Can You Short Sell Stocks Under $2? Can You Short Sell Stocks Under $5?
Posted by Timothy Sykes on Fri 9th of Oct, 2009 07:40:19 AM
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I get these questions all the time and I’m tired of answering people individually so I’m praying Google picks this post up. The answer is:
YES!
Now anybody who knows Short Selling, knows it’s far better to short sell a stock when it’s high and everyone points to Enron….but the odds don’t work out that way. High priced stocks are high for a reason, they’re doing something right, whether it be business or perception-wise and it’s v ery difficult to convince people otherwise. (Enron and a few others are exceptions due to blatant fraud, but good luck poking through the books of thousands of public companies trying to find that one or two potential frauds)
As I teach in my PennyStocking DVD packages, it’s far easier and better odds to poke around the books of strong Penny Stocks, stocks that have surged 100%, 300%, even 2,000% in the past few days and weeks, like this cobra venom as a pain reliever-selling penny stock which TIMalert subscribers banked $6,000+ on, because instead of 1 or 2 out of 5,000 stocks being a potential frauds, the equation is flipped with 1 or 2 out of 5,000 Penny Stocks NOT being a fraud or having nasty skeletons in their closet.
As we all know stocks trading at 10 cents, 50 cents and $1/share have the potential to really boom if the right group of stock promoters and hedge fund traders who like to manipulate these stocks get together, they really can surge quickly and appear to have earned their gains legally, but it’s all a mirage.
Every single stock trading under $5/share is evil in some way…trust me, I’ve been doing this for 10 years, I have 3,000+ blog posts in 2 years and I’m just getting started exposing these scumbags.
the good news is that since we know just about EVERY runup is due to hype or manipulation, that means Short Selling them isn’t just legal, it’s smart.
Understand some brokers truly suck and they will tell you the SEC doesn’t allow shorting under $5…or under $3…or under $2….or under $1…if anyone ever says that, belt them in their dumb/lying stomachs for they’ve wasted your time and mine (because I have to do blog posts like this pointing out reality).
It’s PERFECTLY LEGAL TO SHORT STOCKS DOWN TO A PENNY/SHARE…OR EVEN BELOW IF YOU SO DESIRE…I use and recommend Thinkorswim & Interactive Brokers, but it’s tough to find borrows on Penny Stocks up a ton because everyone whose been in the industry for any amount of time knows that 99.9% of these runups fail and they offer great shorting opportunities.
There is one caveat, for any stock trading under $2.50, whether it’s 10 cents/share, 50 cents/share, $1.99, or $2.49…the SEC requires you to have the buying power of however many shares you want to short multiplied by $2.50/share….so when TIMalert subscribers and I successfully short sold Genova Biotherapeutics, Inc. (GVBP) for $40,000+ in trading profits, even though the stock never really made it past $1/share, we had to put up $2.50 per share for every share short…I shorted 30,000 shares at 49 cents/share, later covering at 29 cent/share for $6,000 in profits, but I had to add $100,000 to my Covestor auto-trading account so I could take such a large position (30,000 shares x $2.50/share=$75,000), even though it was just a $15,000 position.
Understand?
It’s all about odds and risk management, that’s why taking lessons from someone like me whose seen it all over the past decade is not optional, I save you from making dumb mistakes and help you learn from mine.
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TIM Trades
View All| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| Nov 19 | AENY | $2.80 | $3.02 | $1148 |
| Nov 18 | NLST | $4.16 | $4.40 | $947 |
| Nov 18 | IMGG | $1.42 | $1.64 | $2094 |
| Nov 17 | NLST | $5.04 | $5.59 | $2195 |
| Nov 13 | VRMLQ | $21.50 | $22.97 | $2901 |
| Nov 11 | EONC | $2.61 | $2.80 | $687 |
| Nov 10 | EONC | $2.74 | $3.36 | $9784 |
| Nov 6 | QXM | $4.31 | $4.80 | $1936 |
| Nov 4 | COT | $8.66 | $8.88 | $642 |
| Nov 4 | QXM | $4.61 | $4.89 | $822 |
| Oct 30 | DDRX | $25.70 | $26.53 | $812 |
| Oct 29 | CTDC | $4.00 | $4.42 | $781 |
| Oct 26 | AWSL | $3.24 | $4.10 | $2516 |
| Oct 23 | RODM | $5.27 | $5.23 | $301 |
| Oct 22 | AMLM | $2.69 | $2.97 | $820 |
| Oct 22 | USEG | $6.12 | $6.09 | $85 |
| Oct 20 | CBOU | $8.93 | $9.06 | $243 |
| Oct 16 | VRMLQ | $16.79 | $18.65 | $2773 |
| Oct 13 | YONG | $11.05 | $11.66 | $1202 |
| Oct 13 | NPHC | $0.59 | $0.71 | $583 |
| Oct 12 | IMGG | $0.60 | $0.70 | $682 |
| Oct 9 | ZAGG | $5.50 | $6.10 | $2380 |
| Oct 7 | GVBP | $0.03 | $0.27 | $702 |
| Oct 1 | NPHC | $0.70 | $0.85 | $1482 |
Total: $98,094 (681%)
