1. more that 500% if cost of carry is positive, and you measure things with respect to cash price not futures price.
2. Did you read the previous posts?
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- Thread starter riskfreetrading
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1. more that 500% if cost of carry is positive, and you measure things with respect to cash price not futures price.
2. Did you read the previous posts?
Quote:
......"According to Regulation T, you may borrow up to 50% of the purchase price of securities that can be purchased on margin. This is known as the initial margin.
Under Regulation T, the Federal Reserve Board requires all short sale accounts to have 150% of the value of the short sale at the time the sale is initiated. The 150% consists of the full value of the short sale proceeds (100%), plus an additional margin requirement of 50% of the value of the short sale. For example, if an investor initiates a short sale for 1,000 shares at $10, the value of the short sale is $10,000. The initial margin requirement is the proceeds $10,000 (100%), along with an additional $5,000 (50%), for a total of $15,000." ......
End of quote.
......"According to Regulation T, you may borrow up to 50% of the purchase price of securities that can be purchased on margin. This is known as the initial margin.
Under Regulation T, the Federal Reserve Board requires all short sale accounts to have 150% of the value of the short sale at the time the sale is initiated. The 150% consists of the full value of the short sale proceeds (100%), plus an additional margin requirement of 50% of the value of the short sale. For example, if an investor initiates a short sale for 1,000 shares at $10, the value of the short sale is $10,000. The initial margin requirement is the proceeds $10,000 (100%), along with an additional $5,000 (50%), for a total of $15,000." ......
End of quote.
Balda: your point is?
how about simplifying the question?
what is the max gain on a single short equity position given 2x margin, 0% commish, 0% interest and 0 dividend? alternative trading vehicles like futures, options, inverse etfs, correlated stocks are not allowed.
if the answer to the above question is not +200% than I would not mind knowing the correct answer.
what is the max gain on a single short equity position given 2x margin, 0% commish, 0% interest and 0 dividend? alternative trading vehicles like futures, options, inverse etfs, correlated stocks are not allowed.
if the answer to the above question is not +200% than I would not mind knowing the correct answer.
I was resending him his suggestion so that he goes back to the right track. He started on the right track, and somehow got/tried to go off track to the right solution.
Quote from shortie:
how about simplifying the question?
what is the max gain on a single short equity position given 2x margin, 0% commish, 0% interest and 0 dividend? alternative trading vehicles like futures, options, inverse etfs, correlated stocks are not allowed.
if the answer to the above question is not +200% than I would not mind knowing the correct answer.
Let us adopt that for now (there are other nuances when one includes the other things). Thanks shortie. I did not want to start with a structured question before some answers as it would limit human imagination.
You also should specify the meaning of return. I know you wrote it correctly, but I want to make sure that in people's heads the meaning is the same for everybody. If you make $50 using $50 of your money for a total of $100, it is a 100% (is this what you mean shortie?). 200% would be you start with $50 and end up with $150 total. I know that these are trivial things, but I want to make sure that people do not put in their heads different meanings for the same word.
I have asked this question to a large number of people (possible a 1000). Not a single one of them came as close as this forum has gotten so far, or have not even shown a deep-enough thought/appreciation to the question. Some may have thought I am just an idiot for asking the question (may be I am an idiot after all. Who knows?
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