This is how it works in a VERY simple form:
My friend, Bud is going on vacation for 2 weeks he loans me his Playstation 4.
I take Bud's Playstation and sell it for $300.
Now I have $300, however I still have to return a Playstation 4 to Bud.
Playstation 5 comes out 1 week later.
A day before Bud comes back I go out and buy a Playstation 4 (does not have to be the same one
that I originally borrowed), the price has now gone down, so I pay $200.
The next day I give Bud his Playstation 4 back and $20 for letting me borrow it.
Profit $80!!
Now, Bud could have come back sooner than expected and demanded his Playstation back, I would have had to pay whatever price to get one back...$250, $300, $350, whatever I had to, even losing money in the process. So I could have had a smaller profit, no profit or a loss.
The Playstation 5 could have come out and not lived up to the hype and the word could have gotten out that Playstation 4 is still the best. Then the price would have gone up and I would still have to buy one back, but at a loss.
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