3 ms·

Not sure if you're joking or not, but I'll offer a quick explanation. Interest in this context does not mean interest on a loan, but rather how many people are

by olympus 13y ago

Not sure if you're joking or not, but I'll offer a quick explanation. Interest in this context does not mean interest on a loan, but rather how many people are interested in shorting the stock. The 46% short interest meant that almost half of Tesla's stock was shorted. To put it another way, 46% of Tesla's stock was loaned out from various parties to sell to other various parties. This is a bad thing for the short sellers because they now have to pay more for their borrowed stock than they got for selling it in the first place. It's like owing more for your car than the car itself is worth.

jamesaguilar 13y ago
Probably isn't joking. That is also the claim I initially thought was being made.
pyoung 13y ago
Got it, thanks. Do brokerages charge interest rates for allowing shorts to borrow the stock?
- revelation 13y ago
  olympus actually misunderstood me, and you were spot on :) Brokers do charge interest rates and the rates for TESLA really were 45% (current) and 85% (once upon a time) annualized, mostly because of a deficiency in available shares. At that point it was costing 60c per share a week just to keep your short position. Theres plenty of discussion here: http://www.teslamotorsclub.com/showthread.php/15183-Cost-to-Borrow-Tesla-Shares-for-Shorting-Hits-85 http://www.teslamotorsclub.com/showthread.php/15183-Cost-to-...
  - olympus 13y ago
    Oh, wow. With numbers that high it never crossed my mind that you were talking about loan interest. Normally the interest you pay to short a stock is single digits, and if you have enough money it can be <1%. I was thinking of this: http://www.investopedia.com/terms/s/shortinterest.asp http://www.investopedia.com/terms/s/shortinterest.asp You can see the short interest in TSLA here published twice a month: http://www.nasdaq.com/symbol/tsla/short-interest http://www.nasdaq.com/symbol/tsla/short-interest which is very high compared to AAPL's short interest: http://www.nasdaq.com/symbol/aapl/short-interest http://www.nasdaq.com/symbol/aapl/short-interest which hovers around one day to cover.

by olympus 13y ago

jamesaguilar 13y ago

Probably isn't joking. That is also the claim I initially thought was being made.

pyoung 13y ago

Got it, thanks. Do brokerages charge interest rates for allowing shorts to borrow the stock?

revelation 13y ago
olympus actually misunderstood me, and you were spot on :) Brokers do charge interest rates and the rates for TESLA really were 45% (current) and 85% (once upon a time) annualized, mostly because of a deficiency in available shares. At that point it was costing 60c per share a week just to keep your short position. Theres plenty of discussion here: http://www.teslamotorsclub.com/showthread.php/15183-Cost-to-Borrow-Tesla-Shares-for-Shorting-Hits-85 http://www.teslamotorsclub.com/showthread.php/15183-Cost-to-...
- olympus 13y ago
  Oh, wow. With numbers that high it never crossed my mind that you were talking about loan interest. Normally the interest you pay to short a stock is single digits, and if you have enough money it can be <1%. I was thinking of this: http://www.investopedia.com/terms/s/shortinterest.asp http://www.investopedia.com/terms/s/shortinterest.asp You can see the short interest in TSLA here published twice a month: http://www.nasdaq.com/symbol/tsla/short-interest http://www.nasdaq.com/symbol/tsla/short-interest which is very high compared to AAPL's short interest: http://www.nasdaq.com/symbol/aapl/short-interest http://www.nasdaq.com/symbol/aapl/short-interest which hovers around one day to cover.