All a boxed short is, is this,
Say you short modacad today, for instance, at $24
And near the end of the day, you are unsure if $20 is the lowest it will go, or it might rebound.
Well, what you do is buy some long shares.
So, lets say we short sell 200 shares of Moda at $24
Then later we buy 200 shares at $20
Now understand that this does not mean we cover our shorts
It means we now have 200 short and 200 long.
This way, if moda goes up, the increase in value of th elong shares, balances out the loss of value in the short shares.
A better example would be CFON
You short sold CFON a while back at $8
Now you Box the short at $2.50, because you think it will go up a bit.
You might say, "why not just cover the short then, at $2.50
You could, but then the game is over.Because for most people, you can't short below $5.
Hope that helps. |
