Assume that you order your broker to sell short 100 shares of a company whose stock is trading at $38 per share.If the company's price later falls to $32 per share and you buy 100 shares,you will make a $600 profit (before brokers' commissions).

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If you sell short 100 shares at $38 per share, you receive $3,800. If the price later falls to $32 per share and you buy 100 shares for $3,200, you can close out your short position and make a profit of $600 ($3,800 - $3,200 = $600) before brokers' commissions.

Assume That You Order Your Broker to Sell Short 100