When do I need to return short stock to the lender
"If the owner of the stock wants it back, they ""call"" it back. There are no guarantees of how long you can keep it for your short, or the cost involved to hold it.  Usually, everyone knows about a particular set-up (e.g. a warrant or convertible bond mispricing) that is attractive for arbitrage. This causes the associated stock to be in high demand thus expensive to borrow for shorting, or impossible to find for any price at all."
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. Owning a stock via a fund and selling it short simultaneously should have the same net financial effect as not owning the stock.  This should work both for your personal finances as well as the impact of (not) owning the shares has on the stock's price. To use an extreme example, suppose there are 4 million outstanding shares of Evil Oil Company.  Suppose a group of concerned index fund investors owns 25% of the stock and sells short the same amount.   They've borrowed someone else's 25% of the company and sold it to a third party.  It should have the same effect as selling their own shares of the company, which they can't otherwise do.  Now when 25% of the company's stock becomes available for purchase at market price, what happens to the stock?  It falls, of course.   Regarding how it affects your own finances, suppose the stock price rises and the investors have to return the shares to the lender.  They buy 1 million shares at market price, pushing the stock price up, give them back, and then sell another million shares short, subsequently pushing the stock price back down. If enough people do this to effect the share price of a stock or asset class, the managers at the companies might be forced into behaving in a way that satisfies the investors.  In your case, perhaps the company could issue a press release and fire the employee that tried to extort money from your wife's estate in order to win your investment business back.  Okay, well maybe that's a stretch. No. There is no asset associated with your short position, so there's nothing to gift. The short position in the stock is purely a liability. When you note that you have a profit in the position, what you mean is that the cash you made when you shorted the stock is more than enough to cover the short position. The only asset in this picture, then, is the cash you made when you entered the short position. If they short the contract, that means, in 5 months, they will owe if the price goes up (receive if the price goes down) the difference between the price they sold the future at, and the 3-month Eurodollar interbank rate, times the value of the contract, times 5. If they're long, they receive if the price goes up (owe if the price goes down), but otherwise unchanged. Cash settlement means they don't actually need to make/receive a three month loan to settle the future, if they held it to expiration - they just pay or receive the difference.  This way, there's no credit risk beyond the clearinghouse. The final settlement price of an expiring three-month Eurodollar futures (GE) contract is equal to 100 minus the three-month Eurodollar interbank time deposit rate. Different brokerages have different house rules for margin requirements and margin calls.  You will likely get a margin call giving you a small amount of time to deposit the required funds to bring your account balance up to the required margin requirements.  In reality, a stock that falls from $50 to $4 in a short period will probably become unmarginable.  In short, yes, you will owe the broker for the loss. "When I have stock at my brokerage account, the title is in street name - the brokerage's name and the quantity I own is on the books of the brokerage (insured by SIPC, etc).  The brokerage loans ""my"" shares to a short seller and is happy to facilitate trades in both directions for commissions (it's a nice trick to get other parties to hold the inventory while you reap income from the churn); by selecting the account I have I don't get to choose to not loan out the shares." The problem with rate of return calculation on short positions is, that the commonly used approach assumes an initial investment creating a cash outflow. If we want to apply this approach to short selling, we should look at the trade from another perspective. We buy money and pay for this money with stock. Our investment to buy 50$ in your example is 1 share.  When closing the short position, we effectively sell back our money (50$) and receive 2 shares. Our profit on this position is obviously 1 share. Setting this in relation to our investment of 1 share yields a performance of 100%   in reality, we do not sell back the entire cash but only the amount needed to get back our investment of 1 share. This is actually comparable to a purchase of stock which we only partially close to get back our invested cash amount and keep the remaining shares as our profit Well, if the short seller has to pay the dividend out of their pocket, what happens to the dividend the company paid out ??  Sounds like there are 2 divdends floating around, the short's, and the company's, but only 1 share of stock. Is it just -34*4.58= -$155.72 for CCC and -11*0.41= -$4.51 for DDD? Yes it needs to be recorded as negative because at some point in time, the investor will have to spend money to buy these shares [cover the short sell and return the borrowed shares]. Whether the investor made profit or loss will not be reflected as you are only reflecting the current share inventory. Thanks for your reply. I’m not familiar with the term “Held-For-Trading Security”. My securities are generally held as collateral against my shorts. To clarify, I am just trying to track the “money in” and “money out” entries in my account for the shorts I write. The transaction is relatively straight forward, except there is a ton of information attached! In simple terms, for the ticker CSR and short contract CSRUQ8, the relevant entries look something like this: There are no entries for expiries. I need to ensure that funds are available for future margin calls and assignments. The sale side using covered calls is as involved. "The short answer is that the exchange of the stock in exchange for the elimination of a debt is a taxable exchange, and gains or losses are possible for the stock investor as well as the bank.   