Tesla (TSLA) Shorts Pay Premium as SolarCity Deal Hangs in the Balance

September 22, 2016 12:05 PM EDT

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Tesla (Nasdaq: TSLA) shares are down around 15 percent for 2016, to-date, but that doesn't mean short-selling the stock is getting any cheaper.

The WSJ, citing data from S3 Partners, says some investors looking for downside in Tesla are paying anywhere from 90 to 120 percent (on an annualized basis) for the rights.

Shorting Tesla stock had been closer to 14 percent since last June, when it announced a merger with SolarCity (Nasdaq: SCTY). Typically, the majority of stocks come with rates of 0.3 to 0.5 percent to short.

That could provide and additional "squeeze" higher in TSLA, or when a stock moves higher as shorts buy shares to close positions.

TSLA is down 0.4 percent Thursday.

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