MSB Trading - 2020, page-2517

I'm not sure if you're doing your math's right. My understanding of shorting is you don't need to stump up the money for the whole price of the share but rather put up some insurance against it going up. Ie if you short 1000 shares and the price increases by 20c you need to cover $200, and not the cost of all the shares being $3000 @ $3.00 a share (or $3.20 - whatever it gets to). Obviously there is other costs involved but I am sure there would be a larger than 11% gain on his investment or risk if in @ $3.02 and out @ $2.70.

If he used the citigroup mini short MSBKOR the strike price is $3.98 and knock-out (stop loss) is $3.36. So if he shorted 1000 shares at $3.02 thats difference of $0.96 = $960. The risk is it hits $3.36 and it forces the knock-out and he loses approx $340 plus costs. But as it went down and he sold at $2.70 it means he made $320 on his 1000 shares.

I'm only really learning how these mini longs and mini shorts work but that is my understanding - happy to be educated differently.