I thought you couldn't short penny stock at least in the USA?...
This is one of the great myths, perpetrated mostly by the penny stock touts.
Some additional material relating to short selling:
I wanted to clarify my understanding of short sales rules. There is no per se rule which says that stocks under five dollars, penny stocks or bulletin board stocks can not be shorted. They can be shorted if the stock can be borrowed. If your clearing firm has it, and can be borrowed, you can short it. Obviously such stocks typically are more difficult to borrow and may not be marginable, but it can be done.
Note that if the stock is under five dollars, the position may not have any loan value, that is, it may be nonmarginable. As a result you may need to come up with 100% equity for the short position, or upto $5 per share depending on the clearing firms' margin requirements...
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Note that the author and thread host, Steve Goldman is (I believe) a principal in Yammer & Co. - a well-respected - at least here on - SI brokerage firm.
Many firms will not let you short a BB, because they can't margin it and hence can't earn the interest. Thus, the extra effort, expense and risk is not worth it. There are Rules about shorting for brokerages for stocks under $5.
As mentioned above, Yammer will allow you to short BBs, so does DLJ.
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