Hi Clive, In your Newport example, the $500 Minimum Trade value is the controlling factor, not the 1 share minimum. With this, the following will be the results:
PC = 10,000 (portfolio Control)
SO = 100 (shares owned)
MSO = 1 (minimum Shares traded)
1.1 = Buy SAFE
0.9 = Sell SAFE
Next Buy Price = PC/(SO(1.1 + (MSO/SO))) = $90.09
Next Sell Price = PC/(SO(0.9 - (MSO/SO))) = 112.36
Now if we change the formulae to account for the minimum trade of $500, then the results are as Newport suggests. Consider the $500 being added to the SAFE value.
This will give you $86.96 for the buy price and $117.65 as the next sell price.
Newport looks at both the min. share and the min. dollar values when coming up with its suggested price. It has to satisfy the minimum that is the larger value of the two. So, with the share minimum at 1 it only seeks to satisfy the minimum of $500. It also does a bit of rounding in there, too. If I remember correctly it rounds to the nearest whole share in making the calculation.
