Grifco Inc (GFCI)

[cyofish]

len, risk = what you can potentially lose. If you short $100, you can certainly lose much more than $100. Therefore, you risk isn't limited to $100. More importantly, you're missing the whole point. You borrowed the stock not the $100. What you owe is the replacement of that stock. In fact, you earned the $100..now you have to determine what you're cost is going to be to replace the borrowed shares. This is determined when you cover. Therefore your cost of the transaction is going to be the covered price.

ROI is applicable to longs or shorts, you just plug in the variables. When you short you sell first and buy second. When you're long you buy first and sell second. Either way, you plug in the same variables in the formula. The sellinng price minus the purchase price (net profit) is in tne numerator and the purchase price is in the denomenator. The principle doesn't change.

What a short gains is not a reciprocal of what a long loses.