How To Reserve Shares To Short On Hard To Borrow Stocks
Posted by timothysykes on Sun 1st of Jun, 2008 04:23:07 PM
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When you wanna short sell these crazy Supernovas like KYUS, PDO and FPP, you gotta grab your shares early in the morning—think 7-8am—cuz everyone wants a piece of the action. Finding shares is the biggest obstacle when it comes to PennyStocking from the short side—especially on spamming pure plays like BSHF and KYUS, but the good news is that the shares are in such demand cuz the odds the stock dropping are so high! After all, it doesn’t take a genius to understand a stock up too much too quickly on fluff news/pumping/stock promotion, offers up some solid shorting opportunities / reversal probabilities. So, if you can’t find shares one day, try, try again as the breakdowns usually occur over multiple days
When I was running my hedge fund, I had a beautiful little thing called “pre-borrows”, at my disposal where I could and did reserve and reuse shares to short from Goldman Sachs (NYSE:GS) and I’d have them for multiple days, or until I canceled this preborrow. For that right, I paid some pretty hefty fee, something like .02 cents/share per day…just kidding, it’s not hefty at all…I woulda paid 25 cents/share if they asked cuz I could and still can sometimes be 90%+ sure of a stock drop.
But now that I’ve given up all the special features that come with running several million dollars—to show you EXACTLY what it’s like to trade with just a few thousand dollars—basic online discount brokers like Thinkorswim—the one I personally use and recommend for shorting these Penny Stocks—don’t offer such luxuries so each morning you just gotta call them up or go to their site and click the “live chat” window and ask to borrow shares of whatever stock you might want to short that day. Now I’ve learned you don’t even have to place an order right away—you can reserve the shares for the day and ask Thinkorswim to make a note in your account…and then contact them again if and when you want to execute that short sell order.
Very convenient, no risk, no cost.
Before I discovered this little trick, I would place my limit price waaaay above a stock’s current price—as high as my pathetic buying power would allow—so I could go in there and manually change the limit later, but since these stocks are so volatile, sometime my order/s got executed, screwing me bigtime as I literally lost thousands of dollars accidentally shorting MXC and VRML…Ruined my week each time, especially VRML—click THIS link to see that wreckage—very stupid mistakes but good lessons for you guys.
So don’t even risk it, just reserve the shares and look to pounce really only if there’s an afternoon fade to negative on the day…that’s by far the most reliable pattern to short into on these pumped up Penny Stocks.
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TIM Trades
View All| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
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| Nov 18 | IMGG | $1.42 | $1.64 | $2094 |
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| Nov 13 | VRMLQ | $21.50 | $22.97 | $2901 |
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| Nov 10 | EONC | $2.74 | $3.36 | $9784 |
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| Oct 22 | USEG | $6.12 | $6.09 | $85 |
| Oct 20 | CBOU | $8.93 | $9.06 | $243 |
| Oct 16 | VRMLQ | $16.79 | $18.65 | $2773 |
| Oct 13 | YONG | $11.05 | $11.66 | $1202 |
| Oct 13 | NPHC | $0.59 | $0.71 | $583 |
| Oct 12 | IMGG | $0.60 | $0.70 | $682 |
| Oct 9 | ZAGG | $5.50 | $6.10 | $2380 |
| Oct 7 | GVBP | $0.03 | $0.27 | $702 |
| Oct 1 | NPHC | $0.70 | $0.85 | $1482 |
Total: $98,094 (681%)
