Selling Short with bad credit?

Discussion in 'Trading' started by Daivam, May 24, 2008.

  1. Daivam


    I have fairly bad credit, (defaulted on student loan, and 2 credit cards). I'm fairly certain no brokerage in their right mind would extend a margin account to me.

    I would be fine trading on a cash basis, except that I'd like to be able to sell the market short in addition to buying long positions so that I could better follow trends.

    I'm not very familiar with the requirements most broker's have for allowing their clients to trade in options. Would put options be a feasible way of selling short without a margin account? Also would most options brokers allow me to freely trade options even though my credit is abysmal?
  2. Your mileage will vary from broker to broker, but I'd expect you could get yourself a margin account. Margin borrowing is secured by the assets in your account, so creditworthiness shouldn't be an issue.

    Still, if you can fund your account you're probably better off paying down some debt and cleaning up your credit history instead.
  3. 1) It would be a good idea to pay off your debts and then clean up your credit score.
    2) You may have trouble getting "better" jobs and lower insurance premiums with an ugly credit history.
    3) If you can't take responsibility for your debts, it's likely you'll have trouble taking responsibility for dealing with trading losses. You can run from them but you can't hide from them.
  4. Interactive Brokers wouldn't give me a margin account even though I deposited $21000 with them. Fucking lame and awful customer service.