Bottom line is this is the way it has always worked. You just haven't noticed it previously. As I said - you could have been charged 3 days worth of interest and the borrow rate isn't determined until the settlement day so these types of trades are very risky and "you" have no control over what happens. My advice - admit the mistake - and learn from it. best of luck
I don't understand why anyone would risk a DITM short call on these HTB shares. Trade the put calendar.
Hi Guys, I am looking to learn the intricacies of Opts trading and this thread certainly gives one of those. Could you please tell me as a newbie what is the principal amount on which the 190% or the 386% borrowing fee is calculated ? Is it the value of the Stock that resulted from assignment of the call option ? Or is it the price of the Call option itself ? Also what are HTB shares and how to identify them ? Is the ES Futs contract considered a HTB thing ?
IB probably isn’t profiting off you either. They have an obligation to deliver the stock that has been assigned so they need to go to market and borrow or pay penalties costs which get passed on via the borrow cost.
Isn't it possible to buy share using this feature and avoid the 1 day loan fee? https://www.interactivebrokers.com.hk/en/index.php?f=13437
HTB = hard to borrow. When you short a stock you borrow the stock from someone, sell it and hope it goes down so you can buy it back at a lower price and return the borrowed stocks at a cheaper price. Some stocks fall under hard to borrow( small caps and other less liquid products). Your broker can locate them but the interest rate on borrowing these can be pretty high. Futures you never short a contract( borrow ), you either buy/ sell.