Webull, a popular online brokerage platform, offers its clients the ability to purchase fractional shares of stocks and exchange-traded funds (ETFs) through its Fractional Trading feature.
This allows investors to invest in a portion of a share of a stock or ETF, rather than having to purchase the full share.
Here's how fractional shares work on Webull.
Fractional shares are essentially a portion of a whole share, allowing investors to purchase an equity position with a quantity of less than one whole share.
For example, instead of having to purchase a full share of a stock that trades at $1,000, an investor can purchase a portion of that share for an amount they feel comfortable with, such as $10.
There are several reasons why investors trade fractional shares:
In the event of a stock split, investors may receive fractional shares of a security depending on the terms and conditions of the split.
For example, if an investor held 10 shares of a security that experienced a 1:7 reverse stock split, then the quantity of their position would be adjusted into 1.42857 shares.
If an investor holds an equity position with fractional shares included, and the underlying security pays out a cash dividend, the investor would be eligible to receive a dividend payment for the fractional shares held.
However, only whole shares are eligible for proxy voting, and the fractional piece of the position will not have any voting ability.
Here are some guidelines for fractional trading on Webull:
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