Shorting Stocks

Is there an acceptable return for a short position at a L/S HF?
Thanks
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Comments (9)

Apr 26, 2021 - 2:00pm

A long/short manager adds value through the spread between their shorts and longs. If the market rips 20% and your long book goes up 30% while your short book is up 10%, then you've done very well, even though your shorts have lost value. 

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Apr 26, 2021 - 3:26pm

if you're just playing the intra-sector spread, doesn't matter. just need shorts to underperform longs.

if your shorts are meant to be standalone profit generators, >20% over next 12 months.

May 6, 2021 - 11:40am

it depends on how long you intend to hold the position....generally you are targeting at least 20% annually....but if uoi only intend to hold a position for a few days/weeks....then do the math.   1 year = ~250 trading days   1/250 = .04%

So, you would hope/expect to average 0.04% per day...and so for example, if you make 1% on an outright short position in 1 day...that = 25 days worth of "annualized return" (the equiv of making IRR of 20%*25 = 500% annualized).

Not all position are intended to be held for the long term.  If you can make 1% here and 1% there...over the year that can add up to big $$

just google it...you're welcome
  • 1
May 9, 2021 - 11:46am
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