Trade recap for September 18th

Daily profit: ($915.85)

Weekly profit: $271.03

Trades:
+    SLD    201    SPDE    false    Stock    7.100    USD    DRCTEDGE    08:04:01        1.00
+    SLD    2,599    SPDE    false    Stock    6.703    USD    DRCTEDGE    09:30:18        13.48
BOT    10,000    LFBG    false    Stock    0.0350    USD    SMART    09:35:03        1.75
+    SLD    10,000    LFBG    false    Stock    .034    USD    SMART    09:50:55        1.70
BOT    400    UFI    false    Stock    3.38    USD    SMART    09:57:02        2.00
+    SLD    400    UFI    false    Stock    3.400    USD    SMART    10:07:05        2.00
+    BOT    300    ARNA    false    Stock    4.920    USD    SMART    11:09:29        1.50
+    SLD    300    ARNA    false    Stock    4.930    USD    SMART    11:15:13        1.50

Disclosure: No positions. I have a disclosure policy.

How to borrow shares to short

To sell short, a trader first needs to borrow shares that will be sold short. For the most part, brokers will only lend shares if they have other customers who own the shares. While there is an inter-broker stock loan market, it is not very well developed (LocateStock.com is one company that provides such services to brokers; AQS is another). The method of borrowing shares differs at different brokers. For most normal discount brokers, you need to place a short order and then if no shares are available the broker will reject the order because there are no shares to borrow. Following are instructions for many different brokers on how to borrow shares to short and how to see which stocks are available to short.

Common Brokers

E*Trade –  There is no way to determine which stocks are shortable. You must enter a short order and if it is rejected then that stock is not shortable at the present time. Shorting stocks priced below $1 per share is prohibited. Etrade has instituted a hard to borrow program that allows for the possibility of shorting hard to borrow stocks. You can read more and enroll here. If a stock is hard to borrow you will be quoted a borrow fee as an annual interest rate and once you accept that fee the order will be sent to the market.

Lightspeed Trading – Lightspeed generally sets up clients to clear through Penson, although they can clear through Goldman Sachs. They tell me that they also obtain borrows that they get from other sources as well. The Lightspeed trading platform will display a symbol if a stock is not readily available to short. According to Lightspeed, “We have a standing request with our clearing firms to locate or pre-borrow a certain quantity of every hard to borrow stock.” If a hard to borrow stock is in inventory through that standing request, it will be marked as available to short in the Lightspeed platform. If a stock is marked as hard to borrow in the trading platform, the user can send a request for the borrow through email or live chat. Lightspeed will then make an additional attempt to secure the requested shares for that specific user.

Scottrade –  There is no way to determine which stocks are shortable. You must enter a short order and if it is rejected then that stock is not shortable at the present time. Scottrade generally has poor short stock availability. Shorting stocks below $5 per share is prohibited.

Centerpoint – At the bottom of the level 2 montage there are the letters “ETB”. If the stock is not easy to borrow then those letters are greyed out. In the image below they are in greyed out, meaning that CLNO is not easy to borrow/short. Stocks that are not easy to borrow may be located using the locate monitor in Sterling Trader Pro.

centerpoint_sterling

TD Ameritrade – There is no way to determine which stocks are shortable. You must enter a short order and if it is rejected then that stock is not shortable at the present time. TD Ameritrade generally has poor short stock availability (although sometimes they will have shares of hard-to-borrow stocks). Shorting non-marginable stocks (including all OTC stocks) is prohibited.

Tradestation – Tradestation primarily self-clears for stock trades. The Tradestation platform has a “Short Locate” function, which search for hard to borrow securities. About 20-30% of the times when IB does not offer shortable securities they can be found on Tradestation (this is according to a reader)). It takes around 30 seconds up to 15 minutes; usually under 2 minutes) to get the answer from a “locate request” – using their built-in platform locate tool. Tradestation does not allow short selling of OTC stocks or stocks under $2.50 per share.

Other random discount brokers – Most small discount brokers clear through Penson Financial (which has now changed its name to Apex Clearing), so the borrows would be the same, although the method for borrowing shares may be different. Noble Trading, Cobra Trading, and LowTrades.com all clear through Penson.

