I had a million extra H$ and the news just came out about Jupiter Ascneding moving to Feb, so I shorted 17k or so shares of that using all the money I had. Then I got to thinking, the price is going down, and the value of my position is going up. So the question came to me, At what point would I make more money by covering, and re-shorting to get more shares?
I think starting with a scenario where we know where the price is doing could be helpful. Say the current price is H$50 and it's going down to H$30. I have H$1 million to spend. Short max at 50 and that's 19,800 shares. Hold to H$30 and I end up with H$1,372,140 (I think I'm doing the commission right, but not all the way sure).
Or I short at 50, cover and short again at 40, then cover at 30 where it lands. 19800 shares covered at 40, then re-shorting the max amount gives me 29,108 shares. Hold down to 30, cover and I'll end up with H$1,440,846.
Has anyone worked this out further? If it costs 2% to cover and re-short does that turn into an easy formula somehow that I'm now seeing?