In this basic position, an investor shorts the underlying asset, ABC Ltd. shares for instance, for Rs. 2220, and buys it back at a future date at an unknown price, St. Once it is sold, the investor is said to be "short" the asset. Figure 1.2 shows the payoff for a short position on ABC Ltd.
Figure 1.2 Payoff for investor who went Short ABC Ltd. at Rs. 2220
The figure shows the profits/losses from a short position on ABC Ltd.. The investor sold ABC Ltd. at Rs. 2220. If the share price falls, he profits. If the share price rises, he loses.
