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Post by artman1033 on Jun 12, 2024 15:29:23 GMT -8
AAPL ALL TIME HIGH!$220.20All Time Highest TODAY intraday 194,031,540 shares traded today
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mark
fire starter
Posts: 1,624
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Post by mark on Jun 14, 2024 11:47:08 GMT -8
On the short squeeze perspective, it turns out the short interest is very small. Looks like the data is only updated monthly. I expect some people made some bets, similar to the options collars we hear someone report about around most Apple earnings or events. But Yahoo shows it at only 0.65% of float: finance.yahoo.com/quote/AAPL/key-statistics/FWIW GME is listed at nearly 30%, from a month ago when it wasn't yet in the news. As a better comparison, MSFT is 0.59%, GOOG is 0.32%, META is 1.36%, and NVDA is 11.84%. My guess is that especially on some of these large market cap stocks, some big holders choose to offset part or all of their holdings within an index fund. Similar to how Fisher Investments said they would be mostly in an index, and then basically double up on one section of the market they thought would do well, and shrink or remove one section of the market they didn't like. With offsetting long/short positions in this manner you don't have the added costs that doing this through options would have. And yet you can easily capture most of the market thorough an index, and potentially keep your qualified status on dividends or long term status on stocks, depending on the index and if it uses the special tax rules that some have. (And while there are various IRS rules that could be a problem, often the complexities aren't enforced, pretty much because they are too complex. Offsetting positions, in a spread (options long/short) or otherwise (ie stock long/short, or in this case long index, short individual), seem to be that way.) But you do have other costs. There is a cost involved in borrowing shares to short. Sometimes I loan out various shares that I own, and I am paid an interest rate for that. And that rate varies by how much the shares are in demand for shorting. I've received rates from 1% to 28.5% for my various shares. Never Apple, probably because there is relatively little demand for shorting Apple.
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4aapl
Moderator
Posts: 3,845
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Post by 4aapl on Jun 14, 2024 13:53:48 GMT -8
On the short squeeze perspective, it turns out the short interest is very small. Looks like the data is only updated monthly. I expect some people made some bets, similar to the options collars we hear someone report about around most Apple earnings or events. But Yahoo shows it at only 0.65% of float: finance.yahoo.com/quote/AAPL/key-statistics/FWIW GME is listed at nearly 30%, from a month ago when it wasn't yet in the news. As a better comparison, MSFT is 0.59%, GOOG is 0.32%, META is 1.36%, and NVDA is 11.84%. My guess is that especially on some of these large market cap stocks, some big holders choose to offset part or all of their holdings within an index fund. Similar to how Fisher Investments said they would be mostly in an index, and then basically double up on one section of the market they thought would do well, and shrink or remove one section of the market they didn't like. With offsetting long/short positions in this manner you don't have the added costs that doing this through options would have. And yet you can easily capture most of the market thorough an index, and potentially keep your qualified status on dividends or long term status on stocks, depending on the index and if it uses the special tax rules that some have. (And while there are various IRS rules that could be a problem, often the complexities aren't enforced, pretty much because they are too complex. Offsetting positions, in a spread (options long/short) or otherwise (ie stock long/short, or in this case long index, short individual), seem to be that way.) But you do have other costs. There is a cost involved in borrowing shares to short. Sometimes I loan out various shares that I own, and I am paid an interest rate for that. And that rate varies by how much the shares are in demand for shorting. I've received rates from 1% to 28.5% for my various shares. Never Apple, probably because there is relatively little demand for shorting Apple. On going long/short on options, it should balance out. On shares maybe it doesn't directly. In an ideal world the bet would work out, that maybe the index is going up 15%, the stock they short only 5%, and the extra stock that they go long on going up 30%. Maybe it's that simple. Or maybe it isn't. I do like to try to think about the other side of the trade. It's making sense to both sides.
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mark
fire starter
Posts: 1,624
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Post by mark on Jun 14, 2024 15:15:16 GMT -8
But you do have other costs. There is a cost involved in borrowing shares to short. Sometimes I loan out various shares that I own, and I am paid an interest rate for that. And that rate varies by how much the shares are in demand for shorting. I've received rates from 1% to 28.5% for my various shares. Never Apple, probably because there is relatively little demand for shorting Apple. On going long/short on options, it should balance out. On shares maybe it doesn't directly. In an ideal world the bet would work out, that maybe the index is going up 15%, the stock they short only 5%, and the extra stock that they go long on going up 30%. Maybe it's that simple. Or maybe it isn't. I do like to try to think about the other side of the trade. It's making sense to both sides. I do the same! All the time. I try to look at the other side of the trade, especially with options (because they are truly zero sum). For example, I saw that something like 20,000 of the GME Jun 21 125s traded a few days ago. I can't imagine why anyone would buy such a thing (for 35 cents!!!!!), but I can easily see selling them at that price. I still hold all those Jan '26 puts on Apple that I sold a while back (and as I recall, you sold some of those too) at strike prices between 125 and 175 or something like that. The "short against the index" trade mostly works if the timing is right and the delta between the index and the stock you are subtracting is high enough. Take, for example, a stock that costs 5% to borrow and short. If it drops 5% relative to the index in 6 months, then you've made 2.5% relative value. But if it takes a year and a half to drop 5% relative to index then you've lost 2.5%, even though you were directionally correct. Now, options could cost a similar amount depending how many rollovers you need to do, or if you choose to buy long-term options that are always more expensive. It's a balancing act, and it is not as easily done in real life as it sounds. Very large institutions can create a fund that subtracts out the stocks it doesn't want to include. For example, someone wants S&P500 minus the top 8 or 10, so they simply create their own fund that buys 490 or 492 stocks instead of 500 of them. No need to short, no need to incur the costs of shorting.
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