Robinhood does not offer short selling to most users
Robinhood's standard brokerage account does not let you short stocks. Short selling — borrowing shares to sell them now and buy them back later at a lower price — requires a margin account with specific regulatory approval and a minimum account balance. Robinhood offers margin accounts, but short selling itself remains unavailable on the platform as of now, even for margin account holders.
If you want to bet that a stock price will fall, Robinhood does offer other tools: you can buy put options (which increase in value when a stock drops) or use inverse ETFs (funds designed to move opposite to a market index). These are the actual ways to profit from a price decline within Robinhood's current feature set.
Key Takeaways
- Robinhood does not offer short selling on its platform, even for margin account holders.
- Put options let you profit if a stock price falls, and Robinhood users with options approval can trade them.
- Inverse ETFs move opposite to a market index and can be bought like regular stocks without options approval.
- Other brokerages like Interactive Brokers, TD Ameritrade, and E*TRADE do offer short selling to users who meet their requirements.
What margin accounts on Robinhood actually include
A Robinhood margin account lets you borrow money from the brokerage to buy more securities than your cash balance allows — this is called buying on margin. It requires a minimum account balance (currently $2,000) and approval from Robinhood. Margin accounts also charge interest on borrowed funds and come with maintenance requirements: you must keep a certain percentage of your account value in cash or securities at all times.
Short selling is a different transaction type that requires borrowing shares themselves, not just borrowing cash. Robinhood's margin account structure does not include the backend infrastructure to lend shares to users or manage short positions. This is a deliberate product choice, not a regulatory barrier — other brokerages manage short selling on margin accounts routinely.
Using put options to profit from falling prices
A put option is a contract that gives you the right to sell a stock at a set price by a set date. If the stock price falls below that price, the put increases in value. You can sell the put contract for a profit without ever owning the underlying stock. Robinhood offers options trading to users who request it and pass Robinhood's approval process, which typically takes a few minutes to a few days.
Put options work differently from short selling: you pay a fixed cost upfront (the option premium), your loss is limited to that premium, and you do not have to repay borrowed shares. The tradeoff is that options expire on a specific date, so timing matters more than with short selling. If you buy a put on a stock and the price stays flat or rises, you lose your premium.
To trade puts on Robinhood, go to your account settings, select "Options" under Investing, and request approval. Robinhood typically grants Level 1 (covered calls and cash-secured puts) or Level 2 (spreads and long puts) access. Long puts — the kind that profit from falling prices — fall under Level 2.
Inverse ETFs as an alternative to short selling
An inverse ETF is a fund that moves opposite to a market index. If the S&P 500 falls 2%, an inverse S&P 500 ETF typically rises 2%. You buy inverse ETFs the same way you buy any stock on Robinhood — no margin account, no options approval, no borrowing required. Examples include PSQ (inverse Nasdaq-100) and SH (inverse S&P 500).
Inverse ETFs are simpler than puts or short selling, but they have real drawbacks. They are designed for short-term trades, not long-term holds, because of how they reset daily. If you hold an inverse ETF for weeks or months while the market moves sideways, you can lose money even if the market eventually falls. They also charge annual fees (typically 0.95% or higher) that eat into returns.
How short selling works on other brokerages
If you want to short stocks, you will need to move to a different broker. Interactive Brokers, TD Ameritrade, E*TRADE, and Charles Schwab all offer short selling to users with margin accounts. Requirements vary: some require a minimum account balance ($2,000 to $25,000 depending on the broker), and some require you to pass a brief questionnaire about your trading experience.
When you short a stock on these platforms, you borrow shares from the broker's inventory or from other clients. You pay interest on the borrowed shares (rates vary by stock and broker, typically 0.5% to 15% annually). You must maintain a minimum margin level, and the broker can force you to buy back shares if your account drops below that level. Short positions have no expiration date — you can hold them indefinitely as long as you meet margin requirements.
Comparing your options for betting on falling prices
| Method | Available on Robinhood | Upfront Cost | Maximum Loss | Time Limit |
|---|---|---|---|---|
| Short selling | No | None (you receive cash from sale) | Unlimited | None |
| Put options | Yes (with approval) | Option premium | Premium paid | Expires on set date |
| Inverse ETFs | Yes | Stock price | Full investment | None (but decay over time) |
Frequently Asked Questions
Can I short stocks if I upgrade to a Robinhood Gold margin account?
No. Robinhood Gold is a paid subscription that gives you margin buying power and other features, but short selling is not included. The feature is not available at any Robinhood account level.
What happens if I try to place a short order on Robinhood?
The order will be rejected. Robinhood's system does not accept short sell orders. You will see an error message explaining that the order type is not supported.
Are put options riskier than short selling?
Put options have limited downside (you lose only the premium paid) but expire on a set date. Short selling has unlimited loss potential but no expiration. Which is riskier depends on your time horizon and how much the stock moves.
Do inverse ETFs count as short selling?
No. Inverse ETFs are funds you own outright — you are not borrowing anything. They move opposite to an index, but they are a different product with different tax and fee implications than short selling.
If I move to another broker to short stocks, do I have to close my Robinhood account?
No. You can keep your Robinhood account open and use another broker for short selling. You would just transfer the funds or securities you want to use for shorting to the new broker.