stang351 said: I'm not planning to short something and sell it the same day,in my mind it might take a month for the world to end for this stock like I hope the implication is that you are are not going to do a round trip transaction in the same day. to close the transaction you need to buy the stock.
the board is fortunate to have someone, as knowledgeable and experienced a trader as yourself.. you think you can recognize semantics, while understanding the underlying reality.
one of his assistants did send me an email last night, which was blocked at work and i forgot to watch. just watched. he says he used interactive brokers and e-trade in 2016. takes a while for him to get to the point, but later he implies and eventually just says that he uses interactivebrokers account for shorting the pump and dump/penny stock types. he doesn't get into the fee structure much, but at least for his experiment he uses a smalish ($10k) balance, so i guess thats a positive. I'm looking into it. Tim is the definition of a short-term trader (when i subscribed 2 years ago... it was often buy or short, with a hold on the order of minutes... so i wouldn't be surprised if his broker isn't as good for a long-term short. Browsing through interactive broker's fees, at least to my eyes they aren't explained as clearly as most... but i don't see an overnight short fee. So thats nice, if I'm reading it right.
FYi - i have called in to Interactive brokers, and their fees are pretty reasonable. The overnight fee varies based on the security... quite dramatically. As opposed to the 1% nightly flat fee for shorts at Suretrader, the stocks i'd want to trade interactive brokers range from 8% to 200% annually. 200% annually is pretty close to the 1% nightly, but 8%.. pretty much nothing. Fee structure seems generally more reasonable as far as monthly fees ($10-15/mo, offset somewhat by commissions), access fees and trade commsions (capped at .005%.. so $50 for a $10k trade, not terrible) Long story short it seemed legit and reasonable enough that I have funded it. Should be interesting.
Nothing at Interactive Brokers is ever as good as it "seems" and in many cases like this one they turn out to be downright terrible. When calculating the borrow fee they always round up on the value of the stock. That means if you tried to short a .10 penny stock with a 20% borrow rate, they would charge you 20% on $1.00 per share, so your 20% goes to 200%! Additionally, IB doesn't allow you to margin OTC stocks, which if you read my post earlier in this thread means that they don't have any to lend. In addition, "For short positions in stock where the last sale price/share is less than $5, then the maintenance margin requirement is $2.50 per share or 100% of the stock value, whichever is greater." So, take that $.10 OTC BB stock and say you want to short 100 shares with a 20% borrow rate. You're probably thinking you need to put up $5 in margin and pay a few cents in borrow fees. In reality you'll need to put up $250 in margin (for a $10 position) and pay a 200% borrow fee. That pretty quickly eats up any illusory saving on commissions. Not to mention, aren't you just a little upset that the helpful friendly rep at IB failed to let you know about all these dramatically important factors in your decision to move to them in order to short penny stocks? Don't worry, he probably wasn't doing it on purpose, he's just so incompetent that he genuinely didn't know. One more great thing about IB, you get to work with the world's least intelligent customer service team.
We went through a couple tickers and in some cases they confirmed there were no shares available to short; in others they said they had X available. I guess I'll make sure I call and verify those rates before investing. Thats not great to hear, obviously. Annoyed at myself for missing that earlier in the thread.