how do you sell short a stock. say nutrisystem was at 55 and you think it is going way down which it did can you sell short and make money off the loss of the stock. If so how does one do this. use for example i wanted to sell short 300 shares how much does this cost and how much would i make
You must first have a margin account because you are "borrowing shares".
Next you would simply put in an order to sell short 300 shares of NTRI. You would either place a market order or a limit order. The market order will go out and place the trade for you immeditaly at the best possible price. If you place a limit order, you define the price that you want to trigger the sell and if it reaches that price that you set, the trade will execute.
You would need to half at least half of {300 (shares) x price per share x 50%}
That would equate the 300*44*.5 = 6600$ you would need in your account.
Every day your account will be "marked to market" which means that if the price of NTRI were to rise, you would have a margin call and you would be forced to deposit money into your account to cover the loses that would be mounting against you. If you didn't, your broker would automaticaly go out and buy 300 of NTRI to close your trade.
If on the other hand NTRI drops in price, you would need to do nothing except to close out the trade when you want to take profits.
Next you would simply put in an order to sell short 300 shares of NTRI. You would either place a market order or a limit order. The market order will go out and place the trade for you immeditaly at the best possible price. If you place a limit order, you define the price that you want to trigger the sell and if it reaches that price that you set, the trade will execute.
You would need to half at least half of {300 (shares) x price per share x 50%}
That would equate the 300*44*.5 = 6600$ you would need in your account.
Every day your account will be "marked to market" which means that if the price of NTRI were to rise, you would have a margin call and you would be forced to deposit money into your account to cover the loses that would be mounting against you. If you didn't, your broker would automaticaly go out and buy 300 of NTRI to close your trade.
If on the other hand NTRI drops in price, you would need to do nothing except to close out the trade when you want to take profits.
http://en.wikipedia.org/wiki/Selling_short
Read this and if you have any other questions, let me know.
Read this and if you have any other questions, let me know.
