hawk-eye,
The strategy is used mainly if you are short, and the stock starts running on you, as AMZN did the last few days.
If you box, you lock in your losses, and don't lose your borrow.
If you cover, and the stock starts to slide, sometimes you can't get the borrow to go short again.
If you are boxed, and the stock starts down, you simply sell your long shares, and enjoy the ride.
I used a box to protect some gains on LU once, but now I realize it would have been better on the long side to simply sell, and if the stock goes down, you can buy it back. It's the same commission either way.
Are you less, or more confused?
Have fun,
Phil |
