Calculate the potential net profit or loss from a short sale, considering margin interest.
Result
—
Understanding the Fidelity Margin Calculator
This Fidelity Margin Calculator helps investors estimate the financial outcome of a short selling trade, taking into account the costs associated with borrowing shares and margin interest. Short selling involves selling a stock that you do not own, with the expectation that you can buy it back later at a lower price. The difference between the selling price and the repurchase price, minus costs, is your profit. However, borrowing shares and holding a margin account incurs interest, which can significantly impact your net returns.
How it Works:
Short Sale Price per Share: The price at which you initially sold the borrowed shares.
Number of Shares Sold: The total quantity of shares involved in the short sale.
Repurchase Price per Share: The price at which you buy back the shares to cover your short position.
Annual Margin Interest Rate (%): The yearly interest rate charged by your broker (like Fidelity) on the amount of money you've effectively borrowed to facilitate the short sale.
Number of Days Position Held: The duration, in days, for which you maintained the short position. This is crucial for calculating the prorated interest cost.
The Calculation:
The calculator determines the net profit or loss using the following logic:
Gross Proceeds from Short Sale:Short Sale Price per Share * Number of Shares Sold
Cost to Repurchase Shares:Repurchase Price per Share * Number of Shares Sold
Gross Profit/Loss (before interest):Gross Proceeds - Cost to Repurchase Shares
Amount Borrowed (for interest calculation): Typically, this is the Cost to Repurchase Shares. However, in some margin calculations, it might be based on the initial sale proceeds or a combination. For simplicity and common practice in short selling profit calculation, we use the cost to cover.
Total Margin Interest Cost:Amount Borrowed * Daily Margin Interest Rate * Number of Days Position Held
Net Profit/Loss:Gross Profit/Loss - Total Margin Interest Cost
If the Net Profit/Loss is positive, it represents a profit. If it's negative, it represents a loss.
When to Use This Calculator:
Evaluating Potential Short Trades: Before entering a short position, use this calculator to estimate the likely profit and see how interest costs might affect it.
Analyzing Past Trades: Review completed short sales to accurately determine your net return after all expenses.
Comparing Brokerage Rates: Understand how different margin interest rates from various brokers could impact your profitability.
Disclaimer: This calculator is for informational purposes only and does not constitute financial advice. Margin trading involves substantial risk and is not suitable for all investors. Always consult with a qualified financial advisor before making investment decisions. Fidelity's actual margin interest calculations may vary based on account specifics, loan amounts, and fluctuating market rates.
function calculateMargin() {
var shortSalePrice = parseFloat(document.getElementById("shortSalePrice").value);
var sharesSold = parseInt(document.getElementById("sharesSold").value);
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var marginRate = parseFloat(document.getElementById("marginRate").value);
var daysHeld = parseInt(document.getElementById("daysHeld").value);
var resultElement = document.getElementById("result-value");
resultElement.style.color = "#28a745"; // Default to green for profit
if (isNaN(shortSalePrice) || isNaN(sharesSold) || isNaN(purchasePrice) || isNaN(marginRate) || isNaN(daysHeld)) {
resultElement.textContent = "Please enter valid numbers for all fields.";
resultElement.style.color = "#dc3545"; // Red for error
return;
}
if (shortSalePrice <= 0 || sharesSold <= 0 || purchasePrice <= 0 || marginRate < 0 || daysHeld = 0) {
formattedNetProfitLoss = "$" + netProfitLoss.toFixed(2);
resultElement.style.color = "#28a745"; // Green for profit
} else {
formattedNetProfitLoss = "-$" + Math.abs(netProfitLoss).toFixed(2);
resultElement.style.color = "#dc3545"; // Red for loss
}
resultElement.textContent = formattedNetProfitLoss;
}