RE: Updated stock on loans/ shorts - reduced 6.2 million24 May 2022 18:49
Hi Tilly and all, 6m shorts closed yesterday when only 6m traded. Found a post from a while back and must be what is going on IMO
This may be a reason for increases- not at all sure as some of it way over my head. Synthetic longs! Warning best not read without brain engaged. May also be the reason we do not see them open on exchange.
‘There have also been suggestions that stock lending data is less useful or less relevant due to synthetic activity surrounding a stock. You can create similar economic effects using derivatives or “synthetic” structures without ever owning the underlying security – options and futures being obvious examples. However, remember that almost all meaningful synthetic positions will be hedged by the underlying issuer. For example, if a significantly large put option is created, the issuer will likely hedge that position by borrowing and shorting the stock. ORTEX stock lending and short interest data therefore also include data related to synthetic positions.‘
https://public.ortex.com/the-naked-truth/
Link to synthetic positions - synthetic longs being my thoughts but may be completely off the mark but increases don’t add up.
https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/synthetic-position/
Options traders prefer synthetic positions because they are flexible and cost-friendly. For starters, synthetic positions can be used to swap positions when expectations change without necessitating the closure of the existing ones.
Secondly, once a synthetic position is already occupied, it is possible to shift expectations.
Thirdly, the flexibility of synthetic positions means that there is no need to make frequent transactions. In such a way, an existing position can be transformed into synthetic form, as expectations can change any time.
Equally, if a synthetic position is already held and there is a need to benefit from existing market conditions, an individual can simply make adjustments without the need to make a total change.
GLA
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