About the Short Selling Calculator
This short selling calculator works out the net profit or loss when you borrow shares, sell them, and buy them back later to return to the lender. Enter the number of shares, the price you shorted at, the price you cover at, the annual stock borrow fee and how long you held the position. It also accounts for dividends you must pay the lender and the commissions on both trades.
It is built for traders sizing a bearish position, investors hedging a long portfolio, and anyone who wants to see how quickly borrow fees eat into a short on a hard-to-borrow stock. The break-even cover price shows exactly how far the stock has to fall before you make money, and the chart plots profit or loss across a range of cover prices.
Borrow fees are assumed to accrue daily on the value of the shares at the short price using a 360-day year, the convention most US brokers use. Real brokers mark the fee to the current price each day, and margin interest is not included — use the margin interest calculator if you also carry a debit balance.
With the default inputs, the net profit / loss is $787.50. Change any value above to recalculate instantly.
How to use the short selling calculator
- 1Enter the number of shares and the price you shorted at.
- 2Enter the price you covered at, or your target cover price.
- 3Add the annual borrow fee your broker quotes and the days held.
- 4Include any dividends paid while short and your commission per trade.
- 5Read net P/L, return on margin and the break-even cover price.
Formula and method
A short profits from the difference between the price you sell borrowed shares at (Ps) and the price you buy them back at (Pc), multiplied by the number of shares N. From that gross gain the calculator subtracts the stock borrow fee — the annual fee rate f applied to the short value for d days on a 360-day basis — any dividends D per share you must pay the lender, and a commission C on both the sell and the buy-to-cover.
Return on margin divides net P/L by the collateral you post (short value × initial margin requirement; 50% under Regulation T). The break-even cover price is Ps minus all costs per share: below it the trade is profitable.
- N
- Number of shares shorted
- Ps
- Short sale price per share
- Pc
- Cover (buy-back) price per share
- f
- Annual borrow fee rate
- d
- Days the short is open
- D
- Dividends per share paid to the lender
- C
- Commission per trade
Worked examples
Short 100 shares at $50, cover at $42 after 30 days
Selling 100 borrowed shares at $50 brings in $5,000; buying back at $42 costs $4,200, a gross gain of $800. A 3% borrow fee for 30 days costs $5,000 × 0.03 × 30 ÷ 360 = $12.50, so net profit is $787.50 — a 31.5% return on the $2,500 margin posted.
Losing short with a dividend and commissions
The stock rose $8, a $1,600 loss on 200 shares. Borrowing $16,000 of stock at 1% for 60 days adds $26.67, the $0.75 dividend owed to the lender costs $150, and two $5 commissions add $10, for a total loss of about $1,786.67.
Hard-to-borrow stock at a 60% fee
A $3 drop on 500 shares is a $1,500 gain, but a 60% annual borrow fee on the $10,000 position for 90 days is $10,000 × 0.6 × 90 ÷ 360 = $1,500. The fee wipes out the entire profit — the stock had to fall below $17 just to break even.
Frequently asked questions
How do you calculate profit on a short sale?+
Multiply the number of shares by the difference between the price you sold short and the price you bought back, then subtract borrow fees, any dividends paid to the lender, commissions and margin interest.
What is a stock borrow fee?+
It is the annualized rate your broker charges to lend you shares, accrued daily while the short is open. Widely held stocks usually cost well under 1% a year, while heavily shorted, hard-to-borrow stocks can cost 20%, 50% or more.
Do I have to pay dividends when shorting a stock?+
Yes. If the stock pays a dividend while you are short, you owe the lender an equal “payment in lieu” of the dividend, which is debited from your account on the payment date.
How much can I lose on a short sale?+
In theory the loss is unlimited, because there is no ceiling on how high a stock price can go. A long position can lose at most 100%; a short can lose several times the initial proceeds, which is why stop-losses and position sizing matter.
How much margin do I need to short a stock?+
Under Federal Reserve Regulation T, a short sale requires collateral of 150% of the short value — the 100% sale proceeds plus 50% from you. Brokers then require ongoing maintenance margin, often 30% or more of the current short value.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.