Suppose that you sell short 100 shares, now selling at $70 per share.
What is your maximum possible loss?
What happens to the maximum loss if you simultaneously place a stop buy order at $78?
Finance - RIO, Monday, July 5, 2010 at 12:59am
The Max possible loss will be increasingly unbounded if P --> infinite.
If you simultaneously place a stop-buy order at $78, the maximum possible loss per share is $8.