Shorting Profit Calculator

Formula

The formula to calculate the Shorting Profit (SP) is:

\[ SP = N \times (PP - CP) - F \]

Where:

$ SP $ is the Shorting Profit ($)
$ N $ is the Number of Shares Shorted
$ PP $ is the Price per Share at the Time of Shorting ($)
$ CP $ is the Current Price per Share ($)
$ F $ is the Fees and Interest Paid for Shorting ($)

Shorting Profit Definition

Shorting profit refers to the gains made from short selling, a trading strategy where an investor borrows shares and immediately sells them, hoping to buy them back later at a lower price, return them to the lender, and pocket the difference. The strategy is based on the expectation that the price of the borrowed securities will drop. Therefore, a shorting profit is the money made when this expectation is realized, and the securities are repurchased for less than the initial selling price.

Example Calculation

Let's consider an example:

Number of Shares Shorted (N): 100
Price per Share at Time of Shorting (PP): $50
Current Price per Share (CP): $30
Fees and Interest Paid for Shorting (F): $200

Using the formula to calculate the Shorting Profit:

\[ SP = 100 \times (50 - 30) - 200 = 100 \times 20 - 200 = 2000 - 200 = 1800 \, \text{\$} \]

This demonstrates that with 100 shares shorted, an initial price of $50 per share, a current price of $30 per share, and fees of $200, the shorting profit would be $1,800.