The somewhat longer answer is best summarized as noting that banks don't usually accept stocks as collateral, mostly because stock values are volatile and most banks are not equipped to monitor the risk involved but it is very much part of the business of stock brokers.   In the USA, as a practical matter I only know of stock brokerages offering loans against stock as part of the standard services of a ""margin account"". You can get a margin account at any US stock broker. The stockholder can deposit their shares in the margin account and then borrow around 50% of the value, though that is a bit much to borrow and a lower amount would be safer from sudden demands for repayment in the form of margin calls. In a brokerage account I can not imagine a need to repay a margin loan if the stocks dividends plus capital appreciation rises in value faster than the margin loan rate creates interest charges...  Trouble begins as the stock value goes down.  When the value of the loan exceeds a certain percentage of the stock value, which can depend on the stock and the broker's policy but is also subject to federal rules like Regulation T, the broker can call in the loan and/or take initiative to sell the stock to repay the loan.   Notice that this may result in a capital gain or loss, depending on the investor's tax basis which is usually the original cost of the stock.  Of course, this sale affects the taxes of the investor irregardless of who gets the money." 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. "Concerning the general problem of short selling and the need to borrow shares to complete the transaction : Selling short is a cash transaction.  Unlike a futures contract, where a short seller is entering into a legal agreement to sell something in the future, in the case of short selling a share the buyer of the share is taking immediate delivery and is therefore entitled to all of the benefits and rights that come with share ownership.  In particular, the buyer of the shares is entitled to any dividends payable and, where applicable, to vote on motions at AGMs.  If the short seller has not borrowed the shares to sell, then buyer of non-existent shares will have none of the rights associated with ownership. The cash market is based on the idea of matching buyers and sellers.  It does not accommodate people making promises. Consider that to allow short sellers to sell shares they have not borrowed opens up the possibility of the aggregate market selling more shares than actually exist.  This would lead to all sorts of problematic consequences such as heavily distorting the price of the underlying share.  If everyone is selling shares they have not borrowed willy-nilly, then it will drive the price of the share down, much to the disadvantage of existing share holders. In this case, short sellers who have sold shares they have not already borrowed would be paying out more in dividends to the buyers than the total dividends being paid out by the underlying company. There are instruments that allow for short selling of unowned shares on a futures basis.  One example is a CFD = Contract for Difference.  In the case of CFDs, sellers are obliged to pay dividends to buyers as well as other  costs related to financing. EDIT Regarding your comment, note that borrowing shares is not a market transaction.  Your account does not show you buying a share and then selling it.  It simply shows you selling a share short.  The borrowing is the result of an agreement between yourself and the lender and this agreement is off market.  You do not actually pay the lender for the shares, but you do pay financing costs for the borrowing so long as you maintain your short position. EDIT I realise that I have not actually read your question correctly.  You are not actually talking about ""naked"" short selling.  You are talking about selling shares you already own in a hope of maintaining both a long and short position (gross).  The problem with this approach is that you must deliver the shares to the buyer.  Otherwise, ask yourself what shares is the buyer actually buying if you want the bought shares to remain in your account. If you are not going to deliver your long position shares, then you will need to borrow the shares you are selling short for the reasons I have outlined above." If you are sure you are right, you should sell stock short. Then, after the market drop occurs, close out your position and buy stock, selling it once the stock has risen to the level you expect. Be warned, though. Short selling has a lot of risk. If you are wrong, you could quite easily lose all $80,000 or even substantially more. Consider, for example, this story of a person who had $37,000 and ended up losing all of that and still owing over $100,000. If you mistime your investment, you could quite easily lose your entire investment and end up hundreds of thousands of dollars in debt. At the bottom of the page you linked to, NASDAQ provides a link to this page on nasdaqtrader.com, which states Each FINRA member firm is required to report its “total” short interest positions in all customer and proprietary accounts in NASDAQ-listed securities twice a month. These reports are used to calculate short interest in NASDAQ stocks. FINRA member firms are required to report their short positions as of settlement on (1) the 15th of each month, or the preceding business day if the 15th is not a business day, and (2) as of settlement on the last business day of the month.* The reports must be filed by the second business day after the reporting settlement date. FINRA compiles the short interest data and provides it for publication on the 8th business day after the reporting settlement date. The dates you are seeing are the dates the member firms settled their trades. In general (also from nasdaq.com), the settlement date is The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently three business days after the trade.