Traders Made Expensive Bets That Facebook (FB) Would Crash
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Some traders were so certain that Facebook (Nasdaq: FB) would falter after its IPO that they were willing to pay up the nose to get shares to short.
Approximately 18 million shares of Facebook shares were on loan as of this morning, according to Data Explorers Ltd. This equates to short interest of 4.3 percent of the free float.
As of yesterday, traders that shorted the stock paid borrowing cost of 50% or more to get the hard to borrow shares. Today, shares to short are more freely available on Wall Street and borrowing costs have come done to 7% in some case, according to sources.
With borrows more easy to get, short interest on Facebook will likely balloon in the coming days.
Having shorts in the stock may not be a bad thing for investors however. In fact today's upside in the stock is in part being attributed to short covering after Needham & Company issued a bullish report on the company.
Shares of Facebook are up 2 percent currently to $31.65, but off the day's highs.
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Approximately 18 million shares of Facebook shares were on loan as of this morning, according to Data Explorers Ltd. This equates to short interest of 4.3 percent of the free float.
As of yesterday, traders that shorted the stock paid borrowing cost of 50% or more to get the hard to borrow shares. Today, shares to short are more freely available on Wall Street and borrowing costs have come done to 7% in some case, according to sources.
With borrows more easy to get, short interest on Facebook will likely balloon in the coming days.
Having shorts in the stock may not be a bad thing for investors however. In fact today's upside in the stock is in part being attributed to short covering after Needham & Company issued a bullish report on the company.
Shares of Facebook are up 2 percent currently to $31.65, but off the day's highs.
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