The mathematics of shorting is not fair. And this is a serious issue.
Let’s say with all things being equal you decide to go long and short a 100 USD stock for a period of one year, and your starting capital is 100 USD. In each case we will calculate the gains or losses of each position with a movement of 10 USD. For calculation purposes the interest rate would be libor which will be 4%. If you are borrowing money it would cost you 4.5%, and if you want interest you will get 3.5%.
4 comments Tuesday, Oct. 7, 2008
by Christian
