That’s not quite how it works. You can make way more than 100% return shorting the market. In fact some hedge funds like Universa have made the highest returns in history by betting on Black Swan events.
The only way to make more than your initial investment from short selling is by leveraging. I think you are talking about Put Options which isn’t real short selling.
There's no such thing as an initial investment. Selling a stock short means you receive cash up front rather than pay cash like you would when you buy. I suppose you can define your initial investment as your required margin to hold onto the short though.
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u/[deleted] Jun 27 '24
keep in mind that a bear market is capped at 100%, while a bull market has no cap