Recommended Broker

Interactive Brokers –  I like to use the FTP text version of IB’s short stock list: Shortable Stocks FTP (when prompted for a password just hit enter or okay). The FTP link will show a large text file; use your browser’s search function to find a stock by name or ticker. An HTML version of the shortable stocks list is also available. Both show how many shares are available to short and what interest rate a trader must pay to borrow said shares. For example, the FTP link shows each stock on a line that looks like this: “AMEL|USD|Amerilithium Corp|73282418|US03077G1067|03077G106|-2.69|NA|NA|20000|”. The first entry is the ticker, the next the base currency, followed by name, two different identification numbers I’m not familiar with, the stock’s CUSIP, and then the indicative annual interest rate (positive numbers indicate a short sale rebate, in other words you get paid to hold the short position). The right-most entry is the number of shares available. The top line of the file indicates when the data were updated (ie, #BOF|2010.06.07|13:30:03) and the second line shows each column’s headers. So the line above indicates that as of 1:30pm EST on June 7, 2010 there were 20,000 AMEL to short at an annualized interest rate of 2.69%. The interest rate can change from day to day as the stock becomes more or less easily available to short.

If you log in to your account and go to “Tools > Short Stock Availability” you can see more detailed data on how many shares of a stock were available at different times. Interactive Brokers has detailed instructions on how to use this tool. I have also configured my Trader’s Workstation software to show the “Shortable” column. Below is a detailed video of how to do that. IB allows short selling stocks of any price (although short selling stocks under $2.50 requires more capital) and allows short selling of OTC BB and Pink Sheets stocks. Interactive Brokers does not allow for reserving shares to short; the first trader to get a short order filled gets the shares. Because Interactive Brokers’ system automatically searches for stock to borrow from various lenders and then displays how many shares are shortable, if it shows that there are no shares to short, placing an order to short is almost futile. You can place an order, which will cause the system to automatically look for more shares, but I have found that to almost never result in the system finding shares. The one benefit of placing an order is that TWS should notify you if you place a short order for which there are no shares and shares do later become available.

[Update 2017-5-3]: Interactive Brokers allows preborrowing shares to short of any stock. To submit a preborrow order you must have a Portfolio Margin account (this requires approval and a minimum $110,000 equity in your account). Preborrow orders are accepted on all US stocks and the minimum size for a preborrow order is $10,000. Preborrowing shares reduces the likelihood of a forced buy-in and will enable a short seller to sell short stocks that are hard to borrow. Preborrowed shares can be held without shorting the stock for up to 3 days (afterwards they will be automatically returned). There is a $20 per ticket charge for each filled preborrow order.

See the first video below for how to use the shortable column. The quick way to add it is to right-click the column header just to the right of where you want the shortable column, then select “Insert column before XXX column” > “Contract Description” > “Shortable”.

Below is a video about how to use Interactive Brokers’ short stock availability tool. (Direct link to video)

Disclosure: Updated 4-12-2018 to add info on Tradestation. No positions. I use Interactive Brokers (which I love) and Centerpoint Securities (clearing through Vision Financial). I have my IRA accounts at TDA (formerly Scottrade).  I have an account at Etrade that I rarely use. I have a disclosure policy.

If a stock is marked as hard to borrow in the trading platform, the user can send a request for the borrow through email or live chat. Lightspeed will then make an additional attempt to secure the requested shares for that specific user.

Watchlist for September 18th: Four witches

Tomorrow is quadruple witching day: stock index futures, stock index options, single stock futures, and stock options all expire. Expect volatility. Either my scans are not comprehensive enough or (more likely) I lack imagination. Only two stocks interest me much tomorrow.

HCEI – A former zero-volume stock, this ran big today. It likely has more run left in it tomorrow, though as always, with the crappiest penny stocks a trader needs to sell at the first sign of weakness.

SPDE – Big move on news, volume was 5x higher than any previous day in last six months. Tim Sykes is long, I’m long, The Lionmaster is short. It did hold $7 nice throughout the day but did fade a little towards the end and didn’t make new highs towards the end of the day like I like on stocks I hold long overnight. I think this could spike or drop in the morning, but it is quite possible it will do what many one-day spikers have done recently and just be choppy and not move big.

Disclosure: Long 2800 shares of SPDE @ $7.055 that I bought in after-hours trading. I have a disclosure policy.

Trade recap for September 17th: "I'm going to destroy this stock"

When the Reaper says “I’m going to destroy this stock,” you might want to watch out. I posted that in the TimAlerts members-only chatroom (sign up here for Timalerts) as I advised anyone long AEXP to sell before I started selling short. AEXP was a Stockpreacher / Beacon Equity pump from $1 and I started shorting at $1.90. I averaged my position up to 6500 shares at $2.12 as it hit a high of $2.55. I later covered at an average of about $1.58 for a cool 25% profit margin. At the time I had finished covering my position my trading represented over 3% of the volume in AEXP today.

I also went long 20,000 shares of GVBP at $0.26 this morning in pre-market trading but that trade was busted as a trade-through. It was still a nice risk/reward: my risk was the $26 in commissions I paid and my potential reward was over $5,000. So even with a 99% chance of the trade being busted I thought it worth a shot.

