How do you calculate profit on a short sale after borrowing costs?
A short sale borrows shares, sells them, and later buys them back to return to the lender. The price part is simple: gross = shares x (short sale price - buy-back price). What a plain profit sum misses is that borrowed shares are not free. Three costs come off the gross:
- Borrow fee = short sale value x annual borrow rate x days / 360 (or 365).
- Dividends owed = shares x every dividend paid while you are short.
- Commission on the sale and on the buy-back.
With the default inputs, 100 shares shorted at $50 and bought back at $42 make $800 gross. The short sale value is $5,000, so 60 days at 3% costs $5,000 x 3% x 60 / 360 = $25.00. A $0.50 dividend paid during the short costs $50.00, and two $5 commissions cost $10.00. The net profit is $715.00, which is 14.30% of the $5,000 sale value and 28.60% of a $2,500 deposit at a 50% initial requirement.
The basic short mode on the stock profit calculator counts commission only. This page adds the borrow fee and the dividends, which are the costs that grow the longer a short stays open.
What does it cost to borrow shares to short?
The borrow fee is quoted as an annual rate on the value of the shares borrowed and charged for each day the short is open. Shares that are easy to borrow can carry a small rate; shares in short supply can carry a very large one, and the rate can change while you hold. Here is the default trade, $5,000 short for 60 days and bought back at $42, at different rates:
| Annual borrow rate | Fee for 60 days | Net profit | Break-even buy-back price |
|---|---|---|---|
| 0.25% | $2.08 | $737.92 | $49.38 |
| 3% | $25.00 | $715.00 | $49.15 |
| 10% | $83.33 | $656.67 | $48.57 |
| 25% | $208.33 | $531.67 | $47.32 |
| 50% | $416.67 | $323.33 | $45.23 |
| 100% | $833.33 | -$93.33 | $41.07 |
At 100% a year the borrow fee alone outweighs an $8 fall in the price, and the trade loses money even though the share went the way the short seller wanted. The fee here is worked on the value at the short sale price. A lender can instead charge on each day's value, which falls as the price falls and rises as it rises, so treat this figure as an estimate and compare it with your broker's statement.
Why do short sellers pay dividends?
The lender of the shares still expects every dividend the shares pay. Because the shares were sold to someone else, the company pays the dividend to the new owner, and the short seller pays the lender an amount equal to it. So a dividend is a cost to a short, not income.
On the default trade, one $0.50 dividend on 100 shares costs $50.00, twice the borrow fee for 60 days. A short held across several dividend dates pays each of them; enter the total per share under Dividends per share paid while you are short. The payment to the lender is owed in full whatever the share price does.
Break-even and loss-limit prices on a short
The break-even buy-back price is where the net result is zero: short sale price - total costs / shares. On the default trade the costs are $85.00 over 100 shares, so the price has to fall to $50 - $0.85 = $49.15 before the short makes anything. Every extra day open moves that line lower by the day's borrow fee, about $0.0042 a share at 3% on $50.
The price at which the loss reaches a set amount works the other way: short sale price + (loss - total costs) / shares. With a $500 limit, 50 + (500 - 85) / 100 = $54.15. That is the price to compare with a buy-stop order. If the costs alone are larger than the limit, the price comes out below the short sale price and the page says so. The stop-loss calculator sets stops from a percentage for long trades as well as shorts.
Why are losses on a short sale unlimited?
A share bought for $5,000 can fall to zero and lose $5,000, and no more. A short has no such floor, because there is no top to the price it may have to be bought back at. Each rise in the price adds to the loss in a straight line:
| Price rise from $50 | Buy-back price | Loss on 100 shares after $85 of costs |
|---|---|---|
| 10% | $55.00 | $585.00 |
| 25% | $62.50 | $1,335.00 |
| 50% | $75.00 | $2,585.00 |
| 100% | $100.00 | $5,085.00 |
| 200% | $150.00 | $10,085.00 |
When the price doubles, the loss is already larger than the whole $5,000 the short sale raised. A sharp rise can also make borrowed shares harder to keep: a lender can recall them, a broker can raise the borrow rate, and short sellers buying back together can push the price up further, which is called a short squeeze. The second chart under the calculator draws this line for your own inputs next to the loss on owning the same shares.
