Short Selling
Short selling is used as a bearish strategy in attempt to profit from the potential price decline of a security. Learn more about the short sale strategy.
Find out how the short sale process works at Scottrade and what is required to sell a stock short.
It's important to realize that the number of shares available at the time you create your order may not be the number of shares available when your trade settles. While the trades will still settle, they may be closed out by Scottrade any time after settlement date.
When you borrow money from a lending institution, you agree to pay interest on the loan based on certain conditions such as the loan amount, availability, etc. Similarly, when you borrow shares of a stock, you may be charged interest based on the underlying lending conditions of the security in the short sale - primarily the availability of shares. This fee is referred to as the short sale rebate fee.
Once you've created a short sale position, you must eventually cover your short sale by delivering shares or repurchasing them in the market. Learn about closing a short sale.
Sometimes in a short sale, it will be necessary to purchase the stock back and close the position for regulatory purposes. This is called a forced buy-in, and is a risk you take when initiating a short position.