Screenshot from IB - margin interest on shorts (longs?)

[Saltynuts]

Take a look at the picture below I took from my IB account. This from the margin rates screen. So, this is from SGLB (which I have a tiny, tiny amount shorted). Is this saying I'm paying 61.25% a YEAR to keep it shorted? Insane if so. And the rebate percentage of -61.42% - is that saying I can earn 61.42% in interest if I own the stock long? Or do I need to do something to get that interest payment if I own it long? And how in the heck can the amount one earns as interest exceed the amount one has to pay as interest to short the stock? I thought for sure the short interest would be higher, then IB would keep the difference.

Thanks for any help!!!

 

[Metamega]

https://www.elitetrader.com/et/thre...ts-on-call-spreads.346614/page-2#post-5135065

Post 17 user broke it down.

 

[Saltynuts]

Thanks a ton Metamega! Ah, that makes sense that the "rebate rate" is split 50/50 with IB. And my GAWD that NKLA rebate rate from post 17 - it is 960% plus - why on Earth would it be so high for a stock that is not in a freefall? Even splitting it 50% with IB, you are still getting close to 500% a year in interest (assuming you sign up and your shares get shorted)?!?!?

 

[Atikon]

Thanks a ton Metamega! Ah, that makes sense that the "rebate rate" is split 50/50 with IB. And my GAWD that NKLA rebate rate from post 17 - it is 960% plus - why on Earth would it be so high for a stock that is not in a freefall? Even splitting it 50% with IB, you are still getting close to 500% a year in interest (assuming you sign up and your shares get shorted)?!?!?

Robinhood is one hell of a broker

 

[Saltynuts]

Robinhood is one hell of a broker

We are talking about IB of course - I'm not getting the joke Atikon?

 

[zdreg]

Thanks a ton Metamega! Ah, that makes sense that the "rebate rate" is split 50/50 with IB. And my GAWD that NKLA rebate rate from post 17 - it is 960% plus - why on Earth would it be so high for a stock that is not in a freefall? Even splitting it 50% with IB, you are still getting close to 500% a year in interest (assuming you sign up and your shares get shorted)?!?!?

Supply and demand trumps all other factors.

 

[Saltynuts]

Supply and demand trumps all other factors.

Understood. Its just its weird that people would pay that much to short the stock of NKLA (almost 1000% a year!!!), when there doesn't appear anything immanent happening with the stock. Heck its been doing relatively over the past 12 months (although worse recently). But that interest rate to pay to short it is HUGE!!!

 

[Atikon]

We are talking about IB of course - I'm not getting the joke Atikon?

Bc NKLA was one of RH favourite Stocks for a while. Look at RH User Nr. Someone drove that Borrow Rate up

 

[HobbyTrading]

Or do I need to do something to get that interest payment if I own it long?

I think that you have to change a setting such that you allow IB to take your shares and lend out to others. The default setting is that the shares you own are not being lent out.

 

[ET180]

I think that you have to change a setting such that you allow IB to take your shares and lend out to others. The default setting is that the shares you own are not being lent out.

If you have a margin account, then I believe your shares are always being loaned to other members of the broker whether you like it or not and you get nothing for that. Under IB's stock yield enhancement program, your shares are loaned out to people outside if IB in exchange for some cash collateral and interest. From what I have heard and personal experience, it works out well except that in a taxable account, you might be paid payment in lieu instead of an actual dividend which has negative tax consequences for long-term holdings. Also, because I generally hold S&P500 stocks, the yield wasn't much. Probably a lot more if you hold more speculative assets that are hard to borrow.