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Strategies & Market Trends : Trading For A Living

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To: the options strategist who wrote (281)	5/27/1998 6:55:00 PM
From: Eric P	Read Replies (2) of 1729

Jen: Active daytraders will sometimes have two trading accounts that can provide collateral for each other. One account will be their "long" account and the other will be their "short" account. Once set up, the trader can set up a long position in one account and offset it with a short position (initiated on an uptick) in the other account. This cross collaterallized position only requires ~5% margin to maintain. ==> Why bother to short against the box like this??? The trader now has the ability to go net long by buying additional shares in his/her long account OR, he/she can go net short by selling his/her LONG position, leaving the non-offset short position behind. The benefit achieved is that the trader is now able to enter a short position without regard to the downtick rule. This is because the trader is no longer "selling short" he/she is merely selling their LONG position. I hope this is clear. Good Luck, -Eric

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