WSBers playing with fire and getting burned: NKLA hard to borrow early assignments on call spreads

[tonyf]

nope. what is it NKLAW? maybe it isn't shortable.

It is with IB but no info on fees...

 

[TheGoonior2]

Do you know what the rate is to short NKLA warrants? I cant find this info on TWS...

Sorry, but I do not. I'm not that familiar with warrants, but regardless, I'd just pop on to their online chat with the trading desk as that's probably the most reliable info out there. You're probably in for a bit of a wait as they seem to have pretty big lines in the online chat these days.

 

[tonyf]

Sorry, but I do not. I'm not that familiar with warrants, but regardless, I'd just pop on to their online chat with the trading desk as that's probably the most reliable info out there. You're probably in for a bit of a wait as they seem to have pretty big lines in the online chat these days.

Tried that. Guy said 0 fees for warrants. I could not believe it. No online documentation to support his claim.

 

[ironchef]

Assuming the stock at 65, that's 65 x 3.60 or $234 per year (per share) divided by 365 so .64 per day or $64 per 100 shares (or one assigned call). So that $192 for 3 days. So if he was assigned on 52 calls it would be about $10,000.

Note that the short rate now is over 800%

52 contracts on a $5K account?

 

[ironchef]

can the broker loan out your shares if u didn't agree to it

No. But if I own the shares and they are collecting dust, why don't I? I can terminate the loan at will any time. I have done that numerous times. Like free money, better than selling covered calls.

 

[Arnie]

When you open an account you agree to broker lending your shares out.

 

[JesseJamesFinn1]

I do understand the risk of hard to borrow stock. The big issue I have is there was no indication that it was a hard to borrow stock, or the current rate associated with it ( I know that can change instantly ). The trade desk was the only one who had that information. Should I be responsible for guessing on each trade if I'm going to get screwed with an almost 1000% fee or does the broker have some accountability in this?

To be fair, yes! We enter this game know option traders loss over 98 percent of the time.

No. But if I own the shares and they are collecting dust, why don't I? I can terminate the loan at will any time. I have done that numerous times. Like free money, better than selling covered calls.

For those who don't want shares loaned can you still use gtc orders to avoid loaning? I always use them on stocks low float movers. I put in a GTC sell order on 10,000 CB?? biotech I bought Friday $2.6-$3.1 using OutRTH at $4.40-$4.50. It did get filled, did my action prevent loans while in the $3s? Lots of educated players on this thread, thought you all might know.

 

[ironchef]

I completely agree with this statement. I also think if they know something that I have no way of accessing and they do absolutely nothing to mitigate the risk , they share responsibility.

Assuming they did what you said and then you found out if they didn't do that, you would have printed money. You sue the hell out of them then.

As a society, we like to sue whenever we lose, no matter the reasons and no matter who is responsible.

 

[ironchef]

To be fair, yes! We enter this game know option traders loss over 98 percent of the time.

For those who don't want shares loaned can you still use gtc orders to avoid loaning? I always use them on stocks low float movers. I put in a GTC sell order on 10,000 CB?? biotech I bought Friday $2.6-$3.1 using OutRTH at $4.40-$4.50. It did get filled, did my action prevent loans while in the $3s? Lots of educated players on this thread, thought you all might know.

Here is how one brokerage does it:

You don't have to do that. When they first want to borrow you shares, they either call or send you an email asking you. If you say no, they won't borrow. If you say yes, they then open a separate account, put those shares in it and sufficient funds in it to cover the short. You can terminate or sell those share any time. I currently have shares that the broker borrowed and the interest rate for borrowing this particular stock is 22%.

 

[FSU]

52 contracts on a $5K account?

Yep, their risk program would look at selling 100 $5 call spread for 4.95 as $500 in risk. Five thousand? You have plenty of money! Feel free to keep selling it!