, along with Credit Suisse's takeover, produced"outsized price volatility" in those banking regions, said S3.
"The main reason for the rush to short banking sector stocks in this volatile stock price environment was a wide swath of profitable trades that returned +17.2% in less than a month," Ihor Dusaniwsky, managing director at S3, said in its report. The return rate was on an average short interest of $82.4 billion.
The data showed that 78% of every shorted bank stock was profitable, and 97% of every dollar shorted was profitable. But bank stocks as a whole have come off their worst levels of the month on signs that the banking crisis is settling down, including a deal for. Stripping out SVB Financial Group and Signature Bank, those selling bank stocks short were down 4.5% since March 23, handing back $587 million of their profit made this month.
"If this upward price trend continues in the rest of the regional banks, we should see short covering as short sellers rush to realize some of their mark-to-market profits," said Dusaniwsky.
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