Is it possible to short a stock or stock CFDs without paying any interest or swap fees for mantaining the position?
Thank you.
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Sign up to join this communityIs it possible to short a stock or stock CFDs without paying any interest or swap fees for mantaining the position?
Thank you.
As others have said: unless you can find someone willing to make a zero-interest loan, the answer is no.
If you can figure out how to turn a "0% for first N months" credit card offer onto a leveraged investment or something of that sort -- seems unlikely -- maybe.
It is possible and it depends on your strategy.
As short selling interest rates are annual and levied monthly at a prorated rate. Interest rates are also low in general, with the exception of hard to borrow stocks.
Therefore you can maintain a short position for weeks on end and notice nothing. Months even, if the position itself has already gained in your favor.
There is no additional fee for opening the short position. Although some brokers have a "locate" fee, if it is hard to borrow the stock and they need to go find some shares to short. So you can do it as much as you like.
If the stock offers options, you can utilize the synthetic short stock strategy. This consists of selling a call and buying a put option with the same strike and expiration and it simulates a short stock position's risk and reward. Since call premiums are high than put premiums by the carry cost, you're likely to receive a small a credit if the options are at-the-money.
A variation of this would be a collar where you sell a call at a higher strike and buy a put at a lower strike. The collar would behave similarly except that participation would be at the rate of option delta which is less than 1.00