Shld 25d R/r

[dmo]

Quote from newguy05:

Thanks for the heads up. i think this trade might not work, unless someone can offer a bit more insight.

1) IB app -> View -> Account Management (webpage) -> Tools -> Short Stock (SLB) Availability
2) Symbol: SHLD, Exchange: ARCA
3) Current Indicative Rate -35.50
4) This rate is on the amount cash you received from the short if i understand correctly, but how is it calculated exactly with regards to your position.

If i shorted 1000x shld for $86,000. I am to pay 86,000*0.355=~$30,000 for the year? So if i held the short for 2 months, that's $5k to be paid?

Does anyone know how this works with IB?

:eek:

Mighty sneaky outfit, this IB.

If you dig deep into your account management, you will find that you have already paid interest on your short SHLD for August. Surprised? Didn't know that, did you!

And how would you? IB didn't exactly go out of its way to warn you or even let you know once they had debited your account. I'm beginning to understand how IB can make money with those low commissions...

Anyway, log on to Account Management, click on Report Management on the left, set the dates from, say August 20 to Last Business Day, click on View, click on Broker Interest Paid, and you have penetrated into the secret realm. There you will see an item that says something like USD NET SHRT STK INT FOR AUG-2008. That's what you paid through the end of August for your short SHLD.

IB says that the rate you will pay for hard-to-borrow short stock will be determined when the trade is settled. But what rate is that? Where do they explain how they arrived at it? Where do they even tell you what it is? Very, very opaque.

BTW, I think you did this trade toward the very end of August, so it's possible this won't show up yet.

 

[newguy05]

DMO, i did the trade on 8/27 and do not see it yet in the report under broker interest paid. However in the normal account popup window, my Accrued Interest (which IB defines as Interest that has accumulated but has not been paid or charged ) is at -$291. Shouldnt have hid this row from the summary view grr.

Just to confirm, under broker interest paid you do see the charge on your report? is it ~35% annualized, i remember you got in around mid august.

 

[dmo]

Quote from newguy05:

DMO, i did the trade on 8/27 and do not see it yet in the report under broker interest paid. However in the normal account popup window, my Accrued Interest (which IB defines as Interest that has accumulated but has not been paid or charged ) is at -$291. Shouldnt have hid this row from the summary view grr.

Just to confirm, under broker interest paid you do see the charge on your report? is it ~35% annualized, i remember you got in around mid august.

Yes, under Broker Interest Paid there is an item labeled USD NET SHRT STK INT FOR AUG-2008. I think I'm paying about 21%, if I'm calculating it correctly. There have been no shares available to borrow for several days now, that's probably why it's now popped to 35%. Whatever our rate is, it SHOULD BE locked in. But good luck getting any info out of IB. Now that the rates are higher they'll probably blow us out of our position so they can re-lend the shares at the higher rate.

 

[newguy05]

Out. Made about 400 bucks after interest lol. All in all, it was a very good lesson for me, learned something new.

They need to include the current indicative rate as an optional column on the main ib console so anyone try to short can find the rate at a glance. As it proves to be an important column in this case.

I couldnt find the column or a way to add it in the trader workstation anywhere.

 

[dmo]

Quote from newguy05:



They need to include the current indicative rate as an optional column on the main ib console so anyone try to short can find the rate at a glance. As it proves to be an important column in this case.

IB provides a very easy way of finding out how many shares are available to borrow - Individuals>Trading>Shortable stocks. All they need to do is include the "indicative rate" when someone pulls up that info. They don't. They make you jump through hoops to get it.

If you do jump through those hoops and find the indicative rate, they tell you the indicative rate is not YOUR rate - YOUR rate will be decided when the trade settles. But you are never told that rate when the trade settles. In fact that information NEVER becomes available to you.

 

[dmo]

I finally got a reply from IB on this issue. Contrary to what I understood from their website, the borrowing rate is not locked in at settlement. It changes from day to day. The indicative rate attempts to approximate the actual rate you'll be charged that day, but may or may not be the actual rate.

The bottom line I got out of all this gobbledygook is that you will be charged whatever the hell they want to charge you, and you will never, ever - even if you live a thousand years - understand where that number came from.

 

[newguy05]

it be really nice if they can put the rate on the same column as the colored short availability bar so at least we can get some ballpark idea. Think i will submit a ticket for it.

But agree, very sneaky especially for such a big firm.

 

[nitro]

newguy05,

Thanks, that thread is informative.

nitro

Quote from newguy05:

nitro, there is no roll. On expiration, the contract converges to the stock, or if exercised it exchanges for the stock, effectively closing out your other leg and the entire position. Dividend affects the ssf price, but there is no dividend announced here.

Maybe i am confused, not sure if we are talking about the same thing. Check here for some more info: http://www.elitetrader.com/vb/showthread.php?s=&threadid=134879

 

[newguy05]

DMO, are you still getting charged negative accured interest? My accured interest keep going up negatively day after day even though i closed the position monday already. When i closed my SHLD position my accured interest was at -$200ish, now it's at -$720, and keeps going up. I have no other position that has borrow fees.

It's probably a settlement timing issue, but IB cs is no help as usual. Just curious if you notice this behavior too.

 

[dmo]

A quick glance seems to show I'm still being charged too. I'll check in more detail in a little bit - but I'm sure I'm being charged. If I understood them correctly, interest begins accruing the day the short sale settles, so at the earliest it wouldn't stop accruing until the day the closing transaction settles too.