Explain rules/guidelines for shorting a stock?

[stevenmac2]

Hi,

While I haven't attempted a short before, I wanted to find out more information behind the specifics of attempting to do one.

From my Scott Trade account, I have the ability to select a Sell Short and Buy to Cover. From what I know is that I would place an initial Sell Short (with the motive that i want the stock to fall - borrowing the stock with the promise to return the stock at a lower price on my part) and eventually a Buy to Cover to replenish the stock I borrowed. Understanding this works like a regular Buy/Sell ruleset except I make money when the stock falls and lose money when the stock rises.

My main question:

Are there any time limits on how long a short is good for? or is there a situation like in Options (Option Expirations)? Do I have to Buy to Cover in a specific time frame?

Example: If I did a Sell Short on a stock and it took 6 months lets say to see it reach a lower price point that I found was acceptable for a Buy to Cover, would that be work for me or not?

Anything I missed that I should be aware of?

Thank you for any insight and further explanation on this.

 

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[Jonleehacker]

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[bflbob]

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[stevenmac2]

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[bflbob]

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