Schrödinger’s Stock

Schrödinger’s Cat is a famous thought experiment which demonstrates the concept of superposition, the ability of a quantum system to exist in multiple states simultaneously. To oversimplify the experiment, when the cat is placed in a box with items that may or may not kill it, it is both alive and dead until observed. Much like Schrödinger’s experiment, quantum computers are reliant on superposition, though they are far less interesting to PETA. Quantum bits (qubits) exist in a superposition of 0 and 1 simultaneously, as opposed to a classical bit which can only be 0 or 1. The ability of a qubit to represent multiple states at once may open the door for faster computation as it allows for the evaluation of multiple possibilities concurrently. 

A name presently popular amongst short sellers has reminded us of the fabled experiment. Quantum Computing Inc. (NASDAQ: QUBT) is a quantum optics and nanophotonic technology company that provides accessible solutions with real world applications. QUBT’s price and short demand have been strong, and the juxtaposition between upside and downside potential prompts the classic question, is it dead or alive?  

QUBT closed above $7.00 per share on Friday March 14th, up 29% from Thursday’s $5.49 close and continued its climb on Monday, gaining another 13%. This surge in share price may be due to investors anticipating positive news from Nvidia’s upcoming Quantum Day conferences. Despite the recent appreciation in share price, the stock is still down nearly 70% from its 52-week high of $27.15. The price decline came after comments on the future of quantum computing from the Nvidia CEO in early January. Quantum Computing Inc. is also facing class action lawsuits filed in Q1 2025 claiming that the firm made misleading statements regarding its business, operations, and prospects.  

The stock has remained popular amongst short sellers in recent weeks, with Utilization in the 90’s. From March 7^th, On-Loan Quantity and On-Loan Value have jumped 22% and 42% respectively. The chart below displays this relation between the quantity and the value of the shares on loan. Due to the higher share price, the added quantity of shares on loan has a greater value, which is why the green line appears to ascend more rapidly.   

QUBT On-Loan Quantity vs On-Loan Value February 17^th, 2025 – March 17^th, 2025  

Source: Interactive Brokers Securities Lending Dashboard. Data is provided by Orbisa.  

The Securities Lending Dashboard can be used to analyze short sale metrics for QUBT and other stocks. Current IBKR clients can receive a free trial of the dashboard by clicking here. 

Since Thursday of last week, we’ve seen a falloff in Shortable Shares as the share price soared and the borrow fee rate followed suit. The rate is currently 13.50%. When determining  Short Sale Cost, short sellers at Interactive Brokers should also consider the interest they receive on Short Sale Proceeds. Looking at the chart below from Trader Workstation’s Fundamentals Explorer Short Selling tab, we can track historical changes in the price, Fee Rate, and Shortable Shares. The light blue line represents the share price, which has been tailed by the Fee Rate illustrated by the red line. At the bottom of the chart, the orange line displays the Shortable Shares at IBKR, which decreased sharply as the share price spiked on March 14^th. We are being shown inventory by two securities lending counterparties, a mutual fund issuer and a small prime broker. 

QUBT Short History March 11^th, 2025 – March 17^th, 2025  

Source: Interactive Brokers Trader Workstation – Fundamentals Explorer – Short Selling Tab 

While the future of QUBT’s share price is uncertain, the options market’s estimated daily price movement range can be observed using the Rule of 16. For example, the QUBT Mar 21 2025 8 Call shows implied volatility (IV) of 280%. Since IV is an annualized figure, we can determine the implied daily percentage move by dividing IV by the square root of 256 (number of trading days per year). The result of dividing 280% by 16 is 17.50%, which is the daily up or down price movement implied by options market pricing.