Anyone that has traded stocks has likely experienced the message from their broker in connection with executing a short sale (or something similar):
“shares are currently not available for this stock, we’re searching for shares and will notify you if shares become available.”
Yesterday, I attempted to short REV in the middle of the day at $11. I received this message and my order was never filled.
Today, I saw REV in the pre-market spiking near $11 and entered a short sale again. This time, my order was filled. Then, after the open, REV went up to $11.20 and I figured I would short a little more. Guess what? No shares were available to short.
This made me realize that this has happened to me before. There have been other instances where I have entered orders in the pre-market successfully that were denied once normal trading opened.
I also think that when this occurred before my trade was not actually filled in the pre-market. It was just entered in the pre-market. This morning, I actually had it filled in the pre-market.
So my hypothesis is that if there is a stock you want to short and shares are not available during normal trading hours that you might be able to short the stock in the pre-market. I haven’t tried doing this in after hours.
This could be coincidence and there may not be anything to it. But for those that have ran into this problem before, it might be worth checking out this technique. Assuming you are comfortable with trading in the pre-market, this might be a useful tool.
I trade using Interactive Brokers and perhaps it is IB specific.
If it turns out my hypothesis is correct, I would be very interested in knowing why this occurs.
Another solution to this problem is to use more than one broker. This way if one broker does not have shares available, you might still have a shot at getting shares in your other account.
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