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Playing & Trading Strategy

Kind of weird question about shorting when you have limited money

Posted by: MattW (a.k.a del_RGV_MattW) on Jun 04, 09:51

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?





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