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How is shorting and the brokerage costs of shorting modeled in the portfolio
Saravanan Shanmugham
posted

If I were to short some stocks or say the s&p500, how are the different scenarios modeled

  1. What happens to the cash I receive from the proceeds. Does the cash get added to the portfolio?
  2. How are brokerage costs like interests, etc modeled.
  3. Other eventualities associated with shorting stocks.
4 responses
Ethan Adair

Cash is added to your portfolio, other than that there is no extensive modeling for things such as borrow costs, availability, or recalls

Yun peng

one additional question: is there a margin issue when shorting stocks.

Simon Thornington

Shorting uses the same or more margin as going long.

Kevin Stevens

In my models, I have had to add these in myself. For lack of a real datasource, I guesstimate interest/margin rates over time periods and use those. I try to over-estimate margin rates.

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