Grifco Inc (GFCI)

[cyofish]

Lent. Statistics and Finance are completely different disciplines.

The maximum you can make shorting $100 is $99.9999...but your assumptions are wrong about how ROI is calculated.

Shorting 100 shares at a $1 is not equivalent making a $100 investment.

You borrow the shares and sell what you didn't own so you did not invest $100. You cover and replace what you borrowed at $0.10, your investment is $0.10. The $$ you paid to cover is your cost basis. Investment = Cost Basis. The difference between your cost basis and the selling price = your (short) gain.

Therfore, if your cost basis is $0.10 and you made $99.90, you made a 99,900% return.

Flip it around, you go long and buy 100 shares at 0.001 = $0.10. The investment turns into $100, (cost basis = $0.10, net profit = $99.90) you made a 99,900% return.

From the long's prespective he made a $100 invesment and it goes down to $0.10 he would have lost 99.9% of his investment. Most he can lose more than 100%. However, a long has virtually unlimited potential for a gain. A short has both the unlimited potential for a gain or loss.

If by your assertion the upside for a short is only 100% and downside is unlimited, it won't be worth the risk to short...agree.

If you want more detail on how ROI is calculated: http://www.investopedia.com/terms/r/returnoninvestment.asp