Margarine and Shorts

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First, what is margin?

Margin is a collateralized loan from your custodian that lets you control more exposure than your cash balance.

How to establish a short position

Foremost You better know what you are doing. You are betting against an asset that you believe will fall in value. If you are wrong, your losses are potentially unlimited. We do not want that. So now we bring in an insurance policy – A hedge using options.

How options cover a short position


Options let you define the risk that you are prepared to take.

The most classical strategy:

Short the asset that you believe will decline in value and purchase a long call option.

The call option will gives you the right to buy back the asset you have shorted at a fixed price. this places a ceiling on losses.

This is not investment advice it is for educational purposes only.


Call the office if you want concise advice.

-Zac