Question

You took the advice of a close friend and short sold 100 shares of Techware common stock when its market price was $105 per share. What would be your dollar return if the price of Techware common stock drops to $95 per share?

Answer 1

You sold shares short for $105, and later on, to close out the short sell, you can buy them back from the market for $95, so the gain is $10/share, or $1,000.