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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: byhiselo who wrote (10275)12/4/2001 12:51:00 PM
From: Mathemagician  Read Replies (2) of 99280
 
what was the original capital risked? 80K

That is not necessarily correct. The original capital risked when opening a short position is impossible to state definitively. The reason for that is that "capital risked" really means "maximum loss" and potential loss in a short sale is, of course, theoretically unlimited. That complicates calculation of rates of return for short sales and really invalidates direct comparisons with rates of return from long positions. Another complicating factor is that short sales are necessarily leveraged (which you've chosen to exclude from your calculation), but that is another matter entirely.

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