Can you short sell stocks that are trading below $5? My broker says that I can't.

By Investopedia Staff AAA
A:

Short selling can be very risky for both the investor and the broker. Brokers will often tell investors that only stocks above $5 can be sold short. Although this may be true for your particular brokerage firm, it is not a requirement set by the Financial Industry Regulatory Authority or the SEC.

Most brokerage firms will have a "short list," which details all securities the firm allows investors to short sell without any extra requirements. If you are looking to short sell a security that isn't on this list, your broker will have to call into the securities lending department to see if the brokerage has enough of the particular security for you to short sell. This list and the securities available for short selling will vary across different brokerages, and it is completely up to your brokerage to decide whether it will assist you in short selling a security.

For more on short selling, take a look at our Short Selling Tutorial.

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