Long Short Margin Ratio Hedge 13030 15050 2575 by Hedge Strategies An Investing Newsletter

Author:Hedge Strategies An Investing Newsletter
Language: eng
Format: mobi
Published: 2010-10-08T16:00:00+00:00

80/20 Long/Short Ratio Strategy

Example: The price of an equity security is $20 in an unleveraged 80/20 long/short ratio strategy with its ratio based on share quantity, not share value. 80 security shares are purchased (invested). 20 security shares are borrowed and sold short to the market (positioned). The net investment position is 60. The bias is positive.

The long value is $1,600 (calculated as 80 security shares multiplied by the $20 share price). The short share quantity value is $400 (calculated as 20 security shares multiplied by the $20 share price).

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