And although the interest continues to rise for them, shorts aren’t going down without a fight. The short borrow fee is an interest that shorts must pay for borrowing AMC shares. And regrettably for them it’s getting worse the longer they hold. Hedge funds currently shorting the stock are losing money every day. Keep an eye on this interest as it will determine just how much shorts are bleeding. When an interest fee is extremely high, it makes a stock difficult to borrow which obligates the short seller to close their positions.ĪMC’s short borrow fee rate as of 11/8 is: 0.60% according to Stonk-O-Tracker. “A short position may be maintained as long as the investor is able to honor the margin requirements and pay the required interest and the broker lending the shares allows them to be borrowed.” – Investopedia This is rare and only occurs if the the seller isn’t paying the interest fee, or the interest fee is ridiculously high. However, lenders do have the right to demand the seller closes their position with minimal notice. Now, there are currently no rules regarding how long a short can hold before closing out their position. Are shorts obligated to close their positions? Let’s start with the fundamental question. So, why aren’t shorts covering their positions yet? What do retail investors need to do to squeeze hedge funds out of their money? Are shorts obligated to close their positions?
You’ve been holding through the ups and downs and even buying the dips.
Retail investors have been waiting patiently for AMC Entertainment stock to rip. Welcome to – the blog that fights for you, the retail investor. See, it’s like saying, “when will retail investors sell their positions?” But there will be more.Every retail investor holding a position in AMC wants to know, when will shorts cover their positions? And I don’t blame you. You find some anomaly, and that anomaly usually goes away, but the one thing you can reliably predict is that there will be some other anomaly that will surprise you, because it will be different. “That’s sort of the thing with behavioral finance. “I wouldn’t expect it to be exactly the same,” Fedyk says. Perhaps instead of going to the moon, the meme stocks of tomorrow will be destined for Mars or Saturn. They just won’t be exactly like GME or AMC. In the constant churn of news stories and the companies’ ability to fundraise off their stock prices, Fedyk sees “all of the necessary ingredients” for more stocks to explode on similar lines in the future. “They are not as prone to short selling, so if they see something they’re gonna act on it, it’s usually a buy.” On top of that, a widespread appetite for what she calls “lottery-like” returns isn’t new.
They don’t tend to sell, because they don’t have that many holdings to begin with,” she says. The Fox News–QAnon Rift That Maybe Revealed Tucker Carlson Asking Hunter Biden to Help His Son Get Into Collegeįedyk pointed to research suggesting that when retail investors see news coverage of a particular stock, they tend to either buy it or do nothing at all*. Jeffrey Epstein’s Little Black Book Makes Its Courtroom Debut I Really Don’t Want the House My In-Laws Are Giving UsĪlice Sebold’s Memoir About Her Rape Is Even More Brutal to Read Now And indeed, as you know, there’s no limit to the liability.” So you’ve got this other variable, where if the stock gets favored by the retail investor, then that short could just be really expensive. “The sort of thing that I’ve heard-and it’s kind of obvious, right?-is that the risk has increased for doing a short like that. “Given that these institutional investors were punished in terms of these meme stocks, it makes it much less likely that they’re going to take the sort of risks that they took before in terms of short positions,” Harvey says. In theory, a short seller has infinite downside, because a stock could go up an untold amount rather than just dropping to zero.) (A short seller borrows a share of a stock, sells it, and hopes to buy it back at a lower price before returning it to the lender. Winding up on the wrong side of organized retail investors might feel like an extra risk, though, given how high-profile the GameStop and AMC rallies were and how expensive they got. “This is just another contributing player that may do the same.” “Institutional investors have been trying to play each other for as long as they’ve been around,” Fedyk says.