Editing Short (finance) (section)

=== Short selling terms ===
'''Days to Cover (DTC)''' is the relationship between the number of shares in a given equity that has been ''legally'' short-sold and the number of days of typical trading that it would require to 'cover' all legal short positions outstanding. For example, if there are ten million shares of XYZ Inc. that are currently legally short-sold and the average daily volume of XYZ shares traded each day is one million, it would require ten days of average trading for all legal short positions to be covered (10&nbsp;million / 1 million).

'''Short Interest''' relates the number of shares in a given equity that have been legally shorted divided by the total shares outstanding for the company, usually expressed as a percent. For example, if there are ten million shares of XYZ Inc. that are currently legally short-sold, and the total number of shares issued by the company is one hundred million, the Short Interest is 10% (10&nbsp;million / 100&nbsp;million). If, however, shares are being created through naked short selling, "fails" data must be accessed to assess accurately the true level of short interest.

'''Borrow cost''' is the fee paid to a securities lender for borrowing the stock or other security. The cost of borrowing the stock is usually negligible compared to fees paid and interest accrued on the margin account – in 2002, 91% of stocks could be shorted for less than a 1% fee per annum, generally lower than interest rates earned on the margin account. However, certain stocks become "hard to borrow" as stockholders willing to lend their stock become more difficult to locate. The cost of borrowing these stocks can become significant – in February 2001, the cost to borrow (short) [[Krispy Kreme]] stock reached an annualized 55%, indicating that a short seller would need to pay the lender more than half the price of the stock over the course of the year, essentially as interest for borrowing a stock in limited supply.<ref name="marketForborrowing">{{cite web |url=http://faculty.chicagobooth.edu/john.Cochrane/teaching/35150_advanced_investments/davolio_borrowing_stock_JF.pdf |title=The market for borrowing stock |access-date=25 December 2012 |archive-date=3 June 2013 |archive-url=https://web.archive.org/web/20130603173838/http://faculty.chicagobooth.edu/john.Cochrane/teaching/35150_advanced_investments/davolio_borrowing_stock_JF.pdf |url-status=live }}</ref> This has important implications for derivatives pricing and strategy, for the borrow cost itself can become a significant [[convenience yield]] for holding the stock (similar to additional [[dividend]]) – for instance, [[put–call parity]] relationships are broken and the [[Exercise (options)|early exercise]] feature of American call options on non-dividend paying stocks can become [[Exercise (options)#Exercise Considerations|rational to exercise early]], which otherwise would not be economical.<ref name="hardToBorrow">{{cite web |url=http://www.math.nyu.edu/faculty/avellane/Lecture13Quant.pdf |title=Lecture 13: Hard to Borrow Securities |access-date=25 December 2012 |archive-date=18 May 2013 |archive-url=https://web.archive.org/web/20130518131233/http://www.math.nyu.edu/faculty/avellane/Lecture13Quant.pdf |url-status=live }}</ref>

==== Major lenders ====
* [[State Street Corporation]] (Boston, United States)
* [[Merrill Lynch]] (New Jersey, United States)
* [[JP Morgan Chase]] (New York, United States)
* [[Northern Trust]] (Chicago, United States)
* [[Fortis (finance)|Fortis]] (Amsterdam, Netherlands, now defunct)
* [[ABN AMRO]] (Amsterdam, Netherlands, formerly Fortis)
* [[Citibank]] (New York, United States)
* [[Bank of New York Mellon]] Corporation (New York, United States)
* [[UBS AG]] (Zurich, Switzerland)
* [[Barclays]] (London, United Kingdom)