How to short sell in Zerodha? (2024)

FAQs

How to short sell in Zerodha? ›

On the trading platform when you are required to short, all you need to do is highlight the stock (or futures contract) you wish to short and press F2 on your trading platform. Doing so invokes the sell order form; enter the quantity and other details before you hit Submit.

You can short sell in Zerodha on an intraday basis in the Cash Equity segment. To place a sell order in Zerodha without holding stock in the Demat account, you need to place an order using MIS (Margin Intraday Square-off) product type.

As per the brokerage, you need to pay 0.03% or ₹20 whichever is lower. This is more than the maximum fee per trade i.e. ₹20 hence you end up paying only ₹40 for the above trade. To save the impact cost of the trade, you can try Zerodha iceberg order where your order is divided into multiple legs.

In delivery-based trading, individuals have the freedom to hold stocks overnight for any desired duration. When using the CNC product type, there is no provision for leverage, and positions will not be automatically squared off. Taking short positions is not possible using CNC.

SEBI (Reuters)

“Naked short-selling shall not be permitted in the Indian securities market and accordingly, all investors would be required to mandatorily honor their obligation of delivering the securities at the time of settlement," SEBI said in its framework.

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MUMBAI - The Securities and Exchange Board of India on Friday said that investors across all categories will be allowed for short-selling, but naked short-selling will not be permitted. Further, all stocks that trade in the futures and options segment are eligible for short-selling.

It requires short trades to have 150% of the value of the position at the time the short is created and be held in a margin account. This 150% is made up of the full value, or 100% of the short plus an additional margin requirement of 50% or half the value of the position.

Once you find a stock to short, you can only enter the short sale if you have account equity equal to 150% of the short position's value (including 100% of the proceeds generated by the short position and additional margin equal to 50% of the short position's value) when you open the trade.

Under Regulation T, short sales require a deposit equal to 150% of the value of the position at the time the short sale is executed. This 150% includes the full value of the short (100%), plus an additional margin requirement of 50% or half the value of the position.

Can I short sell in intraday? ›

Short selling exposes traders to substantial risk in case of bullish runs. Short selling is only available for intraday trading. Short selling is time sensitive. It requires traders to identify trends at a suitable time and enter the trade accordingly.

There is no set time that an investor can hold a short position. The key requirement, however, is that the broker is willing to loan the stock for shorting. Investors can hold short positions as long as they are able to honor the margin requirements.

If you failed to square off your positions by 3:20 PM, the trading platform automatically square-off your open positions. This process square-off your open intra-day positions at market price to settle the transition. Zerodha charges an additional Rs 50 fees for all 'Auto Squared' trades.

Why Is Short Selling Legal in the US? While short selling is often controversial, especially during market downturns, there is a general understanding among U.S. investors and regulators that short selling is a legitimate investment strategy.

Generally speaking, investors cannot short a stock unless they can borrow the necessary shares, or prove that they can obtain the shares within the clearing time of the short sale (the day of the trade plus two business days).

Why is naked short selling illegal? Naked short selling is illegal because it involves the selling of securities that the seller does not actually own or have borrowed, which can result in a lack of sufficient supply of the securities in the market and potentially lead to a decline in the price of the securities.

Yes it is. You can switch from Delivery to Intraday mode by clicking on '⌄' button while placing the order. When placing an order in intraday mode - you can short sell (sell before buying) and get higher leverage (trade with lesser balance).

According to the market regulator, all classes of investors like retail and institutional investors are permitted to short sell. However, the market regulator reiterated that naked short selling shall not be permitted in the Indian securities market.