Hi Barry: Re>The premies are high on most of the stocks I'm
interested in betting against. With a short I don't have to time so perfectly. <<<
We see the same thing there, lots of people into puts drives up the
price of them, they have a supply/demand side also, and it don't
always relate to the supply/demand of the stock, which can be hard
to determine unless you know the exact number of shorted shares
out at any given time, as the shorted shares are gamblers and may
not reflect the true supply/demand of the stock, but some one
has accesses to all that info, and they have an upper hand, or edge
that all the others are having to over come, so with shorting and
putting you not only have to beat the crowd, but the insider, plus
pay the spread, plus the commision..most people do not realize how
the deck is stacked, or what the odds are, and in most cases you
can't tell but just have to guess at it, that improves with time,
but changes from stock to stock. With all the trading in and out
of options I'v done on AOL, I'm just barley ahead and I put in a lot of time and feel I have about as good a handle on her as anyone.
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Part of that is I didn't listen real well to my Mentor..he said to
buy out futher 6 months or more..but they always looked high to
me, and didn't move as much, but I can now see were he is coming
from..you do get a reduced "time" premium..or "rate" per month
time as you move out in time. Were the short one is cheaper the
rate on the time is much higher.
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Being "Bought in" By the Broker, I'v not done this but I was
flirting with it enough to do some home work, and have a face to
face in the office pow wow with an options specalist at waterhouse.
Stops can and will "trigger" at a price but your stock may not
cross the board at the stop price if volume is real heavy, by the
time yours gets there you can feel real ripped off. You can bet in
the case of major sell offs, the borkerage houses ( who also deal
in stock ) and most all of the mutual funds will be in front of
you. "Bought in" does not happen only because of you being
margined out..the spear the fish in the barrel..is they see the
uncovered shorts..and call in thier borrowed stock..forcing a buy,
or an exicution of calls, as if your not short aginst the box
you borrow stock, the lender can demand his stock back at any
at any time, If a brokerage house has x amount of shares out..
and sees that he can call them to cause a squezz he does it,
and you get "bought in" because the borrowerd shares suddenly
become un-available. Some brokerage houses will not lend shares
unless the shares are on margin and with them, ( they won't go
out and borrow them ) others will..another thing that can happen
is that the stock you have borrowed gets sold..and enough
stock gets sold into a rally..that the broker can not find shares
to borrow..and you get bought in. The only safe way I saw to do
it was aginst the box..or aginst some calls were I had the option
to call stock at xx price if shares were to become un-available,
or spike was to hit. Lots of people have been taken to the cleaners
with stop loss orders..that triggerd..but not at the stop price,
you can do a stop limit..were if it falls beyond such and such
it wont sell, but that won't do you much good if your short and
it's going up. Like I say you got more guts than me, <G>
Jim
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