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Non-Tech : Auric Goldfinger's Short List
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To: Phil(bullrider) who wrote (771)11/20/1998 5:56:00 PM
From: Gerald Walls  Read Replies (1) of 19428
 
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.

Unless your profits are large and taxes would be onerous if you sell. If you box and you're right and the stock declines then when you cover your short you report a small gain. If you box and you're wrong then you get to write off the short loss.

If you sell and you're wrong then not only do you lose out on the gain you also pay taxes on the capital gains you "protected." If you sell and you're right then you still pay taxes.

The drawback to boxing in this case is if you're really wrong then you have to come up with a good deal of cash to cover the short, but your net worth wouldn't change because the box position is neutral.
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