Short Borrow Fee Rate Calculator

Short Borrow Fee Estimator

Total value of shares borrowed (Price × Quantity).

The annualized rate charged by the broker (Hard-to-Borrow rates can be high).

Number of days the short position is open (including weekends).

Understanding Short Borrow Fees

When you short sell a stock, you are essentially selling shares you do not own. To facilitate this trade, your broker must "borrow" the shares from a lender (typically another client or a custodian bank) and deliver them to the buyer. In exchange for lending these shares, the lender charges a fee, known as the Short Borrow Fee or Stock Loan Fee.

This calculator helps traders estimate the cost of maintaining a short position over a specific period. These fees can significantly eat into profits, especially for "Hard-to-Borrow" (HTB) stocks where annual rates can skyrocket due to scarcity.

How is the Borrow Fee Calculated?

The borrow fee is calculated daily based on the market value of the borrowed position and the annualized rate set by the broker. The standard formula used by most brokerage firms is:

Daily Fee = (Market Value × Annual Rate) / 365

Note: Some institutions may use a 360-day year convention, but 365 is standard for retail brokerage accounts.

Key Inputs Explained

• Market Value of Short Position: This is the current share price multiplied by the number of shares shorted. Since stock prices fluctuate, the daily fee is recalculated every day based on the closing price of the stock.
• Annual Borrow Fee Rate: This percentage varies wildly. For liquid, blue-chip stocks (General Collateral), it might be as low as 0.25% to 3%. For volatile, heavily shorted stocks (Hard-to-Borrow), rates can exceed 100% APR.
• Duration: Borrow fees accrue every day the position is held, including weekends and holidays. If you hold a short position over a weekend, you pay for 3 days of interest.

Why Do Borrow Rates Change?

Borrow rates are driven by supply and demand. If many traders want to short a specific stock, the pool of available shares to lend shrinks. As inventory becomes scarce, the cost to borrow rises. This is often seen in "short squeeze" scenarios where high borrow fees force short sellers to cover their positions, driving the price up further.

Strategies to Minimize Fees

To reduce the impact of borrow fees on your trading performance:

• Avoid holding HTB stocks over weekends or holidays.
• Monitor the borrow rate daily; it can change without notice.
• Close positions quickly if the stock price moves against you, as a rising price increases the market value basis for the fee calculation.