Model Information

Category : Signal And Noise

Model Name : ShortStock.jar

Author : MS4 Systems

# of Download : 9

Updated Time : 2021-12-30T11:16:45.261Z

Summary of Model

Enacts a scenario in which a trader follows the short selling stock strategy (p. 355 of The Signal and The Noise.)

Detail Description

The trader borrows stock shares from a stock owner promising to return them in a year. This is because she believes they will depreciate in value by that time. She then sells them to a broker at the current price. After a year, she buys them from the broker and gives them back to the owner. If the price has indeed gone down, then she pockets the difference and makes a profit. On the other hand, if the price has risen, she loses the difference ? which can be unbounded in value since it depends on how much the price has increased. Also, the stock owner can ask for the stock return before the due date in which case the same contingencies hold.

How to set instance variables

No specific Instance Variables

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