Can I Short Stocks in an IRA?
Short-selling is one strategy used to make money in a bear market or hedge against losses in other investments you have. Unfortunately, short-selling is done through a margin account so shorting stocks in an Individual Retirement Account or IRA is not allowed. So if you’re wondering “Can I Short Stocks in an IRA” the answer is ‘no’.
Alternatives to Shorting Stocks in an IRA
However, you can buy an inverse ETF or inverse ETN in the IRA account as a hedge. The inverse ETFs should increase in value as the long positions in the portfolio presumably decline in a sell-off. You may need to have the proper paperwork and clearance for trading inverse ETFs and you should check to see if these hedges are suitable for your situation.
But just because you can’t short stocks in an IRA doesn’t preclude you from doing so in a regular (non-IRA) account. You won’t get the tax-deferred advantages but in an emergency such as trying to hedge against a stock market crash or a severe bear market, it’s an option to consider.