Short Selling Cost Calculator
Calculate the borrow rate, locate fee and dividends payable on a short position, and the fall needed to cover them.
Short selling is not the mirror image of going long, and the difference is mostly cost. To sell a share you do not own you must borrow it, and the lender charges for that every day the position is open. This short selling cost calculator adds those charges up, so the cost of shorting a stock is a figure rather than an afterthought.
Formula: borrow = value x rate x days / day count, plus locate and dividends
Your figures
Value of the shares sold short.
From your broker's stock loan rate for this security.
Which convention your broker uses.
One-off charge to source the borrow.
Paid to the lender if the stock goes ex-dividend while short.
Results
Cost to carry the short
US$82.19
0.411% of the position over 30 days
- Borrow cost
- US$82.19
- Locate fee
- US$0.00
- Dividends payable to the lender
- US$0.00
- Daily borrow costUseful for deciding how long the thesis has to work.
- US$2.74
- Price fall needed to cover the carry
- 0.411%
- Annualised cost
- 5.00%
What this means
Carrying this short for 30 days costs US$82.19, so the stock has to fall 0.411% before the position is level. Shorting is not the mirror of going long: a long can be held at no cost beyond financing, while a short accrues borrow every day and pays any dividend to the lender — which is why a short thesis has to be right about timing as well as direction.
- Every figure here is broker-specific and must come from your own contract specification or statement. No broker's or venue's figure is preset: where a field opens with a number it is a round illustration to overwrite, because commission, spreads and rates differ by broker, venue, instrument and account tier, and all of them are revised.
- Borrow rates are set by supply and demand for the stock and are not fixed. On a heavily shorted name they can rise from a fraction of a percent to well over 100% annually.
- Borrow can be recalled. If the lender wants the stock back you may be bought in at the prevailing price regardless of your view.
- Excludes commission and the spread, which are charged separately.
Cost to carry the short: US$82.19
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About the Short Selling Cost calculation
Three charges apply. Borrow accrues daily on the value of the position. A locate fee may be charged once to source the stock. And if the company pays a dividend while you are short, you owe it to the lender — you are, after all, holding their shares.
Together they mean a short position has a clock on it in a way a long does not. A long can be held indefinitely at no cost beyond financing; a short bleeds every day, which is why a short thesis must be right about timing as well as direction.
Short Selling Cost formula
borrow = value × annual rate ÷ 100 × days ÷ day count
total = borrow + locate fee + dividends payable
daily borrow = value × rate ÷ 100 ÷ day count
break-even fall = total ÷ value × 100- annual rate
- The broker's stock loan rate for this security, which is not fixed.
- day count
- 360 or 365, depending on the broker's convention.
- locate fee
- A one-off charge to source borrowable stock.
The stock borrow cost follows the borrow rate, which is set by supply and demand for the stock itself rather than by the broker's goodwill. An easy-to-borrow large-cap may cost a fraction of a percent a year. A heavily shorted small-cap with limited float can cost well over 100% annually, and the rate can move sharply while you are in the position.
That variability is the mechanism behind a short squeeze becoming self-reinforcing. As shorts crowd in, borrow becomes scarce and the rate rises; the rising cost forces some shorts to cover; the covering pushes the price up, which pressures the remaining shorts further.
The break-even fall is the useful summary. It converts the whole carrying cost into the only question that matters at entry: how far does the stock have to drop before the position has paid for itself.
Short Selling Cost: a worked example
A $20,000 short held for 30 days at a 5% annual borrow rate on a 365-day basis, with no locate fee or dividend.
- Daily borrow20,000 × 5% ÷ 365 = $2.74
- Borrow over 30 days$82.19
- Locate fee$0.00
- Dividends payable$0.00
- Total carrying cost$82.19
- Break-even fall82.19 ÷ 20,000 = 0.41%
The stock must fall 0.41% before the short is level. At a hard-to-borrow rate of 120% instead, the same 30 days would cost $1,972 and require a 9.86% fall.
How to use the Short Selling Cost calculator
- Take the borrow rate from your broker's stock loan screen for that specific security, not a general figure. Rates are security-specific and change.
- Enter the position value at the price you shorted.
- Set the day count your broker uses. A 360-day basis produces a slightly higher cost than 365.
- Add any locate fee, which is charged once rather than daily.
- Add the dividend if the stock goes ex-dividend during the holding period — you owe it to the lender.
- Read the daily cost as well as the total. It tells you what waiting costs.
Limitations of the Short Selling Cost calculator
Every calculation makes assumptions. These are the ones that matter here.
- Borrow rates change while a position is open, sometimes dramatically. This prices the rate entered held constant, which it will not be on a contested name.
- Borrow can be recalled. If the lender wants the stock back you may be bought in at the prevailing price regardless of your view — a risk no cost figure captures.
- Excludes commission, the spread and any transaction tax, which are charged separately.
- Excludes margin interest on the cash side of the position, which some brokers charge in addition to borrow.
- Assumes the dividend is known. Special dividends and capital events can produce obligations larger than expected.
Frequently asked questions about Short Selling Cost
Why is shorting more expensive than going long?
Because you are borrowing an asset rather than owning one. The lender charges for the loan, wants their dividends, and can ask for the stock back. A long position has no equivalent obligations — it can simply be held.
What makes a stock hard to borrow?
Scarcity of lendable shares relative to demand to short them. Small free float, high existing short interest, or heavy retail ownership in accounts that do not lend all push the rate up. The rate is the price of that scarcity, and on the most contested names a hard-to-borrow fee above 100% a year is not unusual.
Do I really owe the dividend?
Yes. The lender is entitled to the economic benefits of the shares they lent, so any dividend paid while you are short is charged to your account. It is not optional and it is not a fee the broker can waive.
What is a buy-in?
When the lender recalls the stock and the broker cannot source a replacement, your position is closed at the prevailing market price whether you want it closed or not. It tends to happen when a stock is squeezing, which is the worst possible moment.
Does this apply to CFDs and spread bets?
Not directly. Those are derivatives with their own financing arrangements rather than a borrowed share, so the cost appears as an overnight financing charge. The economics are similar but the mechanism and the numbers differ — use your provider's own rate.
Last reviewed . See our methodology and editorial policy.
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