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naturalborninvestor

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naturalborninvestor

Re: Art Vandeley post# 11335

Monday, 10/20/2014 11:47:13 AM

Monday, October 20, 2014 11:47:13 AM

Post# of 32302
no, the most the underlying stock can lose is 100%, but that may be many 100's of % in gain to the short.

say a stock is valued $100 when shorted. In the best case scenario for the shorter, the stock will go to $0. If we remove any cost of the short for simplicity, the short makes 100% gain when the stock declines to $50 and another 100% gain when the stock declines to $25 and so on.
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