LONG-SHORT STRATEGIES
Long-short strategies hold both long (buy) and short (sell) positions simultaneously, aiming to profit from both rising and falling prices.
GROSS VS NET EXPOSURE
Gross exposure = Total long % + Total short %
Net exposure = Total long % - Total short %
Example: 130% long + 30% short = 160% gross, 100% net
You have $130K in long positions and $30K in short positions on a $100K portfolio. Gross is 160% of capital. Net is 100% — you are fully invested on a net basis.
BORROW COSTS
Short positions incur a flat 1.5% annualized borrow cost.
This is deducted daily from the portfolio value. For a $10,000 short position, the daily cost is approximately $0.41 ($10,000 * 1.5% / 365).
LONG/SHORT P&L ATTRIBUTION
The platform separately tracks P&L for the long book and short book.
Long P&L: Sum of weighted returns for positions with positive weights.
Short P&L: Sum of weighted returns for positions with negative weights (inverted, so a falling stock = positive P&L).
Total P&L: Long P&L + Short P&L - Borrow costs.
LONG-SHORT ARCHETYPES
130/30
130% long, 30% short. The most common long-short structure. Adds modest short exposure on top of a long portfolio.
Sector-Neutral
Long and short within the same sectors so net sector exposure is zero. Profits from stock selection, not sector bets.
Beta-Neutral
Adjusts long/short ratio so portfolio beta is approximately zero. Market-neutral strategy that profits from relative value.
Hedged
Primarily long with a short hedge (e.g., short an index ETF). Limits downside while maintaining upside exposure.