Hey guys quick question regarding margin interest calculation. Thanks in advance. If I had say $100,000 in equity and bought $200,000 worth of securities (lets say ETFs), I would owe that annualized interest rate on the $100,000 borrowed from my broker. If I then shorted $50,000 worth of securities, does the proceeds from the initial short sale offset the amount borrowed from the broker since its technically cash deposited in my account (from the short sale). Would I owe interest on just $50,000 in this scenario, or do they not net out? Thanks
Your margin account, called type 2, is for long stock + long and short options. The type 3 account, called the short account is separate as those credits do not belong to you as you had to borrow the stock to short something you do not own. Quick answer, no, shorts do not offset debit balances.