Shorting a stock on Robinhood requires a Gold subscription and a margin account

Robinhood does not let you short stocks with a regular cash account. You need a Robinhood Gold subscription (which costs money each month) and a margin account instead of a cash account. Once you have both, you can borrow shares from Robinhood's lending pool, sell them at the current price, and hope to buy them back later at a lower price. The difference is your profit — or your loss if the price goes up.

The process itself is straightforward: you find the stock, tap the sell button, and choose "sell short" instead of "sell." But shorting carries real risks that regular stock buying does not, and Robinhood enforces rules about how much you can borrow and when you have to close the position.

Key Takeaways

  • You must have Robinhood Gold (a paid subscription) and a margin account to short stocks on Robinhood.
  • When you short a stock, you borrow shares, sell them, and owe those shares back to Robinhood later — you profit if the price falls.
  • Robinhood charges interest on borrowed shares and may force you to close the position if the stock price rises too far or if you run out of buying power.
  • Your losses on a short can be unlimited, because a stock price can rise indefinitely, whereas a regular stock purchase can only lose 100 percent of what you put in.

Setting up a margin account and Robinhood Gold

Start by upgrading to Robinhood Gold. Open the app, tap the account icon (usually in the bottom right), scroll to "Investing," and look for the Gold subscription option. Robinhood charges a monthly fee — the amount varies but is typically under $10 per month. You can cancel anytime, though you will lose shorting access when ready.

Once Gold is active, you need to convert your account to a margin account. Robinhood usually prompts you to do this when you first subscribe to Gold, but you can also go to Account Settings, find Margin, and request the upgrade. Robinhood will ask you to agree to the margin agreement, which explains that you are borrowing money and shares. Read it, because it covers what happens if your account value drops and Robinhood needs to close positions to protect itself.

After you are approved for margin, you will see a "Buying Power" number in your account that is higher than your cash balance — that extra amount is the margin Robinhood is letting you borrow. Shorting uses this buying power, so if you short a stock and the price rises, your buying power shrinks.

How to place a short sale order

Find the stock you want to short in the Robinhood app and tap it to open the stock detail page. Tap the "Trade" button (usually at the bottom). Instead of tapping "Buy," tap "Sell." A menu will appear with options: "Sell" and "Sell Short." Choose "Sell Short."

Enter the number of shares you want to short. Robinhood will show you the current bid price and let you choose between a market order (sells when ready at the current price) or a limit order (sells only if the price reaches a price you set). For a short, a market order executes right away, while a limit order waits. Review the order and tap "Submit."

Once the order fills, you own a short position: you owe Robinhood those shares. Your account will show a negative number of shares for that stock. You now owe interest to Robinhood for borrowing them, and the position will stay open until you buy the shares back to close it.

Understanding margin requirements and forced closures

When you short a stock, Robinhood requires you to maintain a minimum amount of buying power relative to the size of your short position. This is called the maintenance requirement. If your account value drops — because the shorted stock rises in price — your buying power shrinks. If it shrinks below the maintenance level, Robinhood will send you a margin call.

A margin call means you have a set time (usually a few days) to deposit cash or close positions to bring your buying power back above the minimum. If you do not, Robinhood will close your short position automatically, usually at the worst possible time. You will be forced to buy back the shares at whatever price they are trading at, locking in your loss.

The maintenance requirement varies by stock. Stocks that are harder to borrow or more volatile have higher requirements. Robinhood shows you the requirement before you place the short, so check it before you commit.

Borrowing costs and how interest accrues

Robinhood charges interest on the shares you borrow. The rate depends on how hard the stock is to borrow — popular stocks that many people want to short have higher rates. Robinhood deducts the interest from your account automatically, usually daily or weekly. You can see the interest rate before you short; it appears on the order screen.

The interest is real money that reduces your profit. If you short a stock at $100 and it falls to $90, you have a $10 gain per share — but if you held the short for a month and paid $2 per share in interest, your actual profit is only $8. Long shorts that take weeks or months to play out can be eaten away by interest costs.

Some stocks are expensive to borrow because they are in high demand for shorting. Robinhood may also recall the shares at any time if the lender needs them back, forcing you to close the position when ready. This is rare but possible.

Closing a short position

To close a short and stop owing the shares, you buy them back. Open the stock detail page for the shorted stock, tap "Trade," and tap "Buy" (not "Buy to Cover" — Robinhood just calls it "Buy"). Enter the number of shares you want to buy back. If you want to close the entire short, buy back the same number of shares you shorted.

Place the order as a market order or limit order, just as you would for any buy. Once it fills, your short position closes. You no longer owe those shares, and the interest stops accruing. Your profit or loss is locked in: the difference between the price you shorted at and the price you bought back at, minus interest and any fees.

You can also close a short partially — buy back only some of the shares — and leave the rest of the position open. This lets you lock in a gain on part of the trade while keeping the rest exposed to further price movement.

Risks specific to shorting

The biggest risk is that a stock price can rise indefinitely, but it can only fall to zero. If you short a stock at $50 and it rises to $100, you have lost $50 per share. If it rises to $200, you have lost $150 per share. There is no ceiling. A regular stock purchase can only lose 100 percent of what you put in, but a short can lose far more than your initial investment.

Robinhood can also force you to close a short if the stock becomes hard to borrow or if your account falls below maintenance. You have no control over when this happens, and it often occurs at the worst time — when the stock has risen sharply and you are deep in the red.

Short squeezes are another risk. If a stock is heavily shorted and the price starts to rise, short sellers panic and buy back shares to close positions, which drives the price up further, which triggers more panic buying. This can happen very fast and can wipe out shorts in hours.

Frequently Asked Questions

Can I short a stock that is not on Robinhood?

No. Robinhood only lets you short stocks that trade on U.S. exchanges and that Robinhood has in its lending pool. You cannot short penny stocks, OTC stocks, or stocks that Robinhood has not made available for shorting. The app will not show a "Sell Short" option for stocks that cannot be shorted.

What happens if Robinhood recalls the shares I borrowed?

Robinhood will notify you that the shares have been recalled and give you a important date to buy them back and close the position. If you do not close it by the important date, Robinhood will close it for you at market price. This is rare but can happen if the lender needs the shares back.

Can I short a stock after hours?

You can place a short order after hours, but it will not fill until the market opens. If you place a limit order after hours, it may not fill at all if the stock does not reach your price when the market opens. Market orders placed after hours will fill at the opening price the next day.

Do I pay taxes on short gains the same way as regular stock gains?

Short-term capital gains (from shorts held less than one year) are taxed as ordinary income at your regular tax rate. Long-term capital gains (from shorts held more than one year) get preferential tax treatment, though shorts are rarely held that long. Keep records of when you opened and closed each short for tax purposes.

What is the minimum amount I need to short a stock on Robinhood?

Robinhood does not publish a minimum short size, but you must have enough buying power to cover the maintenance requirement for the stock. Some stocks require more buying power than others. If you do not have enough buying power, Robinhood will reject the order.