02-07-2014, 04:51 AM
I believe there is something else going on, but I do not have all the data to confirm this. My broker has increased their loan rate from 3% on IOC shares to 7% over the last two weeks. I have been hounded to loan my shares on a daily basis. This tells me one of three things.
1. Shorts are loading up for another raid. I think this would be risky at this point since we seem to have found a floor.
2. Large players are positioning their shares in ways that they are no longer available for loan such as selling covered calls. I have not followed the option volume recently enough to confirm whether this is reasonable or not.
3. Shares are turning over and are not immediately available for loan by large players - meaning the shareholder base is becoming more fragmented. I would consider this a good thing.
If it were true that the shorts we getting nervous and covering, you would assume there wold be shares available to loan and brokers would not need to increase their loan rates.
Maybe some of you from the trading world can shed some light.
CF
1. Shorts are loading up for another raid. I think this would be risky at this point since we seem to have found a floor.
2. Large players are positioning their shares in ways that they are no longer available for loan such as selling covered calls. I have not followed the option volume recently enough to confirm whether this is reasonable or not.
3. Shares are turning over and are not immediately available for loan by large players - meaning the shareholder base is becoming more fragmented. I would consider this a good thing.
If it were true that the shorts we getting nervous and covering, you would assume there wold be shares available to loan and brokers would not need to increase their loan rates.
Maybe some of you from the trading world can shed some light.
CF