Robinhood does not offer short selling to most retail investors
Robinhood's standard brokerage account does not let you short stocks. Short selling means borrowing shares from a broker, selling them at today's price, and hoping to buy them back later at a lower price. Robinhood removed this feature from its platform years ago and has not restored it for regular accounts.
If you want to short stocks, you have three realistic paths: open a margin account with a different broker that permits shorting, use inverse ETFs or put options on Robinhood itself, or trade on a platform specifically built for short selling. Each path has different costs, risks, and approval requirements.
Key Takeaways
- Robinhood's standard Cash account does not support short selling of individual stocks under any circumstances.
- A Robinhood Margin account lets you borrow money to buy stocks, but not borrow stocks to sell them short.
- You can bet against a stock on Robinhood by buying put options or inverse ETFs, which move opposite to the underlying stock or index.
- Other brokers like Interactive Brokers, TD Ameritrade, and Charles Schwab offer short selling to accounts that meet their margin and account-value requirements.
- Short selling carries unlimited loss risk because a stock price can rise indefinitely, unlike buying stock where your loss is capped at what you paid.
Why Robinhood removed short selling
Robinhood stopped offering short selling after the GameStop trading event in January 2021. When millions of retail traders bought GameStop stock, the price soared. Robinhood restricted trading to prevent what it said was excessive risk to its clearing house — the financial institution that settles trades behind the scenes. Short sellers were losing money fast, and Robinhood's clearing house demanded more collateral to cover potential losses.
After the restrictions lifted, Robinhood never restored short selling for retail accounts. The company cited operational complexity and risk management as reasons. Today, if you try to short a stock on Robinhood, the order will straightforward be rejected.
Using put options to bet against a stock on Robinhood
A put option is a contract that gives you the right to sell a stock at a set price by a certain date. If the stock price falls below that price, your put gains value. This mimics a short position — you profit when the stock goes down — but with defined risk and no borrowing involved.
To buy a put on Robinhood, you need an account with options trading turned on. Go to your Account settings, select Options, and request Level 1 approval (which Robinhood usually grants when ready). Then search for the stock you want to bet against, tap the contract chain, and select a put contract. Choose your strike price (the price at which you can sell) and expiration date, then place your order like a regular stock trade.
Puts cost money upfront — the premium — and that premium is your maximum loss. If the stock never falls below your strike price, you lose the premium you paid. If it falls far below, your put can be worth much more. The tradeoff is that puts expire on a specific date, so time works against you. A short stock position has no expiration.
Using inverse ETFs to profit from stock declines
An inverse ETF is a fund that moves in the opposite direction of a stock or index. If the S&P 500 falls 2%, a 1x inverse S&P 500 ETF rises about 2%. You buy and sell inverse ETFs exactly like regular stocks on Robinhood — no options approval needed, no borrowing, no margin account required.
Inverse ETFs work well if you want to bet against an entire market or sector rather than a single stock. Common inverse ETFs include SH (inverse S&P 500), PSQ (inverse Nasdaq-100), and RWM (inverse Russell 2000). You can also find 3x leveraged inverse ETFs like SQQQ, which amplify moves threefold but reset daily, making them risky for holding longer than a few days.
The main drawback is that inverse ETFs decay over time if the market moves sideways or up. They are designed for short-term tactical bets, not long-term holdings. If you hold an inverse ETF while the market rises, you lose money even if you were right about the direction in the long run.
Opening a margin account at another broker to short stocks
If you want to short individual stocks, you will need to move to a broker that offers it. Interactive Brokers, TD Ameritrade, Charles Schwab, and Fidelity all permit short selling on margin accounts that meet their requirements.
Most brokers require a minimum account balance — often $2,000 to $25,000 depending on the firm — and approval for margin trading. When you short a stock, the broker lends you the shares and charges you interest (the borrow rate). You must maintain a minimum equity level in your account, or the broker will force-close your position. If the stock price rises sharply, your losses mount with no ceiling.
The approval process typically takes one to three business days. You will fill out a margin agreement that explains the risks, including unlimited loss potential. Some brokers restrict short selling on certain stocks, especially those with low trading volume or high borrow costs.
The risks of short selling you should understand
Short selling is riskier than buying stock because your loss potential is unlimited. When you buy a stock at $50, the worst case is it goes to zero and you lose $50. When you short a stock at $50, it can rise to $100, $500, or higher, and your loss grows with it. There is no mathematical ceiling.
You also pay borrow fees while your short position is open. If the stock is hard to borrow — because many other traders are shorting it — the fee can be steep. Additionally, the lender can demand the shares back at any time, forcing you to buy them back when ready at whatever price the market is offering.
Short squeezes happen when a heavily shorted stock rises sharply, forcing short sellers to buy back shares to cut losses. This buying pressure drives the price even higher, creating a vicious cycle. GameStop and AMC are famous examples. If you are short and a squeeze starts, you can lose your entire account in hours.
Comparing your options for betting against stocks
| Method | Available on Robinhood | Maximum Loss | Expiration | Borrow Fees |
|---|---|---|---|---|
| Put Options | Yes (with approval) | Premium paid | Yes, specific date | No |
| Inverse ETFs | Yes | Amount invested | No | No |
| Short Selling | No | Unlimited | No | Yes |
Put options give you defined risk and no time pressure to close the position, but you pay an upfront cost and the contract expires. Inverse ETFs let you bet against the market with no approval process, but they decay over time and are best for short-term trades. Short selling offers unlimited profit potential and no expiration, but it carries unlimited loss risk, borrow fees, and requires moving to a different broker.
Frequently Asked Questions
Can I short stocks if I upgrade to a Robinhood Gold margin account?
No. Robinhood Gold gives you margin buying power and access to extended-hours trading, but it does not restore short selling. Margin accounts on Robinhood let you borrow cash to buy more stock, not borrow stock to sell short. You would need to open an account at a different broker to short individual stocks.
What happens if I buy a put option and the stock price rises instead of falls?
Your put loses value as the stock rises. If the stock stays above your strike price until expiration, the put expires worthless and you lose the entire premium you paid. This is your maximum loss on a put — you cannot lose more than what you paid upfront, unlike a short stock position.
Are inverse ETFs the same as shorting a stock?
No. Inverse ETFs move opposite to an index or sector, but they decay over time and reset daily if leveraged. Shorting a stock is a direct bet against that one company with no expiration. Inverse ETFs are simpler and safer for beginners, but they are not a perfect substitute for short selling.
Do I need a certain account balance to short stocks on other brokers?
Yes. Most brokers require a minimum of $2,000 to $25,000 in your account before they will approve margin trading and short selling. Some brokers have higher minimums. Check the specific broker's requirements before opening an account.
What is a short squeeze and how do I avoid it?
A short squeeze happens when a heavily shorted stock rises sharply, forcing short sellers to buy back shares quickly, which drives the price even higher. To avoid being caught in one, avoid shorting stocks with very high short interest or low trading volume. If you do short, set a stop-loss order to exit automatically if the price rises past a certain point.