posted
Does anyone know of a broker that will allow you to short sell stocks that are less than $5? I'm with Scottrade right now and $5 is their minimum with a margin account for short selling.
Please let me know. Thanks
Posts: 10 | From: East Lansing, MI | Registered: Jul 2005
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posted
Short selling can be very risky for both the investor and the broker. Brokers will often tell investors that only stocks above $5 can be short sold. Although this may be true for that particular brokerage firm, it is not a requirement set by the National Association of Securities Dealers or the SEC. The main short-selling rules set by these two organizations are the "tick test rules," which help ensure that the short selling of a stock does not cause its price to experience a continuous downward spiral. More specific to your question is the SEC's regulation stating that stocks trading below $5/share must have a margin amount of $2.50/share or 100% of the stock price (whichever is greater).
I'm just looking for brokers that allow it.
Posts: 10 | From: East Lansing, MI | Registered: Jul 2005
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I'm not sure if I'll explain this right, but isn't prodigytrading one of those firms that their clients can cause to go bankrupt? I've heard about similar trading groups, and the capital you deposit becomes sort of their property and if they go bankrupt you lose everything, is this something similar? In other words are customers insured by the SIPC? I see they clear through Penson Financial Services so I'm confused about this...
Posts: 1091 | From: Brugge, Belgium / Dallas TX USA | Registered: May 2006
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