Margin on a short sale: the US rules
A short is always held in a margin account. In the US two rules set the floors, both read at source on 13 November 2026:
- Regulation T, 12 CFR 220.12. For a short sale of a nonexempted security the required margin is 150% of its current market value. The sale proceeds supply 100%, so the short seller deposits the other 50%. That is the 50% default under Day count and margin on the short.
- FINRA Rule 4210, maintenance margin. For a stock sold short at $5.00 a share or more, the requirement is $5.00 a share or 30% of the current market value, whichever is greater. Below $5.00 it is $2.50 a share or 100% of the market value, whichever is greater.
The calculator uses the percentage you enter. With the account holding 150% of the sale value, the margin call comes when price = short sale price x 1.5 / (1 + maintenance). At 30% that is 50 x 1.5 / 1.3 = $57.69, a 15.38% rise. The $5.00 a share minimum is larger than 30% for any share priced below about $16.67, so for cheaper shares type the higher percentage your broker applies. Rules in the UK, Europe and elsewhere differ, and a firm can add its own, so use the figures from your account terms.
Short selling examples in pounds and euros
- Pound account. Short 500 shares at £8.40, a £4,200 sale, and buy back at £7.10 after 45 days. The share is moderately hard to borrow at 12% a year on a 365-day basis, which costs £62.14, there is no dividend, and commission is £9.95 each way. The gross gain is £650.00 and the net profit £567.96, or 13.52% of the sale value. The break-even buy-back price is £8.2359. If a purchase tax applies to the buy-back where you trade, the stock profit calculator has a field for it.
- Euro account, where costs win. Short 200 shares at €40 and buy back at €37 after 180 days. The share is expensive to borrow at 25% a year on a 360-day basis, which costs €1,000.00 on the €8,000 sale value. Two dividends of €0.40 add €160.00 and two €4 commissions €8.00. The price fell, and the short made €600 gross, but the net result is a loss of €568.00. The price had to fall to €34.16 to break even.
The euro case is the pattern to watch for: a correct view on direction can still lose money when the short stays open for months on a costly borrow.
How to calculate short selling profit in Excel or Google Sheets
Put the shares in B2, the short sale price in C2, the buy-back price in D2, the days in E2, the annual borrow rate as a decimal in F2, dividends per share in G2 and commission per trade in H2. Then:
- Borrow fee: =B2*C2*F2*E2/360, which returns 25 for the defaults.
- Net profit: =B2*(C2-D2)-B2*C2*F2*E2/360-B2*G2-2*H2, which returns 715.
- Break-even buy-back price: =C2-(B2*C2*F2*E2/360+B2*G2+2*H2)/B2, which returns 49.15.
- Margin call price at 30%: =C2*1.5/1.3.
Change 360 to 365 if your broker uses a 365-day year. To find the price at which a loss of L in J2 is reached, use =C2+(J2-(B2*C2*F2*E2/360+B2*G2+2*H2))/B2.
What this calculator leaves out, and common mistakes
It works the borrow fee on the value at the short sale price at one rate, while a real fee follows each day's value and rate. It does not model a recall of the shares, a forced buy-in, interest a broker may pay or withhold on the short sale proceeds, locate fees, tax, or special dividends you did not enter. The margin call price ignores the costs, and the FINRA per-share minimum is left for you to apply.
- Leaving out the borrow fee. On a hard-to-borrow share it can outweigh the price move.
- Forgetting dividends. A short pays every dividend paid while it is open.
- Measuring the loss limit on price alone. Costs are lost even if the price never moves.
- Reading a short as a long in reverse. A long can lose at most what the shares cost; a short loss has no such limit.
- Holding longer than planned. Each day open adds fee and lowers the break-even price.
