Why are so many investors betting against Premier Oil?
More than a fifth of the explorer’s 831m shares are out on loan, according to data provider IHS Markit, making it the most “shorted” stock in the FTSE 250 index.
But things aren’t quite as bad as they might appear.
Almost three-quarters of those positions are banks borrowing stock to hedge their exposure to Premier Oil.
The reason they need to protect themselves is they have sold investors contracts for difference (CFD), financial instruments that allow speculators to bet on the direction of a company’s share price without actually owning any stock.
Premier Oil has become a quasi-casino because its shares are highly correlated with the price of oil, often moving more dramatically than the underlying