Wednesday, April 22, 2009

SPY Have Become Hard To Borrow

Developing story: Traders confirm several locations indicating SPDRs are no longer automatic borrow and have made their way to the Hard To Borrow list: pre-borrow call is needed versus automatic short prior, as not enough underlying inventory.

Have fun hedging the market when you can not short. Wholesale market squeeze is being orchestrated.

10:23 am update:

next step - bidless (and offerless) market. A good analogy would be trying to sell Helmlsey Manor in West Palm Beach. Then again, a 200 point drop in the market on bad news (once they come) from 855 will be less bad than from 755. Even DC is taught simple subtraction.

Update 2: CNBC "Stocks not going down on bad news is a good sign"... "Yes, a really good sign."

God be with us.

Update 3 compliments of a reader: "large institution has ordered a redemption in kind, exchanging SPDRs for underlying stocks."\

Update 4: Doug Kass disagrees:
I have received emails from several trading sources, stating that the market is rising because the SPDRs (SPY) are hard to borrow now and arbs are being squeezed.

This story is hogwash, as I just tried to borrow 500,000 SPDRs and had no problem doing so!

Position: Long SPY; short SPY puts and short SPY calls
Maybe Doug can disclose at what term and rate he got the borrow. Doug - I am dead serious - can I borrow 5 million SPY right now at 0% from you? Hell, will give you 1% Sphere: Related Content
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