Glossary
Short sale: selling borrowed shares, planning to buy them back later at a lower price. Buy-back or cover: buying the shares to return them and close the short. Borrow fee: the annual rate charged for lending the shares, applied daily. Hard to borrow: a share in short supply for lending, with a high borrow rate. Dividend owed: the amount a short seller pays the lender for each dividend paid during the short. Short squeeze: a rapid rise as short sellers buy back together. Recall: the lender asking for its shares back. Maintenance requirement: the lowest equity, as a share of the short's market value, that the broker accepts.
Frequently asked questions
How do I calculate profit on a short sale?
Multiply the shares by the short sale price minus the buy-back price, then subtract the borrow fee, any dividends paid to the lender and commission both ways. Shorting 100 shares at $50 and covering at $42 makes $800 gross and $715 net after $85 of costs.
How is the borrow fee on a short calculated?
Multiply the value of the shares borrowed by the annual borrow rate and by the days held, then divide by 360 or 365. A $5,000 short at 3% for 60 days costs $25 on a 360-day basis. A lender can charge on each day's value instead, so the real figure can move with the price.
Do you pay dividends when you short a stock?
Yes. The short seller pays the lender an amount equal to each dividend paid while the short is open. A $0.50 dividend on 100 shares costs $50, and it is owed whatever the price does.
What is the break-even price on a short sale?
The short sale price minus total costs divided by the shares. With $85 of costs on 100 shares shorted at $50, the price must fall to $49.15 before the short makes money. Each extra day of borrowing moves it a little lower.
Why is the loss on a short sale unlimited?
Because there is no upper limit on the price at which the shares may have to be bought back. On 100 shares shorted at $50, a rise to $100 loses $5,085 after costs and a rise to $150 loses $10,085. A long position can lose at most what it cost.
How much margin do I need to short a stock in the US?
Regulation T requires 150% of the short's market value, so the sale proceeds plus a deposit of 50%. FINRA Rule 4210 then sets maintenance at $5.00 a share or 30% of the market value, whichever is greater, for shares priced at $5.00 or more.
At what price does a short get a margin call?
With 150% of the sale value in the account, a call comes when the price reaches the short sale price x 1.5 / (1 + maintenance requirement). At 30%, a short at $50 gets a call at $57.69. The calculator does not include costs in this figure.
Can a short sale lose money if the price falls?
Yes, if the costs are larger than the fall. A short of 200 shares at 40 euros covered at 37 makes 600 euros gross, but 180 days of borrowing at 25%, two dividends and commission turn it into a 568 euro loss.
What is a hard-to-borrow stock?
A share with few lendable shares available, which brokers charge a high borrow rate for. The rate can change daily and the lender can recall the shares. The table on this page shows how a 25%, 50% or 100% rate eats into a short's profit.
Can I use this short selling calculator in pounds or euros?
Yes. Choose from 24 account currencies, and every amount is shown in that currency without conversion. Enter the borrow rate, commission and margin figures from your own broker, since terms differ from firm to firm.
Courses behind short selling
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See what the course coversSources and review
Last reviewed 14 November 2026 by the NIFM Academy editorial team. Next review by 14 May 2027.
- Federal Reserve Board, Regulation T, 12 CFR 220.12 Supplement: margin requirements (e-CFR text, Cornell Legal Information Institute), required margin for a short sale of a nonexempted security of 150% of its current market value. Checked 13 November 2026.
- FINRA Rule 4210, Margin Requirements (finra.org), maintenance margin on stocks sold short: $2.50 per share or 100% of current market value, whichever is greater, below $5.00 a share; $5.00 per share or 30% of current market value, whichever is greater, at $5.00 a share or above. Checked 13 November 2026.
- Short sale arithmetic, gross = shares x (sale price - buy-back price); borrow fee = sale value x rate x days / day count; net = gross - borrow fee - dividends owed - commission; break-even and loss-limit prices solved from net; margin call price = sale price x (1 + initial) / (1 + maintenance); shown in the working under every result. Checked 13 November 2026.