1

Recently I have had trouble finding the shares to short for positions I want to take at the start of open hours. Is it easier for a broker to find the shares in premarket when the stock is likely to increase volume heavily at the start of the day?

  • I don't understand your question. Selling short has nothing to do with the time of day. – Matthew Oct 21 '14 at 21:50
  • The ability to short requires the broker to find the shares to borrow. When there is heavy trading, brokers cannot always find the shares to borrow. Thus, premarket has lower volume, possibly making it easier to find the shares to borrow and short. – Ryan Sinclair Oct 22 '14 at 3:38
  • The market maker knows who has net long positions. It's easy to know how many shares they can short at any time. – Matthew Oct 22 '14 at 16:28
2

The shares available to short are a portion of those shares held by the longs.

This number is actually much easier to determine outside of active trading hours, but either way doesn't really impact the matter at hand since computers are pretty good at counting things.

If your broker is putting up obstacles to your issuing sell short limit orders in the pre-market then there is likely some other reason (maybe they reserve that function to "premium" account holders?)

2

I don't think that the trading volume would impact a broker's ability to find shares to short. You might think that a lot more people are trying to short a stock during regular trading hours than in the pre-market, and that's probably true. But what's also true is that a lot more people are covering their shorts during regular trading hours than in the pre-market. For stocks that have difficulty in finding shares to short, any time someone covers a short is an opportunity for you to enter a short.

If you want to short a stock and your broker is rejecting your order because they can't find shares to short, then I would recommend that you continue placing that order throughout the day. You might get lucky and submit one of those orders right after someone else has covered their short and before anyone else can enter a short. I have had success doing this in the past.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .