how to short a stock robinhood

How to Short Sell on Robinhood

1. Open a Margin Account. Short selling involves selling stock you don’t own, which means you’ll need to borrow it from your broker.
2. Identify a Short Sale Candidate. Once you have a margin account with a broker that offers short selling, your next step is to open a short position.
3. Define Your Exit Strategy. ...
4. Open a Short Position. ...
5. Cover the Position. ...

Full Answer

Does Robinhood let you short stocks?

Dec 02, 2021 · Go to the NASDAQ website in your browser. In the blank space beneath the Get Stock Quotes header, type the stock’s symbol. Underneath the blank, click the blue Info Quotes button. From the drop-down menu in the center of the screen, select Short Interest. You can’t be short on Robinhood, unfortunately.

How to close stock positions fast on Robinhood?

Mar 31, 2022 · How to Short Stocks on Robinhood with Put Options. Another way you can short stocks on Robinhood is to use put options. This simply means buying “puts” to bet on stocks or markets going down. Buying a put option allows you to sell a stock at a specified price within a certain time period.

Can You short sell on Robinhood?

Jan 13, 2022 · How To Short Stocks. The main highlight of shorting is that you need a margin account. That isn’t the case with inverse ETFs and put/call options. So naturally, the first step will be to open a margin account. Robinhood short selling isn’t possible, but you can still open a margin account. Step Number One: Open A Margin Account

What are some good ETFs on Robinhood?

Mar 10, 2021 · How to Short Sell on Robinhood Step 1: Open a Margin Account. Short selling involves selling stock you don’t own, which means you’ll need to borrow it... Step 2: Identify a Short Sale Candidate. Once you have a margin account with a broker that offers short selling, your... Step 3: Define Your Exit ...

What is Short Selling?

Short selling is the investor’s version of betting against a stock. If you think a stock is significantly overpriced or you anticipate news that will cause a major decline, you can borrow shares of that stock to sell at the current high price.

Step 1: Open a Margin Account

Short selling involves selling stock you don’t own, which means you’ll need to borrow it from your broker. You can’t do that with a standard brokerage account. Instead you need what’s called a margin account.

Step 2: Identify a Short Sale Candidate

Once you have a margin account with a broker that offers short selling, your next step is to open a short position. A good candidate for a short sale is a stock that’s experiencing a sudden and dramatic price increase that can’t be explained by any significant changes to its financials.

Step 3: Define Your Exit Strategy

One of the biggest mistakes new investors make in both long and short positions is opening a position without having a clear and specific exit strategy. If you’re not buying and holding, you need to know exactly when you will get out of a position.

Step 4: Open a Short Position

After identifying a prime candidate for a short sale and deciding exactly when you’ll exit, you’re ready to open a short position. If you don’t own the shares, you will borrow them from your broker and immediately sell them at their current price.

Step 5: Cover the Position

The final step in a short sale is to “cover” the position. This just means buying back the same number of shares you borrowed after the price (hopefully) decreases. Once you buy them, the broker will immediately take the shares and any fees.

Robinhood Alternatives

Robinhood is great for beginners and mobile traders, but if you’re interested in short selling, you need to look elsewhere. Robinhood doesn’t offer it.

What Is Short Selling?

Short selling, also known as “going short,” is a trading strategy that allows you to profit when the share price of a specific stock falls.

Can You Make a Short Sale on Robinhood?

Strictly speaking, no, you cannot short sell on Robinhood. Robinhood recently introduced margin accounts that allow borrowing stocks on credit, but they are explicitly designed to not allow shorting. So if you want to take the traditional route of shorting stocks, you’ll need to find a brokerage that accommodates this type of action.

Short a Stock on Robinhood: Inverse ETFs

Inverse ETFs, also known as “Bear ETFs” or “Short ETFs,” are funds that are constructed out of different types of derivative securities. ETFs are designed in such a way that their derivative composition will appreciate in value when the target security’s stock price drops.

Using Options to Short Sell on Robinhood

You can also trade options to profit when a stock’s price falls. Options are contracts that give investors the right, but not the obligation, to buy or sell a specific security.

Can You Short on Robinhood: Final Thoughts

To summarize: Technically, you cannot short sell stock on Robinhood. Their margin accounts are not set up to allow the kind of trading that is associated with direct short selling.

Can You Short Sell on Robinhood?

Shorting the market or a stock is betting that the price of that instrument will come down. There are different tools available to create short positions, each with different advantages. This article will go over these various ways of achieving short exposure and which ones are supported on Robinhood.

Put Options on Robinhood

Another popular way to achieve short exposure is by buying put options, which are time-sensitive securities that give the owner the right (but not the obligation) to sell X number of shares of the underlying stock at a pre-determined price, known as the strike price, up until a certain date in the future.

How to Buy Puts on Robinhood

Once you are on the stock screen for the security you’d like to buy puts on and click the “Trade” button, you will see another button pop up that says “Trade Options” – click this one. Next, you will be taken to a screen with the available options for purchase or sale.

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After selecting the specific put contract you would like to short, you will be taken to this final step to indicate how many contracts you would like to buy (one contract represents 100 shares) and the maximum price you’re willing to pay.

Robinhood Inverse ETFs

Another popular, and perhaps easier way, to create a short position is through inverse ETFs, which are also supported on Robinhood. An inverse ETF is just what it sounds like, it’s an ETF that tries to mimic the daily performance of an underlying index with the sign switched.

Shorting on Robinhood Summary

In short (no pun intended), the most direct way to short a specific stock is by selling it short, which you can’t currently do on the Robinhood platform.