profit calculation for short positions - how?

[rudolf stricker <lists@xxxxxxxxxxx>]

Looking at my last weeks' short positions I wonder, what the "standard
procedure" to calculate "profit"  may be for such cases ...

Following "profit = (money received - money spent) / money spent", I
would get (neglecting commissions for simplicity) "profit = (open
short - close short) / close short", which might result in nice values
near or at expiration ... 

But should I include this kind of profit calculation into my money
management (based on past "probability distributions" for wins &
losses)? - Up to now I use "profit = (open short - close short) / open
short", which restricts my maximum profit to 100%. Even if this is
easier to handle, its imo not correct ...

But to include short positions more carefully into my money
management, I wonder how this can be done in practice?
To do it consistently, I would have to know a-priori the "close short"
price to select the best number of contracts at "open short" time ...
How is this dilemma solved appropriately in practice?

Any suggestions?

mfg rudolf stricker
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