Short Sale Return Calculator
Calculate the profit and return on margin from a short sale, including dividends you owe while short.
How it works
Profit = (sell − cover) × shares − dividends · Return = profit ÷ (sell × shares × initial margin)
A short sale profits when the price falls: you sell borrowed shares high and buy them back low. Because you post only a margin deposit rather than the full value, the percentage return is measured against that deposit, which magnifies both gains and losses. Any dividends declared while you are short are your responsibility to pay to the lender, so they subtract from your profit.
Worked example
Short 100 shares at $100, cover at $90, no dividends, 50% margin. Price gain = (100 − 90) × 100 = $1,000. Deposit = 100 × 100 × 0.50 = $5,000. Return = 1,000 ÷ 5,000 = 20%.
Frequently asked questions
Why is the loss on a short potentially unlimited?
A stock you short can rise without bound, so the price you must pay to buy it back has no ceiling. Your maximum gain is capped at the sale price (if it goes to zero), but the loss is theoretically unlimited.
Why do I owe dividends when short?
You borrowed the shares from someone who is still entitled to their dividends. The broker debits the dividend from your account and passes it to the lender, so any payout during your short reduces your net profit.
What is the margin deposit based on?
This tool uses the initial margin applied to the value of the shares sold short. Regulation T requires at least 50%, though brokers often require more on hard-to-borrow or volatile names.
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Educational estimate, not investment advice. Options and leveraged positions carry substantial risk.