What are hard to borrow (HTB) fees and share availability?

A lot happens in a split second when you line up a short stock order. Our clearing firm has to locate the stock position before you're able to short it. When there is a lot of demand to short a stock, then locating shares can be challenging. As a result, our clearing firm may assess a hard-to-borrow (HTB) fee. Hard-to-Borrow Fees also apply to assigned short calls, resulting in short stock. That said, it is not uncommon for short calls to be assigned early due to heavy short interest.

If an underlying is hard-to-borrow and potentially subject to an HTB fee, this will be indicated in yellow in the upper left corner above the symbol.

If you want to short a stock and want to see if there is an HTB rate or availability, then it will display during order entry after clicking Review and Send. The HTB rate shown is an annualized rate. Additionally, if you already have an open short stock position, then our clearing may assess and/or change the HTB rate at any time, even though there may not have been one initially. HTB fees are charged daily and are pass-through. Also, if shares are not available to short, then the notification will be displayed instead of the HTB rate.

When trading any short credit spread, the typical buying power requirement is the credit received minus the spread width, multiplied by quantity. However, when trading options spreads on an underlying with a high HTB rate, then the margin requirement will be changed to the debit required to buy that spread back as determined by 1.1X (110%) the natural price. Since HTB rates can be levied or increased at any time, elevated margin requirements will apply to any existing positions that previously may not have been hard-to-borrow.