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Motley Fool Pro / Pro: Pro's Shorts & Hedges


Subject:  Re: Cost to short at other brokerages Date:  10/12/2018  12:41 PM
Author:  aleax Number:  1749 of 1930

When I find a particular short too difficult to execute, or costlier than I'd like, I usually reach for the synthetic-short alternative and end up happier. Besides the costs being well known and fixed in advance (broker can't raise the fees on you, you don't risk owing payment in lieu of a special dividend, etc etc), you cannot be forced out of the position as you might be with an actual short (as e.g. Pro was on FAZ) -- your position will run for as long as YOU want, up to expiration date (which is known in advance).

I don't have accurate statistics but I believe I use synthetic rather than actual shorts almost half the time. In particular I'm quite happy to have done a syn short on FAZ back in the day:-)
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