if you ever find a way to short a 5 dollar stock other than it trading above 5 dollars you guy plese let me know/ :eek: :eek: :eek:
Go to IB's TWS and enter order to sell JDSU, SUNW or many other stocks trading under $5 that you do not own and you will be short the stock. While many firms may have rules prohibiting you from trading a sub $5 stock on margin it is not a SEC rule. Retail firm I worked with would not take a stock off its margin list until it closed under $3.
How come , with all the nitwits that keep passing around this sub $5 bogus old wives tale, I'm not a rich man today? I mean, if their trading is on par with their due diligence, they must lose big dineros. One of the great mysteries of life.
Actually all listed stocks are marginable, as are all Nasdaq NMS stocks. Also included are some non-Nasdaq OTC issues approved by the FRB. (You see, Series 7 materials actually have some value!) BTW I once shorted an 8 cent stock through IB. (Just 100 shares--covered at 7 cents, I believe. ) I've shorted several stocks under $5 through IB.
nyc-hotsh**, I assure you IB is not full of sh**. There are no rules against shorting stocks under $5. The rules are a minimum of $2000 equity in an account and maintencance is 30% of the short market value or $5 per share - whichever is higher. For stocks < $5 per shares, the initial and maintenance requirements are $2.5 per share or 100% of the short market value, whichever is greater. I pulled the above from the series 7 manual just to make sure my statement was correct.
I've been shorting sub-5.00 stocks on IB for almost a year. Goto their 'stocks available to short list' and see for yourself.
for example: ITWO had 6.7 mill shares short for 5/02, 9 mill shares short for 6/02, then jumped to 10+ mill for 7/02. the price range during this time frame went from $4 down to 80 cents. I'm presuming institutions aren't allowed to short (?) , so someone has to be doing it.
For a stock to be shorted, it has to be _borrowable_. Any stock held in a typical margin account, regardless of how much margin (e.g. 100%) is required, can be lent to other firms, at the holding clearing firm's discretion. If your clearing firm can borrow it, and it's not against their policies, you can short it. This is the stumbling block for most retail traders - the clearing firms are not willing to take the risk of letting you short a $0.50 stock, and having some news suddenly octuple the stock, as often happens with stocks of this type. Most retail traders are nowhere near well-capitalized and risk-managed enough to handle this type of situation. Heck, I bet a lot of pros aren't either, judging from some of the liquidation-related afternoon avalanches we saw when the bubble burst. "Real" firms (like IB) recognize the need for "real" traders to be able to trade these stocks, both long and short, and control their risk appropriately (i.e. via large minimum equity requirements, real-time mark-to-market, etc.). I think I was short WCOM intra-day at about $0.20 a few months ago, just to verify that it could be done
I don't know where they come from either. With the attitudes of the likes of NYChotshot, it may not be worth the time to tell them that they are wrong...as we keep shorting away the reverse splits that are still way under $5 and will probably never see $5 again. If these guys would learn to use the search function here, they'd see the discussion has been had repeatedly and beaten to death on other threads- the threads that answer many of these questions. What a trove of great info this site is... Best to you.