Stocks that are unborrowable are those that no one will lend to short-sellers. The traditional way to short sell is to find a market participant who will lend you the stock, and then buy it back once you close the position. Unborrowable stock is the result of this failure: if no one is willing to lend you the stock, it becomes unborrowable.

Short-selling opportunities are typically found by your broker, who then passes on the owner's borrowing costs to you. It is possible, however, for short-selling to lead to a bear market and to depress a stock's price. As long as the lender of your shares maintains their long position, they may pull their shares off the market if there is a high short interest. Consequently, your broker may not be able to find a lender for this stock, making it unborrowable.

The traditional method of short-selling shares in a company becomes impossible when they become unborrowable. Because you aren't selling the actual shares, but speculating on the movement of the price, CFDs can be a much more flexible method of shorting.

An unborrowable stock refers to a security that isn't available for short selling due to limited availability in the lending market. Short selling involves borrowing shares from a broker to sell them with the anticipation of buying them back at a lower price to return to the lender, profiting from the price difference. However, if there's high demand to short a particular stock and few lenders willing to lend their shares, it becomes unborrowable. This situation often occurs with low float stocks, high volatility, or when institutional investors hold significant portions of the available shares, making them unavailable for borrowing.