Active Traders: Cobra Trading Claims It's Not What You Know, It's Who You Know That Determines Short-Selling Success

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Active traders on the short side now have the ability to work directly with the brokers that secure their shares for short selling. 

This is why having the right broker is particularly important, says Cobra Trading Inc. Rated Best for Short Selling in Benzinga’s Best Stock Brokers awards, Cobra is one of the go-to brokers for the short selling retail trader. With exceptional access to stock borrows and direct access routing, Cobra gives traders the ability to capture some of the best short opportunities in the market. 

Shares of DocuSign Inc. DOCU, for example, dropped from $242 to $155 overnight after an earnings release, while shares of the Walt Disney Co. DIS exhibited a continued descent to a low of $142 after an after-market sell-off took them from $177 to $163 overnight.

Stocks like that of Roku Inc. ROKU, Palantir Technologies Inc. PLTR and Zoom Video Communications Inc. ZM are in significant downtrends after their initial COVID-spurred growth, and institutional short sellers have pounced on each of these opportunities. Many typical retail traders, however, are once again sidelined despite observing and recognizing the same setups unfold. This is most likely due to their brokers’ inability to locate shares to borrow. 

With Cobra Trading’s extensive broker relationships and locate broker inventories, the company excels in this space where other brokers fall short. 

Cobra’s Short-Locate Abilities

Short selling is a process. 

Before traders can short, they need to borrow the shares to be sold. The trader’s broker facilitates this process, either by providing the trader with the shares themselves or by borrowing shares from a 3rd party and then passing them on to the trader. 

This latter process is called short locating, and this is what separates Cobra from your average brokerage firm. Cobra has been in the brokerage business for the last 18+ years with a specific goal to cater to active traders. In this time, it has developed extensive relationships with short-locate brokerages, which provide the firm with access to hard to obtain shares. 

This access unfolds through both electronic and personal routes. Cobra states that it uses an execution management system (EMS) to provide its customers with seamless access to potential short-selling opportunities. Its extensive network of short-locate brokerages works alongside this route to provide further access to networks with shares available to borrow.

As the interest of retail traders shifts to lesser-known stocks, this short-locate ability can become exceedingly important. Almost any broker can find shares for a short on Tesla Inc. TSLA, for example, but a broker who can find shares for lesser-known companies, like that of small caps, can end up being far more rare. 

Aside from providing accessibility to sell-side plays, Cobra says it also ensures this accessibility remains affordable. For example, the firm offers numerous free, daily locates, and its front-end EMS Locate feature ensures traders can choose the best available locate prices. These characteristics reiterate Cobra’s mission to provide retail traders with exceptional service.

Cobra claims that in short selling it’s who you know, not what you know, that grants traders access to coveted shares. If this adage rings true, Cobra’s extensive network of brokers and its technology may place it at the forefront of short-selling services. 

For any questions regarding Account Requirements and/or Platform offerings:

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The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.