Short Plus
Short Plus is an additional feature of the Leveraged Equities Margin Loan, allowing short selling against Eligible Property.
What is Short Plus?
Short Plus allows you to short sell certain listed securities with the intent of repurchasing them later at a lower price. Your profit (or loss) is the difference between your sale price and purchase price, net of transaction costs.
Typically, Short Plus is suitable for investors who:
- believe the price of a listed security is likely to fall and would like to potentially profit from that fall;
- want to reduce the risk of their portfolio falling in value
by short selling one or more securities; or
- believe the price of one security will increase while the price of a different security will decrease and would like to profit from that movement (“pairs trading”).
Benefits & Risks
It is important to be aware of both the benefits and risks associated with a margin loan including the use of short selling. More information is detailed in the Margin Loan and Short Plus Product Guides.
Benefits
- Profit from a falling security price :
you can sell securities you have borrowed and buy them back
at a lower price.
- Continue to trade and potentially profit from a bear market :
Short Plus can enable you to profit from a fall in the price
of a certain security or portfolio of securities.
- An alternate hedging strategy with no cash outlay : due to the liquidity of the securities sold.
- Pursue a long/short or pairs trading strategy : enabling you to potentially profit on both sides of the trade.
- Potentially earn interest on your short selling collateral : helping offset other interest costs associated with your margin loan.
Risks
- Losses are unlimited : unlike “long” positions, where losses are capped to your original investment value.
- Corporate actions : may require a cash payment to be made to the value of the corporate action.
- Close out at anytime : which may cause you to crystallise a capital gain or loss.
- Margin Call : may occur if the price of the short sold securities increases.
- Collateral : may be required, in the form of a cash contribution from your loan if the short sold securities increase in value.
- Combining short selling with a margin loan may be more complex : it is strongly recommended that financial advice including taxation advice is sought before applying.
Case Study
A detailed case study on how short selling can work for you can be found in the Short Plus Product Guide below.
Download
Ensure you download the Margin Loan Product Guide and Short Plus Product Guide for more information. Read each part of the terms and conditions and Application Forms for both products and obtain appropriate advice before applying.
- Download a copy of the Leveraged Equities Margin Loan Product Guide
- Download a copy of the Leveraged Equities Short Plus Product Guide
How to Apply
You and any Guarantor must read the Product Guide in its entirety before applying for a Margin Loan.
You can apply for Short Plus as:
- an individual or two individuals (called joint borrowers) who are at least 18 years old;
- a company; or
- trustee of a trust (except as trustee of a self managed superannuation fund).
Refer to the checklist when completing the Application Form and return completed and signed forms to your nominated Financial Adviser or Broker. Alternatively return forms directly to us. Contact details can be found on the Contact Us page.
