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Upon options exercise leaving you short a hard-to-borrow stock...
- Thread starter Option Trader
- Start date
You're saying a broker may charge 40% for what they are paying 1/2 cent to borrow? Maybe if they were offerred this time of money they would oblige willingly, but I was hoping they would have to oblige if stock is located, regardless of were, and can only charge reasonable fees.Quote from heech:
And some brokers, like IB, do exactly that. If you're not familiar with the way they price hard to borrow, search on the forum. Some stocks at IB have interest charges as high as 40-50% annualized. Some are still not available period.
If your broker doesn't offer that, and also doesn't have single stock futures, then you're sol.
Quote from Option Trader:
You're saying a broker may charge 40% for what they are paying 1/2 cent to borrow? Maybe if they were offerred this time of money they would oblige willingly, but I was hoping they would have to oblige if stock is located, regardless of were, and can only charge reasonable fees.
the phrase was 40% annualized!
where do u come up with 1/2 per cent?
Although my case does not fit the description you say, however, the idea of having a SHO violation indicates to me that it's yes possible to end up short a stock which the broker doesn't have---else there would be a forced buy-in within 4 business days.Quote from ajacobson:
You should have this discussion with their compliance area. If you intentionally sold a deep call after being told the stock was hard to borrow you open up the can of worms that is a reg SHO violation...
They charge 1/2 cent, not 1/2 percent.Quote from zdreg:
the phrase was 40% annualized!
where do u come up with 1/2 per cent?
Question is moot, see their website: "By offering guaranteed stock locates on a first-come, first-serve basis, LOCATESTOCK allows small and mid-sized hedge funds, broker dealers and day traders to compete for borrows with the largest hedge funds"Quote from zdreg: [/B][/QUOT are u a retail trader or trading under a license? [/B]
Your broker can pretty much do anything he wants regardless of what you think is reasonable or makes sense. You pretty much sign sensibility away when you open your account.Quote from Option Trader:
However, here, I am short calls in-the-money, and upon options expiration, my account stands to show short the stock regardless of availability by broker/ clearance firm.
My question is: can they insist they want to buy-in? Or must they accept my alternative proposal that they get the shares from the street?
40% ? LOL.Quote from Option Trader:
You're saying a broker may charge 40% for what they are paying 1/2 cent to borrow? Maybe if they were offerred this time of money they would oblige willingly, but I was hoping they would have to oblige if stock is located, regardless of were, and can only charge reasonable fees.
Last summer I had a Citibank preferred stock conversion that resulted in my being short 10,000+ shares with an indicative (borrow) rate of over 100%. That was over a $100 a day ($300 for a weekend). I got out of Dodge pretty quick.
Quote from Option Trader:
They charge 1/2 cent, not 1/2 percent.
Question is moot, see their website: "By offering guaranteed stock locates on a first-come, first-serve basis, LOCATESTOCK allows small and mid-sized hedge funds, broker dealers and day traders to compete for borrows with the largest hedge funds"
you are dreaming if u think that goldman clients don't have an edge when it comes to borrowing stock.