6 ms·
Serious question asked from a place of naïveness: how do you short at IPO assuming one doesn't already have stock?
by Jenk 5y ago
Serious question asked from a place of naïveness: how do you short at IPO assuming one doesn't already have stock?
- notyourday 5y agoYou cannot short an IPO. You cannot short post IPO until the stock becomes marginable. What you can do, if have a lot of $$, is have one of the desks immediately at after the IPO write you a synthetic short position using an over the counter option.
- bpodgursky 5y agoYeah you can't do it through the platforms, but if you know someone bullish IRL there's nothing stopping you from making a meatspace agreement to sell them 100 shares of backblaze for $10 one year from today.
- erik_seaberg 5y agoI think the SEC would view that as an unregistered put option (only legal for accredited investors), though I can imagine a gentleman’s agreement to quietly settle it in cash.
- bpodgursky 5y agoYeah I mean, you also can't really bet on football games, but...
- notyourday 5y agoThat does not account for the counter-party risk
- bassingtonfish 5y agoUsually no borrow until 2 days after. You have to wait until shares hit lending pools (basically people saying they are willing to lend out their shares for a fee). This doesn't happen until trades from the IPO "settle" t+2 (standard time for a trade from a buyer to a seller to be booked, and for a buyer to actually receive ownership of the shares. Ownership in this case meaning you can lend / margin them etc) Options usually won't be listed for a week or so at the earlier until after the IPO, so whoever mentioned that below is wrong. Varies deal to deal and if traditional listing / direct but that is the gist.
- dougSF70 5y agoYou cannot.
- secondaryacct 5y agoNever short: capital is asymetric and you can be screwed by irrational spending faster than it dries out.