What's the actual cost of borrowing and shorting financial ETFs?

Discussion in 'ETFs' started by mizhael, May 24, 2010.

  1. Any one knows the real numbers?
    I would imagine the financial ETFs such as FAZ and FAS are hard to borrow and short... and same to many ETFs...
    Please shed some lights on me.
  2. Paul Rose

    Paul Rose

    Maybe I'm missing the point of your post, but why would your ever short FAZ (3x short russel) instead of just going long FAS (3x long russel)?
  3. I am just asking about the shorts, wanted to understand shorting better.

  4. S2007S


    Financial Bull 3X and Financial Bear 3x etf, not russel!
  5. Paul Rose

    Paul Rose

    FAZ is "Financial Bull 3x"

    Where Financial="Russel 1000 Financial Services index"

    Yes, I should have said "russel 1000" instead of russel, but I figured everyone would know what I meant.

    from http://finance.yahoo.com/q/pr?s=FAZ+Profile

    Direxion Daily Financial Bear 3X Shares
    The fund seeks daily investment results, before fees and expenses, of 300% of the inverse of price performance of the Russell 1000 Financial Services index.

    Point was that FAZ and FAS are inverse, so no need to short FAS (just long FAZ) and vice versa
  6. that is a great question and since i am a nice guy i will answer.

    at IB they have a short position interest rate that they post on thier site.

    i think i pay 5.5% anual for fas and 1.5% for faz. not sure, what it is today, but that was what it was about 3 months ago.

    and the reason he would short, is becasue there is a time decay. it is a no brainer and the right way to play it.

    do your thing... gl... but there is a small catch so be careful. pm me and we can discuss
  7. Paul Rose

    Paul Rose

    I learn something new every day. I don't actually trade these, but the post made me curious. The leveraged ETFs (long and short) tend to lose value over time in volatile markets (easy to see in long term charts of FAZ vs FAS), but maybe risky if one leg gets called, etc?

    Like I said, it doesn't matter to me since I don't trade them, but I'd love to hear how it works in the real world (if it doesn't give too much away).
  8. Are they always available to borrow for short?

    Once I got a notice that they were not available...
  9. drcha


    I do not mess with the 2x and 3x ETFs, but I have had minimal trouble shorting other ETFs. I have shorted stuff trading <100,000/day without much difficulty. Once in a while I get a notice from IB that they may have to buy me in, but so far they have not ever done it.
  10. on IB there is no problem. i have had them short for 3 months. on etrade... they were not available as in un-shortable
    #10     May 25, 2010