Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Mama Bear who wrote (64661)	12/18/2000 10:23:32 PM
From: smchan	Read Replies (3) \| Respond to of 122087

If I shorted at 12 and the stock is now 3, do I still have 12 'invested'? The answer is no since I'm now required to have 3 per share in security (rules change sub 5). This is true... but in the beginning you had to have $12 to cover the short stock whether it be margin or cash. (Even if only $6 is required, buying power is still reduced by $12. That $6 or $12 is not available to me.) You are also thinking of this from the long point of view. Don't forget that the security you put up for a short sale can be any form of marginable equity. I considered margin before I wrote the original post. In fact, I could argue that if I went long at $12 and sold at $24 for a $12 profit, my ROI would actually be 300% (based on having $6 + margin... 24-6=18/6=300%), but it isn't because my original investment was $12 regardless of whether it was cash or borrowed money. Regardless of whether I have $6 on margin or $12 cash, my liability is $12 and if my trade goes against me, I lose up to $12 (on the long side) or more (on the short side). Sam