One issue that puzzles me, is how in practice it c

Quote:

---

One issue that puzzles me, is how in practice it can be worthwhile for anyone to short a low-pennies stock. I heard there was a relatively large margin requirement.

---

The normal margin requirement in the U.S. for shorting is $2.50/ share. But the larger shorters have ways of getting around these requirements by using offshore brokers (like Suretrader, Interactive Brokers) where the U.S. margin requirements of $2.50/share don't apply. Depending on their financial clout they may be required to put down as little as 1/10 of this cost (.25/share) as the following post reveals.

VERIFIED PROOF OF SHORTING SUB-PENNY STOCKS (F0R $.20-.25/SHARE BORROWED, NOT $2.50/SHARE)

BigBadWolf  
Wednesday, 12/02/15

BTW ANY of the investing public who believe that shorting sub pennies does not exist, or requires the supposed $2.50/share rule have NO idea of what they speak, nor the monetary means to perform these type of trades.

FACT! We have been shorting sub-pennies for well over a decade at a much lower rate (due to our funds size & a 10-1 borrow/margin cost)...depending on the stock, this amounts to .20 - .25 per share borrowed).