I am happy with my trading today and am glad to be in the green for the week.

Today’s profit: $4,622.95

My trades today at IB:
BOT    0    GVBP    false    Stock (OTCBB)    0.0000    USD    ARCAEDGE    08:55:45        13.50
BOT    0    GVBP    false    Stock (OTCBB)    0.0000    USD    ARCAEDGE    08:55:48        12.50
BOT    10,000    AVVH    false    Stock    0.0100    USD    SMART    13:01:07        1.00
BOT    20,000    AVVH    false    Stock    0.0100    USD    SMART    13:01:30        1.00
BOT    200    ZOOM    false    Stock (SCM)    9.65    USD    SMART    13:23:14        1.00
SLD    30,000    AVVH    false    Stock    0.0090    USD    SMART    13:23:24        1.35
SLD    200    ZOOM    false    Stock (SCM)    10.29    USD    SMART    13:30:16        1.00

Beacon Equity disclaimer on AEXP:
aexpdisclaimer

Note: After I recorded the video and made this post I made the following trades:

+    BOT    10,000    SPDE    false    Stock (SCM)    7.497    USD    ISLAND    15:18:30        50.00
+    SLD    8,000    SPDE    false    Stock (SCM)    7.600    USD    SMART    15:19:06        40.00
+    SLD    2,000    SPDE    false    Stock (SCM)    7.670    USD    ISLAND    15:20:59        10.00
+$1072.30. My daily profit has been updated to reflect this.

SPDE_profit
(click image for full-size screenshot of my SPDE profit)

Disclosure: No positions. I have a disclosure policy.

Trade recap for September 16th: Two 'never' mistakes

See the video for my important thoughts on a few horrid mistakes I made today. I was still up for the day but I should have made $1000 more than I did. Furthermore, I was lucky: my mistakes could have caused me much worse losses.

Today’s profit: $457.53

Disclosure: No positions. I have a disclosure policy.

Genova Biotherapeutics is a perfect pump & dump

If you have ever wondered what a pump & dump is, take a look at the financials of Genova Biotherapeutics (10Q here). They have $35,000 in the bank and somehow are confident that can use that money and patents they bought for $92,000 to develop a cure for cancer.

The company was formerly a travel agency:

“From inception, Kinder Travel Inc. had been a travel agency offering a full range of travel services including corporate travel, vacations, cruise holidays, and group tours. Since Kinder Travel Inc. was incurring continued losses in the travel industry, the Board of Directors decided it was in the best interests of the Corporation to pursue other business opportunities. Through his past contacts in the bio-medical industry, the then President of Kinder Travel Inc. initiated negotiations with Phoinos Oxford Lifesciences Limited, a company incorporated under the laws of the Federation of St. Kitts & Nevis (“Phoinis Oxford”), for the purchase of medical patents for the treatment of prostate and breast cancers.  On April 15, 2009, Kinder Travel Inc. entered into an asset purchase agreement dated April 15, 2009 (the “Asset Purchase Agreement”) with Phoinos Oxford.

The Company subsequently changed its to “Genova Biotherapeutics Inc.” Our shares of common stock now trade on the Over-the-Counter Bulletin Board under the symbol “GVBP.OB”.”

The company has issued numerous misleading press releases:

GENova Biotherapeutics and Prime BioResearch signs LOI on diabetes and cancer cure [Cure! Wow, they bought a few molecules and now they already have a cure (not just a treatment) for cancer!]

New stem cell identification technology could cure breast cancer [again, they are curing cancer!]

Genova doesn’t even own patented molecules. The patents are pending.The company states in another press release that “The Company is aggressively acquiring patents involving the latest generation of biotherapeutic technologies that can cure cancer without any side effects.” That is pretty amazing considering they have $35,000 (Canadian) in the bank. If they can buy cancer cures for that kind of money then they must be brilliant!

Numerous stock touts are pumping Genova stock and idiots are eating it up: the stock closed at $0.80 today on volume of 58 millions shares. Those who believe the hype will soon be left with very little, just as with all pump and dumps (such as recent favorite Spongetech, SPNG).

If you ever run across such a hyped-up company with no real assets, run far and fast. The press releases put out by Genova are over the top even for a pump & dump and I think it likely that the SEC will halt trading in the stock or sanction the company at some point.

[Update: GVBP was halted on 9/23/09 and will be unhalted on 10/6/09. See the SEC press release (PDF).[

Disclosure: No positions. I am a daytrader so I may trade this after the publication of this post.

