I am astonished at what TD Ameritrade required me to do. I had bought 940 $2 put contracts that expired Jun 22. I did not close the puts and wanted assignment of the short shares. This morning when AFFY was trading at less than a buck, my account showed I was short AFFY by an additional 94K shares. This afternoon about 2pm, when I was out on business, a TD Ameritrade representative called me and said that I had to buy 94000 shares AFFY to close the option trade because AFFY shares were not available to short and could not be assigned to my account. I replied how can I close shares that I am not short, and my account showed that I had the 94K short shares? He had no answer for except that I had to buy 94K AFFY shares today as the only way to close my 940 put contracts. I protested, did not agree and maintained that I wanted the short shares. Too bad was all I got back and that TD Ameritrade, over my objections, would buy 94K AFFY on the market today to close the put contracts. That is what TD Ameritrade did in fact. I still made a nice profit on the trade, but I wanted to be short an additional 94K AFFY shares. I have sought legal advice on the matter.
Now, that being said, and based on my experience, it seems to me that anybody who is long AFFY ought to sell while there remains a market for AFFY shares. My experience related above tells me it is the MMs who do not want retail, like me, to be able to short this stock. Why is that? Take it for what is worth, but this happened to me and it does not seem right. It seems that the MMs only want retail to be long AFFY or, in other words, left holding the AFFY bag.
Issue resolved. There are just no AFFY shares available to short even if one should take assignment as a consequence of holding a put contract. Here are some thoughts for those who may seek to daytrade AFFY. 1. WS wants retail to hold the AFFY bag.
2. Best way to get retail to hold AFFY is for calls to close in the money so shares will be assigned.
3. Those, like me, who are long AFFY $2 put options, have to close the options before expiration and if they take assignment must buy the share back immediately. The brokerages will not allow put owners to hold AFFY shares short.
4. There are 4,539 open interest AFFY $1 call options expiring July 20, 2013.
5. There are 478 open interest AFFY $1.50 put options and 4,550 AFFY $2 put options expiring July 20, 2013.
My two cents: It appears that WS will keep AFFY at at least a $1.01 through July 19, 2013. Monday, July 22, 2013, should prove to be a watershed day. There will be many new AFFY longs and the owners of AFFY puts are probably not aware that they cannot maintain an AFFY short position and will have to buy AFFY shares if they take assignment. If I were an AFFY long, it may be wise to sell into the buying that day. GLTA.
Well while you dig yourself out of this hole we may be spared the incessant negative coaching that you insist we need provided. Have a nice day with your legal beagles.
Sentiment: Strong Buy
My first post was back in February after the Fresenius letter and before the O recall. In that post, I explained that I was a retired health care lawyer and, for the reasons I explained in great detail, why anyone who would listen should close long positions and short AFFY while it was still trading above $15 per share. Who is the idiot now Wildshill?
I'm guessing it's difficult to find AFFY shares to borrow to short because no large institutions carry shares anymore, or something like that. I doubt it's hard to buy and sell the shares, it's just hard to find shares to short. At fidelity it's a 48% annual fee to short the shares.
While I agree with much of your analysis on AFFY, you are not correct that retail cannot short AFFY shares. Interactive Brokers, a retail broker, has had plenty of AFFY shares to short. In fact, today they had 350,000 shares available to short. Short availability depends completely on the broker. TD Ameritrade is generally not a very good broker for finding shorts of hard to borrow stocks. In fact, I'm not even sure TD Ameritrade lets you short stocks under $5 per share, but I could be wrong.
Your experience also is not surprising to me. If a broker does not have the available borrows once puts are assigned, then they generally give you 1 day to buy the shares to cover the position. I know Suretrader and Speedtrader do this, so it does not surprise me that TD Ameritrade did something similar to you.
Sentiment: Strong Sell