Assume that IBM stock is selling for $110 per share and that you short sell 200 shares of the stock.
A) What would be your dollar return if the price of IBM stock drops to $95 per share?
B) What would be your dollar return if the price of IBM stock increases to $120 per share?
C) Is there a limit to your gains? Is there a limit to your losses? Explain
Attached Excel sheet works out the dollar return and gains limit of short selling 200 IBM shares.