Watchlist for September 16th

From my watchlist last night:

GVBP – I called it right … it went up, but more than I anticipated or could handle.

ZOOM – This was a nice short on red right out of the gate today. I was busy with other stocks at the open so I missed it.

For tomorrow:

SCII – weird merger news, sketchy and up way big in four days, from .04 to .37. Short on green/red, higher risk.

DIET – 140% price spike in three days on news of a $600,000 PIPE? Short on green/red.

GETG – recycled pump & dumper, up 126% in one day, but still very low priced. Short on green/red, higher risk.

FNET – Preston nailed this shorting as it faded off of highs today. Still up 96% on the day on no news. Short aggressively on green/red.

Disclosure: No positions. I have a disclosure policy.

Trade recap for September 15th

It appears that it is still not too late to sign up for Tim Sykes’ Las Vegas pennystocking seminar on October 18th and 19th. I will be in Las Vegas from Saturday October 17th until Tuesday October 20th and I will be staying at the Excalibur (yay for cheap rooms on the strip!). The seminar is truly a great deal as I explained in my earlier post on 8 reasons why you should go. For an investment of only $847 you get to attend a seminar that lasts for two full days (if you cannot attend, Tim offers the option of seeing a live webcast of the event), you get to meet such great pennystockers as myself and InvestorsLive of the InvestorsUnderground.com penny stock chatroom (not to mention Tim Sykes), you receive DVD recordings of the entire seminar, you receive one of Tim Sykes’ DVD packages of your choice, and you get to attend the wild and raucous pennystocking party Tim will hold at the end of the seminar day (at which I have foolishly pledged to buy a round of drinks for everyone and Tim Sykes will be goaded into doing likewise). So don’t be a party pooper and sign up for the Vegas seminar today!

Today I suffered more pain on GVBP as the pump continues. I cut my losses as it hit new highs late in the day (at $0.63); this was definitely the right choice as it quickly thereafter squeezed to $0.81. I had a nice little trade on RAME that was a nice breakout above $1.12; I wouldn’t have even noticed that had Investorslive not mentioned it in the InvestorsUnderground.com stock chat. I also shorted CNWI and will hold that for a few days or until it dumps … it is another pure pump & dump like GVBP but its upward momentum is already gone.

Daily profit: ($3,893.60)

Despite today’s loss I am currently in a week-long drawdown (in other words, I am back to the profit level I had a week ago).

Disclosure: Short 10,000 shares of CNWI. I have a disclosure policy.

Save time when searching for stock information

You can save time when searching for stock information by installing the following search engines into your browser’s search toolbar. These will work with Firefox and Internet Explorer and maybe other browsers.

Pinksheets.com – I added this search engine plugin. Great for quickly looking up information on OTC and pink sheets pump & dumps.

EDGAR Companies – These two search engines allow for searching the SEC’s EDGAR database of public company filings by company name or ticker.

Yahoo! Finance – This allows quickly searching by ticker on the most popular stock quote website.

Google Finance – As above, but with Google Finance; also works with company names.

Watchlist for September 15th and random thoughts

Only a couple stocks on watch tonight. I’ve been working on my taxes … one problem with being a full-time trader is that I have to deal with estimated taxes. And considering how much I banked last year I don’t just want to use the 110% prior year tax safe harbor provision … which means I have to calculate my income every single quarter to figure out what to send to Uncle Samwise (if you have no clue what I just said, please buy JK Lasser’s Your Income Tax 2009). My tax burden so far this year has paid for either two home-buyer subsidies, the pointless destruction of six working cars, or the bonus that Goldman would give to one janitor.

Another note: I’m about to purchase a very large uninterruptible power supply for my computer. Last Friday I had a two-second power outage that reset my computer and while I wasn’t in any trades, I do not want to deal with that again. In the event of a longer power outage a UPS would give me time to boot up my laptop before power to my main computer runs out.

ZOOM – Huge run today. This was not just because of the news of earnings at their subsidiary; if it were because of the news the stock would’ve gapped all the way up. Instead it ran most of the way late in the day. That means it was momentum buying that drove it up. This is a low-float stock and these are often runners. I would short but I am sure there will be no shares. It might get some follow-through buying tomorrow morning.

zoom

GVBP – Pure pump and dump (see Tim Sykes’ writeup). I’m short from $0.39556 following a Timothy Sykes TimAlert. This likely will go up more tomorrow and Wednesday and then fall. I had to short today because there will likely be no more shares available to short tomorrow.

gvbp

Disclosure: Short 18,500 shares of GVBP. I have a disclosure policy.

Oh, and if you want some light entertainment, check out this amusing use of the devil-spawn AutoTune: