I was wondering if you can short sell stocks no matter what price they are per share. I know some stocks can't be shorted no matter what BUT I saw online you can't short some stocks if they are under $5 per share but i have a friend that is short selling $2 stocks but I am just getting contradicting information.
2006-12-09 14:30:52 · 5 answers · asked by Valerena 4 in Business & Finance ➔ Investing
Usually investors short blue chip stocks which are in inventory with the brokers or which can be easily borrowed by them from fellow brokers. Shorting low priced stocks is difficult probably because the liquidity for it is low. So the brokers won't be in a position to create the short in the market becuase when they try to sell to your order there won't be any takers becuase the stock is bad proposition.
It is also self evident to you from the same propostition that if the brkers don't have it in their inventory these low priced low liquid stocks then it will be difficult to short sell.
I faced a problem similar to this long time back in India. I bought some low cap shares which shot up in value which I handed over to a broker to sell. There was a bull market and stock was liquid. The broker thought he can make some money out of it and since he had this in inventory and it was liquid he short sold it and didn't sell it in time and the price went down drasticlly. The broker was a bear broker. Though I went to court regarding this I didn't win, the Judge thought this was a complicated matter which he cannot handle.
My 18000 investment shout up to 203000 and ultimately when I took the stock certificates and sold it outside I got only 38000.
2006-12-11 03:51:31 · answer #1 · answered by Mathew C 5 · 0⤊ 0⤋
Instead of buying and then selling to close you start of with a sale order (you haven't got stock so it is a short sale). You then have to buy back at some stage to close the bargain. You obviously hope the stock will go down so you make a profit. On your example you sell (to open) at $20. Buy back later at $15 making $5 profit. It depends on the broker or platform exactly how you do it but in the UK you could sell (short) for T+15 and then buy back in the next 14 days to give the same settlement date. On the downside the stock could shoot upwards and you lose money when you buy back. Theoretically the potential loss is unlimited.
2016-03-29 01:30:05 · answer #2 · answered by ? 4 · 0⤊ 0⤋
You can short sell any stock as long as you have the money to cover it if it happens to go the other way.
2006-12-09 15:04:15 · answer #3 · answered by sis79 2 · 0⤊ 0⤋
Short sell any stock early in the day and pray for a bearish market!!!
2006-12-09 18:41:29 · answer #4 · answered by Anonymous · 0⤊ 0⤋
It depends where you do your trading, some sites set a limit others do not, or have a different limit amount.
2006-12-09 14:34:57 · answer #5 · answered by Guy R 3 · 0⤊ 0⤋