[BradleyT]

I'm borrowing and selling 1000 shares of Yahoo at $30, so I'm getting $30,000. A month later I want to close my short position so I have to come up with 1,000 shares to give back to the person I borrowed from (this part is transparent however there MUST be shares available to actually short). Hopefully I only have to pay $25 per share or $25,000 to get back the 1,000 shares I borrowed and sold. If yahoo jumped to $50, I have to pay $50,000 to get those 1,000 shares back.

Essentially you can only make 100% profit on shorting - if yahoo went to $.01 I would only have to pay $10 to get those 1,000 shares back - but you can lose an infinite amount - yahoo could go to $3000 per share and I'd be bankrupt. Your position would get called before that happened though.