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Re: 100%, yes for companies with a reasonable minimum market cap. The one thing not really being explained enough is that short interest as reported through th

Re: 100%, yes for companies with a reasonable minimum market cap. The one thing not really being explained enough is that short interest as reported through the exchanges is reported bi-monthly. You can imagine that with current events that is an eternity to wait for the next update.

konjin 6y ago
Also worth noting is that these are the official channels, there are plenty of dark pools where there are no rules but all sorts of exotic instruments are being traded in volumes that boggle the mind. I worked at one quite some years back.
- deleted 6y ago
  [deleted]
- ceh123 6y ago
  Could you explain a little bit more about this? Or point me in a direction where I could find out more? Super curious. Thanks
  - ls612 6y ago
    A dark pool is just a private securities market. They don’t have to disclose much since the general public can’t participate but they can trade all sorts of exotic instruments without a lot of the “public focused” regulations.
    - koolba 6y ago
      They can also trade run of the mill securities in large quantities without moving the market or making known that a large position shift is happening.
      - KMag 6y ago
        > They can also trade run of the mill securities in large quantities without moving the market or making known that a large position shift is happening. For US public equities, dark pools are still required to print all trades to the public consolidated ticker. They hide potentially huge volumes of hidden orders waiting in their order books, but they don't hide actual position shifts (trades).
    - potsandpans 6y ago
      what is an "exotic instrument"?
      - apaprocki 6y ago
        e.g. A custom tailored interest-rate swap[1] to hedge very specific circumstances between two parties. Or if you like cool names, maybe a gigantic Bermudan swaption[2]. Or maybe two traders want to take opposite ends of bizarre 10 leg option with unlisted strike prices... [1]: https://en.wikipedia.org/wiki/Interest_rate_swap#Extended_description https://en.wikipedia.org/wiki/Interest_rate_swap#Extended_de... [2]: https://en.wikipedia.org/wiki/Swaption https://en.wikipedia.org/wiki/Swaption
      - KMag 6y ago
        An exotic instrument is basically any contract more complicated than a simple put or call option. For a slightly fictionalized version of why these might be useful in the real world, let's say a Finnish life insurer is selling life insurance in Hungary. So, they're doing their accounting (the numerare) in Markka (FIM), taking in payments in Forints (HUF), and exposed to changes in Hungarian mortality rates. So, for the next 30 years, this insurance company wants some secondary protection against adverse shifts in the Hungarian mortality curve, but to make that insurance less expensive, they only want protection if those losses in HUF, converted to FIM exceed 100 million FIM. So, this insurance company goes to the structured products desk of large multi-national firm and gets a very bespoke option created. The multi-national sells this single contract to the insurance company, and hedges the individual FX components using FX options and the actuarial risk with actuarial derivatives. There's basically no market for this stuff, so the large multi-national basically commits to hedging out the other side of this contract for the next 30 years. I've worked with optimizing risk modeling for exotics, because it turns out that for some of the more complex exotics, the daily computational costs get very expensive for basically re-calculating a first-order multidimensional Taylor approximation (the risk components) of these contracts. Every day, we then take these risk calculations and buy/sell a bunch of simple options to bring the first-order partial derivatives (risk components) back close to zero.
        6y ago
- mike00632 6y ago
  The way you describe it sounds super exciting. It's like a trading speakeasy.
- splistud 6y ago
  There are different rules, but there are rules and regulations there as well
dmw_ng 6y ago
There are higher frequency indicators capturing essentially the same dynamic derived from securities lending agents (e.g. borrow rate, availability) and option markets (estimated from end of day open interest)
- apaprocki 6y ago
  Of course, but those other estimated/derived numbers are not what retail investors are looking at. Everyone tries to get an edge with math, models, or subsets of data and fill the gaps, but the official number is a reported figure.

konjin 6y ago

Also worth noting is that these are the official channels, there are plenty of dark pools where there are no rules but all sorts of exotic instruments are being traded in volumes that boggle the mind. I worked at one quite some years back.

deleted 6y ago
[deleted]
ceh123 6y ago
Could you explain a little bit more about this? Or point me in a direction where I could find out more? Super curious. Thanks
- ls612 6y ago
  A dark pool is just a private securities market. They don’t have to disclose much since the general public can’t participate but they can trade all sorts of exotic instruments without a lot of the “public focused” regulations.
  - koolba 6y ago
    They can also trade run of the mill securities in large quantities without moving the market or making known that a large position shift is happening.
    - KMag 6y ago
      > They can also trade run of the mill securities in large quantities without moving the market or making known that a large position shift is happening. For US public equities, dark pools are still required to print all trades to the public consolidated ticker. They hide potentially huge volumes of hidden orders waiting in their order books, but they don't hide actual position shifts (trades).
  - potsandpans 6y ago
    what is an "exotic instrument"?
    - apaprocki 6y ago
      e.g. A custom tailored interest-rate swap[1] to hedge very specific circumstances between two parties. Or if you like cool names, maybe a gigantic Bermudan swaption[2]. Or maybe two traders want to take opposite ends of bizarre 10 leg option with unlisted strike prices... [1]: https://en.wikipedia.org/wiki/Interest_rate_swap#Extended_description https://en.wikipedia.org/wiki/Interest_rate_swap#Extended_de... [2]: https://en.wikipedia.org/wiki/Swaption https://en.wikipedia.org/wiki/Swaption
    - KMag 6y ago
      An exotic instrument is basically any contract more complicated than a simple put or call option. For a slightly fictionalized version of why these might be useful in the real world, let's say a Finnish life insurer is selling life insurance in Hungary. So, they're doing their accounting (the numerare) in Markka (FIM), taking in payments in Forints (HUF), and exposed to changes in Hungarian mortality rates. So, for the next 30 years, this insurance company wants some secondary protection against adverse shifts in the Hungarian mortality curve, but to make that insurance less expensive, they only want protection if those losses in HUF, converted to FIM exceed 100 million FIM. So, this insurance company goes to the structured products desk of large multi-national firm and gets a very bespoke option created. The multi-national sells this single contract to the insurance company, and hedges the individual FX components using FX options and the actuarial risk with actuarial derivatives. There's basically no market for this stuff, so the large multi-national basically commits to hedging out the other side of this contract for the next 30 years. I've worked with optimizing risk modeling for exotics, because it turns out that for some of the more complex exotics, the daily computational costs get very expensive for basically re-calculating a first-order multidimensional Taylor approximation (the risk components) of these contracts. Every day, we then take these risk calculations and buy/sell a bunch of simple options to bring the first-order partial derivatives (risk components) back close to zero.
      - 6y ago
mike00632 6y ago
The way you describe it sounds super exciting. It's like a trading speakeasy.
splistud 6y ago
There are different rules, but there are rules and regulations there as well

dmw_ng 6y ago

There are higher frequency indicators capturing essentially the same dynamic derived from securities lending agents (e.g. borrow rate, availability) and option markets (estimated from end of day open interest)

apaprocki 6y ago
Of course, but those other estimated/derived numbers are not what retail investors are looking at. Everyone tries to get an edge with math, models, or subsets of data and fill the gaps, but the official number is a reported figure.