Yes, you can short stocks on Robinhood, but only in a margin account

Shorting a stock means borrowing shares from your broker, selling them at today's price, and hoping to buy them back later at a lower price. Robinhood lets you do this, but not in a regular cash account. You need a Robinhood Gold account, which is Robinhood's margin account product. A margin account lets you borrow money or securities from Robinhood to trade with.

The process itself is straightforward once you have the account type: you search for the stock, tap the sell button, and choose "short" instead of "sell." Robinhood handles the borrowing behind the scenes. But shorting carries real risks that buying stocks does not, and there are costs involved that you should understand before you start.

Key Takeaways

  • Robinhood Gold is a paid subscription account that gives you access to shorting; a regular cash account cannot short stocks.
  • When you short a stock on Robinhood, you are borrowing shares from the broker's inventory and selling them, betting the price will fall.
  • You pay a borrowing fee (interest) on the shares you short, which varies depending on how hard the stock is to borrow.
  • Your losses on a short trade are theoretically unlimited, because a stock price can keep rising indefinitely, whereas a stock you own can only fall to zero.
  • Robinhood may force you to close a short position if the shares become unavailable to borrow or if your account balance drops too low.

What you need to short on Robinhood

First, you must have a Robinhood Gold account. This is a paid subscription that costs $5 per month (or $50 per year if you pay annually). When you upgrade to Gold, Robinhood grants you access to margin, which means you can borrow against your account balance to trade. Shorting requires this borrowing power.

Second, your account must have enough cash or buying power to meet Robinhood's margin requirements. When you short a stock, Robinhood holds a portion of your account balance as collateral. The exact amount depends on the stock—more volatile or harder-to-borrow stocks require more collateral. You can see the margin requirement for any stock by looking at its details page on the app.

Third, the stock itself must be available to borrow. Robinhood does not let you short every stock. Penny stocks, very new IPOs, and stocks with low trading volume are often unavailable. If a stock is not shortable, the short option straightforward will not appear when you try to sell it.

How to place a short trade on Robinhood

Open the Robinhood app and search for the stock you want to short. Tap on it to open the stock detail page. At the bottom of the screen, you will see a button that says "Trade" or shows the current price. Tap that button.

A menu will appear with two options: "Buy" and "Sell." Tap "Sell." On the next screen, you will see another choice: "Sell" (which closes an existing position or sells shares you own) and "Short" (which borrows shares and sells them). Select "Short."

Enter the number of shares you want to short. Robinhood will show you the current price and calculate how much margin (borrowed money) this trade will use. Review the details, then tap "Review Order." Check everything one more time and tap "Submit" to place the short trade. The order executes at market price during market hours.

Borrowing fees and costs of shorting

When you short a stock on Robinhood, you pay interest on the borrowed shares. This is called the borrow fee or short rebate rate. The fee is not a flat amount—it varies by stock and changes over time. Stocks that are hard to borrow (because many people are shorting them or few shares are available) have higher fees. Stocks that are straightforward to borrow have lower fees, sometimes close to zero.

Robinhood displays the current borrow fee for each stock on its detail page, usually shown as an annual percentage rate. If you short 100 shares of a stock with a 5% borrow fee, you pay roughly 5% of the stock's value per year in interest, charged daily and deducted from your account. The fee is calculated and charged whether the stock goes up or down.

You also pay any dividends that the stock pays while you hold the short position. If you short a stock and the company pays a dividend, you owe that dividend to the person who lent you the shares. This is another cost that eats into your profit or adds to your loss.

The risks of shorting on Robinhood

Shorting is riskier than buying a stock. When you buy a stock, the most you can lose is what you paid—if the stock goes to zero, you lose 100%. When you short a stock, there is no ceiling on how much you can lose. A stock can double, triple, or go up tenfold. Your losses grow with every dollar the price rises.

Robinhood can also force you to close a short position at any time. If the shares you borrowed become unavailable (the lender wants them back), Robinhood will buy them back on the market and close your position, even if you are losing money. If your account balance drops below Robinhood's maintenance requirement, you will receive a margin call and must deposit cash or close positions when ready. If you do not act, Robinhood will close positions for you to bring your account back into compliance.

Short squeezes are another risk. If a heavily shorted stock suddenly surges in price (often because of news or coordinated buying), short sellers rush to buy back shares to cut their losses. This buying pressure can drive the price even higher, creating a feedback loop that can wipe out short positions very quickly.

How to close a short position

To close a short position, you buy back the shares you borrowed. Open the stock detail page, tap the trade button, and select "Buy." Enter the number of shares you shorted (or fewer, if you want to close only part of the position). The buy order will execute at market price, and Robinhood will return the borrowed shares to its inventory. Your short position closes, and any profit or loss is locked in.

You can close a short position at any time during market hours. There is no waiting period. If you close at a price lower than you shorted it at, you keep the difference as profit (minus the borrow fees and any dividends you owed). If you close at a higher price, you take a loss.

Frequently Asked Questions

Do I need Robinhood Gold to short stocks?

Yes. Robinhood Gold is a paid subscription ($5 per month or $50 per year) that gives you access to margin and shorting. A regular Robinhood account cannot short stocks. You can still buy and sell stocks normally without Gold, but shorting requires it.

What happens if I short a stock and it gets delisted?

If a stock is delisted from an exchange, Robinhood will force you to close the position. You will have to buy back the shares at whatever price is available, which may be very low or very high depending on the circumstances. Delisting is rare, but it is a risk to be aware of.

Can I short a stock that just went public?

Usually not when ready. Most newly public stocks are not available to short on Robinhood for the first few weeks or months. Robinhood restricts shorting on new IPOs to reduce volatility and risk. After some time passes, the stock may become shortable.

What is a margin call, and what happens if I get one?

A margin call occurs when your account balance falls below Robinhood's maintenance requirement. If you have a short position and the stock price rises, your losses grow and your account value drops. If it drops too far, Robinhood will notify you that you must deposit cash or close positions within a set time. If you do not act, Robinhood will close positions automatically.

Can I short fractional shares on Robinhood?

No. Shorting is only available for whole shares. You cannot short 0.5 or 2.3 shares of a stock. You must short at least one full share, and the number must be a whole number.