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Has anyone ever heard of a company charging you interest on short position? Should I try and open an account somewhere else if I want to short TSLA? This will cost me about $13 a day.

I was called today and was told that because I shorted TSLA and stock that is in high demand to short, that I would be charged 2% interest on the 23k that position represents.

Which seems very odd to me especially since I am not getting any interest on the 23k in my investment account that I received for shorting the stock.

I don't have to pay the interest on AAPL of which I have 1000 shares shorted to the tune of 100k. Its merely due to the fact that shorting TSLA is a high demand position.

Mark Monforti
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2 Answers2

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Brokers have the right to charge interest on any stock that they lend you. Since you borrowed the TSLA to short it, the owner of those shares can charge you interest until you return them.

If you are not getting charged interest on some shares that you have borrowed to short, consider it generosity on the part of the lender.

Five Bagger
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I agree with Mark. I was quite confuse about the short position at first but then I did a lot of learning and found out that as long as you have enough cash to cover your margin requirement you do not pay any interest since you do not have a debit on your margin balance. This is not true for a long position though, supposed you have 5k cash and 5k margin balance, if you buy 10K worth of stocks then you will need to pay interest on the 5k of the margin balance since it is a debit. Since shorting is done at a credit basis, you actually get interest from the transaction but you still may need to pay the borrowing fees for the stocks so they could simply balance each other out. I have shorted stocks twice through two different companies and neither time I noticed any interest charges. But make sure you have enough cash to cover your margin requirement, because once your margin balance is used to covered your position then interest would accrual. Learn.

Raymondhl
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