That was my understanding.
So after executing a trade to short 200,000 shares of NNVC as per the example provided (assuming 200,000 shares could be located for the purpose), the account would be required to have $500,000 worth of margin value in cash and equities as long as the short position was held.
And as of today the maximum return on that $500K in value (that the investor could not access for anything at all) is $180K and the downside for that investor is unlimited.
It has been a long time since I've taken a short position in any stock, let alone one that requires $2.50/share in margin value. The risk/return profile described above isn't the only reason, but it's a very good one. And I expect that it is a primary factor for the reduction in short interest in NNVC. Even the folks who think the price has further to go on the downside don't want to tie up the required account value. Positions are being covered without being replaced.
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