picture?
 
wintergasp said:
Most guys involved with penny stocks blew up at some point. On the long side for obvious reasons, on the short side due to recalls and squeeze.

Anyone saying otherwise is trying to sell you bullshit

Tim Sykes blew up his hedge fund for that exact reason and never got real money from real investors, that's probably the main reason why he's now selling stuff to retails.
More...

Thanks Wintergasp, I didn't know about Sykes' hedge fund adventures nor ever traded US penny stocks but it makes sense.

Clubber Lang, it's true WG's avatars are confusing, the girls change once in a while but they all have huge boobs. Looks like a trader's smart safety feature, a fall back pillow for the days one get squeezed out of their shorts.
 
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wintergasp said:
Most guys involved with penny stocks blew up at some point. On the long side for obvious reasons, on the short side due to recalls and squeeze.

Anyone saying otherwise is trying to sell you bullshit

Tim Sykes blew up his hedge fund for that exact reason and never got real money from real investors, that's probably the main reason why he's now selling stuff to retails.
More...
is he still throwing parties where the femme fatales are fading gold diggers?
 
zdreg said:
where do you see the actual lenders?
More...

In IB's account management, go to to Support /Tools / Short stock availibility, than look up the stock you are interested in, the system will indicate the number of shares available, the rebate rate and the number of lenders with inventory, although i'm not sure how reliable that is, I just checked AAPL and the system shows only 22 lenders with inventory.
Can anyone here can add information on how to use that number ? I really can't believe AAPL and another large cap I just checked only have 20/25 individual lenders while more than 10 million shares are available to borrow. Depending on the meaning I might actually short some stocks showing only 1 or 2 lenders
 
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luisHK said:
In IB's account management, go to to Support /Tools / Short stock availibility, than look up the stock you are interested in, the system will indicate the number of shares available, the rebate rate and the number of lenders with inventory, although i'm not sure how reliable that is, I just checked AAPL and the system shows only 22 lenders with inventory.
Can anyone here can add information on how to use that number ? I really can't believe AAPL and another large cap I just checked only have 20/25 individual lenders while more than 10 million shares are available to borrow. Depending on the meaning I might actually short some stocks showing only 1 or 2 lenders
More...
most firms don't clear for themselves. share availability for their customers is under the umbrella of the clearing firm.
 
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