Any low cost online brokers that can short <$5 stocks?

Discussion in 'Retail Brokers' started by prox, Sep 9, 2002.

  1. prox


    Say sub $15 per trade.. thanks. Raised margin rates would be expected.
  2. Stocks below $5 are not marginable and therefore not shortable. That is an NASD rule, so any broker that tells you you can short stocks below $5 is full of sh**. Any firm that allows you to do that is violating NASD rules and you can bet they'll get burnt for it eventually.
  3. m22au



    What is the lowest price for shorting a stock?

    Answer: Answer last updated: 08-09-02

    The SEC does not have any specific rules limiting short sales at a specific price. In theory, all stocks can be shorted, including those, for example, below $5.00. But in reality, brokerage firms may impose their own policies about what stocks can be shorted, such as a minimum stock price. In addition, depending on where the stocks trade, they may be subject to certain restrictions.
  4. prox


    ok cool..

    I hear Schwab was able to from a little black bird , but he might have been full of droppings.
  5. JORGE


    I have shorted stocks trading under $1 on IB, ADSX and NEOT.
  6. I checked out that sec site and found out that even un-marginable stocks can in theory be sold short without breaking the law. I had always thought that was illegal because the brokerages always told me I couldn't do it. It turns out that it is really up to the brokerage firm. I know that the market makers of penny firms go short all the time, but they tell all the retail people that they can't do it.

    The one complication I can think of is that in order to short, you have to be able to borrow. However, nobody has to loan you any stock if they don't want to, and often the public float is small anyway.
  7. Babak


    dotslash, could you please provide a link re that specific law/regulation? TIA
  8. All these posts are really surprising to me. Stocks below $5 are not marginable, if they are not marginable how could you possibly short them. I read that SEC post and it does make it sound like you can, but I still don't think any real firm would allow it. Maybe you could do it in a cash account, instead of a margin account. However, I have never had a broker that allowed you to short in a cash account. If someone has a broker that allows it, please tell me which firm. I would be curious to call them and see if they admit you can do it over the phone. I doubt they would.
  9. Can't you just buy a put/sell a call(in the money) and exercise it to be short a stock that cannot be shorted?
    any commments....
    #10     Sep 9, 2002