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Short Selling - An Unprofitable Example 

A rise in the price of the stock can be disastrous!

Consider the same example.  A team short sold 1,000 shares at $50 on turn 12, except on turn 17, the price has risen from $50 to $60. 

When the position is covered, they must purchase the 1,000 shares for $60,000.  The sale proceeds of $50,000 are used, plus $10,000 taken from their margin account. 

At the end of turn 17, they'll receive only $15,000 of the $25,000 used for their margin account on turn 12.

Remember too, that these numbers did not include commissions and the lending fee.  With a commission of 1.25%, it cost the team $625 to sell the stock on turn 12 and $750 to cover on turn 17.  There was also the lending fee which can run anywhere from 3% to 10%.  Assuming a 5% lending fee, that's an additional $2,500, giving a total of $3,875 in commissions and fees, putting their total loss at $13,875!