Calculation of return on a short sale

[Scott Tyler]

Hi,

I'm currently riding a gain on an open short sale, but the return is
being calculated differently by TD Ameritrade and Money Plus Deluxe.

TD Ameritrade's calculation uses the opening trade for the cost basis,
for a return of 47.3%, and Money Plus Deluxe uses the current share
price (or the closing trade, were I to close now) for the cost basis,
for a return (using the "TR all" column) of 89.9%

Is there a "right" way to look at this?

In either case, the capital gain is the same.

Thanks,

Scott Tyler
agent_scotty-at-hotmail-dot-com

[Cal Learner-- MVP]

Post by Scott Tyler
I'm currently riding a gain on an open short sale, but the return is
being calculated differently by TD Ameritrade and Money Plus Deluxe.
TD Ameritrade's calculation uses the opening trade for the cost basis,
for a return of 47.3%, and Money Plus Deluxe uses the current share
price (or the closing trade, were I to close now) for the cost basis,
for a return (using the "TR all" column) of 89.9%
Is there a "right" way to look at this?
In either case, the capital gain is the same.

The Ameritrade way sounds like the better way to me. Looking at the
other possibility, if you sell short at 10 and cover at 30, that
would seem more like a 200% loss rather than a 33% loss.

In the scheme of things, it doesn't seem to be as significant as
some other things.