Stock Criteria for Stock Loans

Hedged portfolio loans that are written against private investment-grade derivatives contracts require stocks that are free-trading with no liens or other restrictions. For our purposes, we aren't concerned with the underlying company so much as simply how the stock itself has been performing. Yahoo and many other online databases make this information available for free.

We have a Stock Loan program for most all stocks. However, for the best rates and terms, stocks should not have huge swings in trading activity or price over the prior 90 days (approximately). Strong and steady volume is highly prized in the options-writing world as it allows some predictability baselines.

Use sites like Yahoo!Finance to determine the "historical" prices and trading volumes for your stocks and you will have a good idea as to the attractiveness of your stock as a hedgable commodity. Do you see a pattern of unusual, huge swings (i.e., volume of 2,000 one day, and 150,000 the next, then back to 15,000)? If YES, your interest rate is likely to be higher. If NO -- if these numbers show relatively smooth movements up and down, you are more likely to get a lower interest rate. Is the price above $5 a share consistently? If yes, you'll get a quote with maximum LTV; if not, you may get a quote of somewhat lower loan-to-value.