Psst! Want to short LinkedIn?
Do you believe in shares of LinkedIn at $90 a share? No? Then how about at $122.70 a share—currently the high trade.
Want to get short? Sorry, you can’t. This is just a one way market—at least for now.
At IPO there are no shares to borrow to short, no puts to buy, no calls to sell.
And, according to Bill Lefkowitz of vFinance Investments, investors allowed in on the IPO are encouraged to buy more on the first day of trading. Selling not encouraged or not allowed—IPOs and holding periods can go hand in hand.
For rule followers, shares will become available to short the first day following settlement of shares traded today. But, not everyone believes in rules.
CNBC’s Herb Greenberg tweeted this about LinkedIn trading today: “How shorting, from Kaminsky to me: Day traders on machines... They don't worry about fail to deliver. Trading back/forth 50x a day.”
For options traders, it will take a few more days. According to a spokeswoman for The Options Clearing Corporation (OCC), options will start trading on shares of LinkedIn five business days after the IPO is listed or, about May 26th. “Problem with these new issues is that you have to wait about a week,” says Bill Lefkowitz, potentially missing the trading opportunity.
Recent case in point he says is Renren . That stock IPO’ed at $14 a share, rallied to $24 but quickly fell back to its intial offering price.
Investors getting long at these levels beware: the twitter stream today was rife with commentators ruminating on the similarities of the LinkedIn IPO to the 1995 IPO of Netscape. And that did not end well for longer-term investors of Netscape.
Although, for a few years, they had it pretty sweet.
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