Solving for X?

[cloobless]

Hi, all. I'm trying to calculate a "capital preservation formula" based on stock positions, and it's not clear to me how to construct this in excel.

1. Your starting equity is $50,000.
2. Let's say you have a current total profit of $12,600
3. You have a open stock position where $4,200 is exposed in 168 shares at $25 share.

Let's say in the event of a crash, you want to lose no more than 20% of your current profit by selling your open position at a specific price. What I'm trying to solve for is what price level to allow your open position to drop to so that your total loss is 20% less than your current total profit.

Any thoughts or suggestions would be welcomed. Thank you very much for taking a look.

 

[NARAYANK991]

Hi ,

I am not in finance , so most of what you talk of is Greek and Latin to me.

However , if we look at the mathematics of what you say , 20% of the current total profit is 20% of 12,600 = 2520.

Your loss will be because of selling the 168 shares at a price less than 4200 ; since the loss is 2520 , it means the selling price would have to be 4200 - 2520 = 1680.

Since this amount is over 168 shares , it means each share was sold at $10.

Is this correct ?

 

[cloobless]

Hi, narayan -- thank you, I'm not sure. I think the logic makes sense but I need to see how this works with the inputs. Not sure why I can't see this clearly yet...

 

[cloobless]

Narayan, I think you are correct. Thank you so much for helping me to break this down. I really appreciate it!