When you short a stock, margin requirements and buying power work differently than when you buy stocks.
Because short selling involves borrowing shares, you must maintain a certain amount of margin equity in your account to open and support the position. This required equity is based on the market value of the short position, not just the amount of cash you receive from selling the shares.
Your short-selling buying power reflects how much additional short exposure you may be able to take on, given your available margin equity and current margin requirements. Buying power can change as stock prices move, margin requirements update, or account equity changes.
After opening a short position, you must continue to meet maintenance margin requirements. If the stock price rises or margin requirements increase, your required equity may increase. If your account equity falls below required levels, you may be required to add funds or reduce positions. You can see the current margin requirements below:
Type of Security | Initial Requirements | Maintenance Requirement | Day Trade Requirement |
Priced above $16.625 | 50% x M.V. | 30% x M.V. | 25% x M.V. |
Priced b/w $5 and $16.625 | $5 per share | $5 per share | 25% x M.V. |
Priced below $5.00 | $5.00 per share | $5.00 per share | 25% x M.V. |
2x Leveraged Exchange Traded Funds (ETF’s) | 60% x M.V. | 60% x M.V. | 50% x M.V. |
3x Leveraged Exchange Traded Funds (ETF’s) | 90% x M.V. | 90% x M.V. | 75% x M.V. |