How to short stocks?

[jeb9999]

OneChicago/David G. Downey

Thank you for the detailed explanation on short sales, but I already understand all of what you said. I also know that borrowing shares from outside is more expensive than borrowing in house shares.

As zdreg pointed out we are in a special situation because of near zero interest rates and this upsets the normal balance of interest credit offsets against outside borrowing costs. If IB or any broker has costs associated with borrowing shares for shorting, then the costs will be passed on to the customer. Charging a daily fee for the costs associated with borrowing shares is not the same as charging margin interest on the cash proceeds of short sales.

 

[WinSum]

Quote from Hurricane:

I'm not sure this is correct. I've got quite a bit of cash in my IB account (presently earning 0% interest) and have had some very small short positions. Just a couple hundred shares of big name stuff. I'm getting some very small margin charges of a couple of $ a day. It has to be coming from the short sales.

The confusion on the short sale expense is that it is not called "margin interest". The Short Sale interest expense is called "Borrow Fees".

Borrow Fees are charged by IB's counter-parties when they borrow stocks to settle your short sales with the buyer. The interest expense is passed onto the customer. It is charged every day you hold the short position. The Borrow Fees amount fluctuates because it is based on the interest rate being charged for lending the stocks.

So, it is an interest rate expense. And can easily be confused with Margin Interest but it is not.

 

[murray t turtle]

Quote from ProfitTakgF:

Yep! No inventory issues, better tax treatment, easier tax reporting, no PDT rule, what else? Oh yeah, you can really lose your ass but I guess you can do that with stocks too

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What else on stock index futures??? More traders in that market;
the new op got another one right,
asking how to short stocks