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petermic

06/01/12 11:47 AM

#26460 RE: Red Knob #26458

With regard to shorting low priced stocks, keep in mind that the minimum (per the Federal Reserve) margin required is $2.50 per share. Most brokers use $5.00 per share.

This makes shorting most penny stocks uneconomic.

Another factor is the 'rebate' or fee to borrow the stock which most brokers, including IB, charge. That varies and can be well in excess of 100% per year.