Short Selling Calculator
Calculate your short sale P&L after borrow costs, break-even cover price, and scenario analysis.
How Short Selling Works
When you short a stock, your broker borrows shares on your behalf (from its own inventory or from other customers' accounts) and sells them at the current market price. You receive the sale proceeds but must eventually buy the shares back (cover) and return them. Your profit is the difference between the sale price and the cover price, minus borrow costs.
Borrow fees are charged as an annualized percentage of the value of the shorted shares. For widely available stocks, the fee is typically 0.25–1%. For stocks with high short interest or limited float, fees can exceed 100% annually — during the GameStop and AMC squeezes in 2021, borrow rates reached well over 100%.
Who Lends the Shares
Shares are lent through prime brokers, institutional custodians, or your own broker (which may lend shares held in your margin account without your knowledge under standard margin agreements). The lender receives the borrow fee income; the borrower (short seller) pays it.
Short Interest as a Market Indicator
Short interest — the total number of shares sold short as a percentage of float — is published twice monthly by exchanges. High short interest (above 20–30% of float) indicates widespread bearish sentiment but also creates squeeze risk. Short interest ratio (days to cover) measures how many average trading days it would take all short sellers to cover: higher = more squeeze risk.
Short Selling vs Buying Puts
Both are bearish strategies, but they have key differences. Short selling has unlimited theoretical loss (a stock can rise forever) while put buyers' maximum loss is the premium paid. Short selling also incurs borrow costs and may be subject to margin calls. Put options expire and have a fixed time horizon, while short positions can be held indefinitely (as long as shares are available to borrow and margin requirements are met).