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Strategies & Market Trends : Point and Figure Charting

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To: Ms. X who wrote (2041)	3/27/1998 2:30:00 AM
From: Bull4Now	Read Replies (1) of 34812

Okay, another great idea I just concocted. This would be a method to short a stock with little risk (don't get me wrong I'm still bullish on the market - DJIA 10,000 here we come !). You target a stock which you think is primed for a drop (like a volatile high flyer). Let's say the stock is trading at $50 today. You can pick up call options on the stock which expire in April 1998 for $2 and so you pick up, say, 5 contracts. This costs you $1,000. You then proceed to short 500 shares of said stock knowing that if it goes up you can exercise the options to buy the stock at $50 and cover your short. If the stock goes down (preferrably at least 2 points), you buy the shares back and either hold on to the options and hope they increase or sell the options. WhatDaYaTink ? Dumb idea, or what ? Please uncover any flawed logic in this. SF NC YO YB M

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