Does E*TRADE offer short selling on stocks and ETFs? How to sell short on E*TRADE. Fees and requirements in 2024.

Can You Short Sell Stocks on ETRADE?

If you are looking for a good broker for short selling, ETRADE might be a good option for you to try. ETRADE offers a wide range of investment products, tools, and services, and its trading fees are relatively low.

Continue reading to learn more about ETRADE’s short-selling opportunities and the related costs.

Available Securities

As a 'full-service' broker, ETRADE offers a wide range of securities, including U.S. stocks and ETFs, options, futures, mutual funds, bonds, and OTC securities. However, not all are available for short selling.

Short selling is available for stocks and ETFs trading on the main U.S. exchanges and the OTC marketplace.

ETRADE Short Selling Fees

There are no commission fees on stocks or ETFs listed on major exchanges. However, securities traded on the OTC market, such as penny stocks and international securities (ADRs), have a commission of $6.95 per trade. This fee can be reduced to $4.95 for traders placing more than 30 trades per quarter.

Aside from commissions, short selling incurs some margin-related fees. There are two main types: a margin interest rate charged when borrowing shares or capital and a short interest rate unique to each stock.

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Margin Rates

Like most other brokers, ETRADE’s margin rates are variable and are decided by the brokerage account size. Since margin rates are always subject to change, they should be reviewed regularly.

Current margin rates at ETRADE are:

Debit Balance Margin Interest Rates
$250,000 - $499,999.99 12.2%
$100,000 - $249,999.99 12.7%
$50,000 - $99,999.99 13.2%
$25,000 - $49,999.99 13.7%
$10,000 - $24,999.99 13.95%
$0 - $9,999.99 14.2%

ETRADE Short Interest Rates

The short interest rate for each stock is charged in addition to the primary margin fee. As mentioned, each stock has its own short interest rate, so the cost of selling stocks short is also variable.

Several things influence the short interest rate - volatility, availability, and popularity being the primary ones. In general, stocks that pose a higher risk or are difficult to locate are coupled with higher short interest rates.

Short interest rates are applied on a daily basis. However, the aggregate cost arising from all your shorting activities is deducted from your brokerage account monthly.

ETRADE Short Locate

When stocks are difficult to locate, the fees are usually higher due to the 'short locate' procedure that brokers must go through. If they cannot supply the shares you want to sell, the broker must locate them from an outside source. Once the broker has the shares you requested, they will assign them to your account.

ETRADE Shorting Requirements

Before you can short stocks on ETRADE, there are a few requirements that you must meet.

The first thing to do is to ensure that you are trading in a margin account and have a balance of at least $2,000. You can still trade in a margin account with a lower balance, but you won't be able to access margin-related services like short selling.

After meeting the $2,000 account minimum for margin trading, you must also consider the maintenance requirement. To establish a short position with borrowed shares, the account should have a value at least twice that of the borrowed amount.

If your account equity drops below that threshold at any time, ETRADE may issue a margin call. To avoid complications, use the balance in your account that exceeds the original $2000 as your maintenance balance.

Following this example, creating a short position of $1,000 in a $4,000 account could help protect you against accidental margin calls.

Alternative For Short Sellers

For short traders, a good alternative broker is Charles Schwab. It has a number of advantages: richer selection of shortable products, the best trading tools, and paper trading. Learn more...

Continue to Charles Schwab Review

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Placing a Trade: Platform Options

Establishing a short position is quite simple once all the requirements have been met. Using any of the available trading platforms, you can use the trade ticket to 'sell short.’ If a security is labeled HTB, you may have to call the broker to request the shares you want, but ETRADE will supply you with the required steps when you try to sell them.

Etrade short selling

The platform choices include two different mobile apps: the ETRADE webpage, a browser-based platform (Power ETRADE), and a desktop trading platform (ETRADE Pro). ETRADE Pro is the most versatile and arguably the best platform for short selling.

Etrade short selling

Unfortunately, ETRADE Pro is not available when you first open an account. To gain access to ETRADE Pro, you must complete at least thirty trades per quarter. Once that requirement is met, you can call in or send a message to request your download link.

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Updated on 12/12/2023.

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