>>a lack of potentially profitable short squeezes
There's no potential profit in short squeezes if you're the one being squeezed. Furthermore, the terms of rights and warrants can and have been changed by the issuing company, eg lowering the strike, extending the time to expiry, etc. all of which make being short these instruments much riskier than being short an equivalent option position. This argues for making the capital requirements on option
positions less onerous than warrants/rights, and not more, as is currently the case.
I realise this is all pretty arcane stuff, but consider one more fact. The risk in being short a deep OOTM option decreases exponentially as time goes by, but the margin is the same on a short position with one day to go as it is with one year to go. Sort of counter-intuitive, no?
Another busy day at the bourse. I hope all of you have some profitable action going; like we say, you can only feed the ducks when they're quacking. (Loosely: if there's nothing going on, you can't make anything go on.)
Happy trading.
Porter |
