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Strategies & Market Trends : LastShadow's Position Trading

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To: LastShadow who wrote (10811)3/19/1999 3:38:00 PM
From: Copeland  Read Replies (1) of 43080
 
Just wanted to clarify this.

I just talked to a few of my wife's brokers and they confirm that you can short IPOs provided that their firms have inventory from the firm's own accounts to lend out. At the earliest, an investor could theoretically short an IPO on the first day of trading if a) your account was with the underwriting firm (and thus has inventory) and b) they were willing to allow you to short (not likely). In most cases, clients need to wait at least three days after the IPO, supposing that their firm bought stock on the day of the IPO, in order for the firm to have possession of the shares that you want to short.

Rules vary from brokerage to brokerage. Some firms allow shorting after that three day window only 100% cash; others do not allow shorting at all.

Shorting an IPO shortly after its debut is one of those things that is a lot easier to do when you have a multi-million dollar account at a major brokerage. For the small time investor, it is very, very difficult.
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