Comments on: how do I short sell a bond?

Question: how do I short sell a bond?

amsterdam63 — Wed, 05 Dec 2007 13:19:14 -0800

Can I short sell a bond?

If so, how do I go about it, meaning what kind of broker do I need to have? I have an E-Trade account, and I asked them if I could do it through them and they said no. Please let me know.

By: Pastabagel

Pastabagel — Wed, 05 Dec 2007 13:28:29 -0800

You can short an ETF (exchange traded funds) that track bonds. There are many of these ETF's (here's one that tracks the long end of the Treasuries). More thyat target specific US govt bonds are listed here.

As these are traded over the exchanges, you can short them on E-Trade. They may also have options, which would allow for put buying and call selling with greater leverage (and risk).

By: burnmp3s

burnmp3s — Wed, 05 Dec 2007 13:33:33 -0800

It's possible. None of the brokerages that I've used let you do it though, as far as I know.

By: Pastabagel

Pastabagel — Wed, 05 Dec 2007 13:34:38 -0800

Sorry, the second link I gave you is crap. Here is a better list, this is "Long Government" only there is also a Short government list.

By: Kwantsar

Kwantsar — Wed, 05 Dec 2007 15:39:22 -0800

Yes. The hard part is getting the borrow (where your broker locates the bond for hypothecation in a client account).

Also, remember that you have to have suitable margin, and you have to pay the coupon payments while you are short the bond.

Are you trying to short credit, or short yield?

By: Kwantsar

Kwantsar — Wed, 05 Dec 2007 18:16:36 -0800

Oh, you'll probably need a full-service broker (if anyone will give you the margin you need-- I dunno. How much money do you have?) like Merrill Lynch or UBS.