![]() ![]() investors are required to mark their shares shorted and regulators report these figures twice a month, with a 10-day delay, S3 said. S3 argued in a recent research note that the traditional method of calculating the percentage of float is flawed because it uses stale data. ![]() This makes it possible, on paper, for more than 100% of the float of a stock to be shorted.Īccording to financial analytics firm S3, GameStop's peak short interest was 141.8% of its float on Jan. In that time, the same shares can be lent out again, and again. Settlement time is two days after the transaction. Once the short seller borrows the shares from the lender and then sells them back into the market, the new owner of the shares is free to lend them out, just as the previous owner did, and have no idea they are on the other side of a short sale. ![]() HOW CAN MORE THAN 100% OF A COMPANY'S SHARES BE SHORTED? The borrower can also request the shares back at any time. The borrower posts collateral, typically 102% of the prior day's settlement price. In the meantime, the short seller pays the lender interest on the value of the stock, giving the lender extra income. If the price has risen, the short seller must buy back the shares at the higher price, incurring a loss. When it's time to return the shares, if the stock price has fallen, the short seller can buy the shares back at a lower price than they originally paid for them, locking in a profit. ![]()
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