Peyto Exploration & Development Corp T.PEY

Short Squeeze

[TerribleEng]

I do these occasional channel checks by trying to short shares of the companies I follow, at prices that would never get filled.

Yesterday I was able to short 50K shares without a risk review, and today not even 100 shares are available from my broker, period.

[Yasch22]

This post has been removed in accordance with Community Policy

[Yasch22]

This post has been removed in accordance with Community Policy

[TerribleEng]

No shares are available and borrows are being pulled. This is creating forced buy-ins.

[GoldStandard41]

The way shorting works is they don't need shares to be available to "sell" them. They take my or your shares without our knowledge or permission from brokerage pools. The only catch is when they want to get out. Then they need to buy on the market and replace what they stole from you earlier. So this just means price is generally going up and it's not in shorters favour. They can

[TerribleEng]

It's a little bit more complicated than that. If I short a stock. I initially don't need the stock to sell it. However at the time of settlement, my broker needs to find the stocks to deliver to the buying broker. If they can't find it, then it's a failure to deliver and the short seller gets a forced buy-in called on them. When you own stocks at a broker, there is a form, that

[Maxmoe]

Better description than goldy's. But your broker cannot lend your shares unless you have a margin account AND you have borrowed money from them to buy the shares. Check with IIROC. They are VERY adamant about this rule. When a mutual fund company or pension fund manager randomly calls the custodian demanding all their client's shares be returned by end of day they usually offer double or

[NotBornLastNite]

Thank you all for the great info.  Have a better understanding now.

[TerribleEng]

Thanks for the clear up Maxmoe.  Is the margin account a legal requirement or just a requirement for them to do it without permission? IB is doing it with cash accounts and fully paid margin accounts as part of a yield enhancement feature. https://www.interactivebrokers.com/en/index.php?f=46942#:~:text=Program%20Overview,pay%20interest%20to%20borrow%20them. When I had a forced buyin in Feb

[Maxmoe]

Hmmm. This is getting 'sneaky' with IB if you ask me,  and you did. IB, I don't know well but I expect they do not have a large pool of shares to access for lending purposes. So they have little choice but to force a buy in.  That being said, never,ever,never,ever expect any broker to do anything ever that will benefit you. Ever,never etc etc.  If you buy using margin

[Maxmoe]

Ummm.  Not exactly how it works. Shorts do need shares in order to sell them. They borrow them. There is a cost to borrow the shares. They borrow them from custodians like RBC Dexxia, State Street which big pension funds and mutual funds use. The funds get a piece of those fees or pay super cheap custody fees to allow the custodian to lend.  or the shorts borrow from the brokers they do