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.

Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Cytokine1 who wrote (5054)	6/1/1998 10:36:00 PM
From: Rocketman	Read Replies (1) \| Respond to of 9719

I think you are accounting for the short sale twice. By holding the short sale credit, that covers the cost of the short, and we can't margin against the credit, but I don't think that is right either. I'm pretty sure that as long as you have enough margin credit to cover the short, then you are fine, but that effects your buying power, however, you have no separate short credit reserve like we have been carrying. In other words, the negative value that shows up in the row where the stock symbol is listed, offsets the equity line at the bottom. The cash received for the short sale is used to reduce the margin balance, and since these offset each other doesn't affect the equity balance. However, if the stock goes up (short is out of the money), then the equity value would drop and you would have less buying power. If the stock goes down, the short is in the money, the negative value on the stocks line gets smaller, thus the equity number gets bigger, and more buying power is available. I think we are trying to make it too complicated in your spreadsheet showing a separate short credit line. Rman, victim of no accounting classes...