Can you sell ETFs and stocks short on Robinhood? Fees and requirements. Does Robinhood offer inverse ETFs and buying put options?

Can You Short Sell on Robinhood?

Shorting the market or a stock is betting that the price of that instrument will come down. There are different tools available to create short positions, each with different advantages. This article will go over these various ways of achieving short exposure and which ones are supported on Robinhood.

Arguably the most direct way to short a specific stock is simply to sell it short. For this to be possible your broker will actually allow you to borrow shares of the stock that you wish to short (for a small fee), and then you will simply sell these borrowed shares in the market. When you want to cover, you simply buy back the shares you sold (hopefully at a lower price) and the price difference is your gain/loss. Robinhood doesn’t currently support short selling (another $0-commission broker, Webull, does offer shorting stocks).

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Put Options on Robinhood

Another popular way to achieve short exposure is by buying put options, which are time-sensitive securities that give the owner the right (but not the obligation) to sell X number of shares of the underlying stock at a pre-determined price, known as the strike price, up until a certain date in the future.

Robinhood recently added options trading to their platform; however investors should be sure they fully understand the multiple dimensions and factors that impact its price. To profit with put options, you must correctly guess not only that a stock will go down, but also by how much and in how much time.

How to Buy Puts on Robinhood

Step 1

Once you are on the stock screen for the security you’d like to buy puts on and click the “Trade” button, you will see another button pop up that says “Trade Options” – click this one. Next, you will be taken to a screen with the available options for purchase or sale.

Robin Hood Buy Put Options

Step 2

On the top of the screen you will have the option to choose for which maturity date you would like to trade options. Right below that you want to then select “Buy” and “Put” to specify your desired trade. The screen will then show you all the available put options for that maturity date, along with their last price and strike prices. The screen will also show you the current break-even price for each contract, which is simply the price that the stock must fall to just for you to recover the premium you paid.

Robin Hood Put Options

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Step 3

After selecting the specific put contract you would like to short, you will be taken to this final step to indicate how many contracts you would like to buy (one contract represents 100 shares) and the maximum price you’re willing to pay. Robinhood then displays your trade cost, and just like with stock trades the app will ask you to review your options trade one last time before submitting.

Robin Hood Trading Put Options

Robinhood Inverse ETFs

Another popular, and perhaps easier way, to create a short position is through inverse ETFs, which are also supported on Robinhood. An inverse ETF is just what it sounds like, it’s an ETF that tries to mimic the daily performance of an underlying index with the sign switched. For example, while the QQQ is an ETF that tracks the daily performance of the Nasdaq 100, its inverse cousin ETF (PSQ) tracks the same index’s daily performance multiplied by negative one (-1).

Robinhood Inverse ETFs

Shorting on Robinhood Summary

In short (no pun intended), the most direct way to short a specific stock is by selling it short, which you can’t currently do on the Robinhood platform.

Robinhood does support buying put options, which is another, more multi-dimensional, way to short a specific stock. This approach can be equally effective as short selling provided the investor understands all the factors that impact options pricing.

Lastly, if you are just looking to short a broad market index, buying an inverse ETF is one of the easiest options out there.

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