A trader shorts 274 shares of OverPriced.com at $13.81 pershare. Initial margin requirements are 50%....

A trader shorts 274 shares of OverPriced.com at $13.81 per share. Initial margin requirements are 50%. The trader closes the position at a price of $31.64. What is the holding period return for the trade?

Expert Solution

A short position will give you profits only if the prices moves down. Here prices have moved up.

Therefore loss wil be there.

Initial Margin = 274 * 13.81 * 50% = 1891.97

HPR = (13.81*274) - (31.64*274) / 1891.97

= -258.22%

jeff jeffy answered 3 years ago

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