If a retail investor shorts a stock they get the proceeds in their account. They then:
- Cannot invest the proceeds.
- Don't make interest.
- Pay interest.
- Pay Dividends.
How does it work for institutional investors? If I am short an equity, long a call to cover my downside, can I invest the proceeds elsewhere (assuming I'm covering my margin calls). Thanks!
There is likely a margin that will have to be placed against the max loss for the spread of initial short price and the strike on the call. you will be able to take out of/have to put more into margin depending on price movement. You will pay interest on the margin balance, and dividends.
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