Shorting Profit Calculator

Calculate Shorting Profit







Formula

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

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

Where:

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:

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.