[ChuckMcM]

Actually that is very "easy" to do, first you short sell some stock (naked short) for $1M, then the stocks value goes up by $8M. You are asked to cover your short and even after your $1M you are still left holding $7M in liabilities.

[shiv86]

This is incorrect. You can’t talk about absolute $8mill gain without talking about the total market cap (total value) of the stock. What would have happened that the company its not increase by $8mill but increase by 8 times the current value which is more possible to happen for small cap stocks.

[lern_too_spel]

If I sell something for $50 million and need to spend $58 million to cover, I'm down $8 million. There's no need for an 8x increase in valuation.

[shiv86]

Yes agreed with your example. The total loss in your example is only 16%. In the example provided above he starts with $1mill and has a loss of $7 mill. Thats a 700% loss.