GV - Re: "That is incorrect. Let's take, for example, a short sale of 100 shares of Intel at 70. The cash I would receive would be $7,000. If there were no other securities at all in the account, I would need an initial margin of 50%, or $3,500. I would receive interest on $10,500 cash. If Intel were to rise to 80, I would receive interest on $10,500 cash. If Intel were to decline to 60, I would receive interest on $10,500 cash. If Intel were to rise to the extent that my equity declined under 30% (in this case, about 116«), I would need to either deposit cash or securities in the account, or buy back some Intel to raise the equity back above the maintenance level of 30%. Note that I still have not been charged any interest. The only reason you have to pay interest is when you borrow money. A short seller does not borrow money. A short seller only borrows stock. The cost of borrowing stock is negotiable, and for most stocks, that cost is zero."
No - YOU ARE Incorrect.
Paul
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