Short sellers must wait to take a stab at SoftBank's Arm Holdings soaring shares
Arm Holdings may have to wait at least a day before the stock becomes available for shorting, analysts said.
Shares in SoftBank's Arm Holdings opened 18% above their offer price in their Nasdaq debut on Thursday, valuing the British chip designer at nearly $60 billion in its return to the public markets after seven years.
Short sellers who aim to sell borrowed shares to buy them back at a profit, however, may have to bide their time since the newly-minted shares might not be available to borrow for shorting just yet.
Investors can begin selling the shares short as soon as their broker has reasonable grounds to believe that the security can be borrowed — in market parlance, be able to «locate» the shares, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
Prime brokers or brokers usually will at least wait until a day after the IPO to give a 'locate' on the shares, to get an idea on how much stock lands in lendable or marginable accounts, Dusaniwsky said.
Investors looking to trade in ARM options, another avenue to place bets on the future price of the shares, may have to wait till next week as certain regulatory requirements on trading thresholds have to be met before options exchanges can list contracts on the newly-listed shares.
«I have every reason to believe that when ARM options are listed they will be very popular,» said Steve Sosnick, chief strategist at Interactive Brokers.
Arm shares were last up 15.80% at $59.06.
