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Strategies & Market Trends : Americans 4 "No Own - No Sell"
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To: Moominoid who wrote (270)10/3/2001 7:37:45 AM
From: Ga Bard  Read Replies (2) of 455
 
Shorting-against-the-box is the act of selling short securities that you already own. For example, if you own 200 shares of XYZA and tell your broker to sell short 200 shares of XYZA, you have shorted against the box.

Note that when you short against the box, you have locked in your gain or loss, since for every dollar the long position gains, the short position will lose and vice versa.

An alternative way to short against the box is to buy a put on your stock. This may or may not be less expensive than doing the short sale. The IRS considers buying a put against stock the same as shorting against the box.

The name comes from the idea of selling short the same stock that you are holding in your (safety deposit or strong) box. The term is somewhat meaningless today, with so many people holding stock in street name with their brokers, but the term persists.

P2bAAAT & DSAS
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