PortTrak - Shorting a Security

Shorting and Covering securities are both done with a "Short" position in a stock. The Short comes before the Cover. When you Short a stock, you borrow share from someone else (you won't ever know where of from whom, since your broker takes care of all of the details). You then sell these borrowed shares, with the intention to buy back shares later, hopefully at a lower price. The buying back is called Covering your Short. (For more information on Shorting, be sure and visit The Fool's School and read the articles devoted to the subject.)

In PortTrak, the gain or loss for a Short resides in the original shares until you cover the last of them. What this means is that the cash portion of your portfolio will not be affected until the very last share is covered.

Your first step to shorting a security it to push the Short Security Button.

In the dialog box, you will see a place for you to enter the security ticker symbol. You can either short more of a stock which you have already shorted, or you can enter an entirely new short. If you are shorting a stock that you have not already shorted, choose <new ticker>. When you have completed the share and price information, you will be prompted to enter the new ticker symbol.

In the Number of Shares box, you should enter the number of shares that you are shorting.

In the Price Per Share box, you should enter the price per share as a decimal. PortTrak will not recognize a fraction. This is the raw price per share, not counting commissions or other costs.

In the Commission box, you should enter the commission that you are being charged on the short. Include here any handling fees, brokerage fees, or any other costs.

Use the Calculate button to see the total amount of the short, as well as the Foolish Value Per Share (with all costs included).

Use the OK button to enter the short.

The new shares will be entered into your portfolio. If this was a stock that you have already shorted, you will notice a new cost basis which factors in both the new purchase and previous transactions.

The transaction will not affect the cash part of your portfolio until you close out the short. Until then, the gain or loss will be reflected in the value of the stock, but not in your cash.

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