Hello TraderTerry: shorting stocks under $5
Yes, stocks below $5 can be shorted. Ask your broker pointedly about it. The arrangement I have requires stock available (for everyone legitimate), an indication of how tight the availability is, $5 per share in margin regardless of how the stock price varies below $5, and a fair ability to ride through whipsawing, as needed[ both with capital and time (patience)].
Generally for long term short positions I short above $5 per share. Sub-$5 occurs with the walking dead on temporary volume puffs, which usually settle down quickly, e.g., IMON. InfoStream has been identifying several daily runs on penny stocks that are worthy of shorting at apogee the last week or so. If a worthless stock runs and stays up in price, I generally look for subsided volume, then enter a short position. This is applying simple common sense and the notion that a few unusual days in trading is not likely to change what the company fundamentally has been for months or years.
A quick recollection does not bring anything to mind that I recall shorting below $5 where I did not have prior shorting experience above $5; I must have had a reasonable history with investing in the security prior to shorting sub-$5. Current shorts include ZITL, IMON, RACE, VNCI, LOCK, and VVUS, which fit this experience. I hope this helps. Most of these positions are held as boxed, and on unusual pops are unboxed. I can keep tabs on performance better if I keep multiples of 1K shares in positions, hence the attempt to double IMON.
Best regards,
m
PS If Infostream is keying on the daytraders, many of which I believe to be gamblers with a gambling problem, then if I am keying on volume, too, I may be in effect taking advantage of gamblers rather than arrogant or thoughtless investors. That would be wrong. It is not possible for me to tell. I am not in the business of separating people from their money. I am in the business of helping the market tend to equilibrium faster. That is most healthy for investments in the long run. Still, there remains market participants who have no business doing what they are doing because of the bad consequences to them and their families. There remains the hope if they hit bottom, that they are in a better position to gain wisdom and change the way they think and act. |
