Kelton,
The following is just my opinion, anyone is free to disagree.
With a stock priced at this level (< .10), the cash-flow problem that you indicate you have and the near-term bounce that might occur if MJ does put out a good PR, you could get into an even worse bind by not clearing you short position ASAP.
I'm not saying that CBNR's price can't go down before it goes up, but with only 5K shares, even if it went to zero (which I don't think will happen any time soon) you could only make $500. If the price starts to go toward .20, you are going to start getting margin calls that will force you to sell some of your holdings.
I have no experience with e-trade, but if your shares are in street name, they can sell your stock to cover the margin calls. All they have to do is notify you that you have a period of time (probably 24 hrs) to make a deposit of $x.xx. If you don't, they will sell shares, at their discression, to collect that amount from your account.
On the surface that may not sound to bad to you, BUT and this is my guess based on some bad prior personal experience;
1) Are you aware that they are charging you interest on the money that you 'borrowed', to buy the shares that you sold short?
2) They will pick the shares that 'they' want to sell, not what you want them to sell. These will be shares that you are long in.
3) They will sell only enough to cover the CURRENT margin call.
4) They will charge you a commission on that sale.
5) If the CBNR price continues to climb, repeat items 2 through 4.
Note: the repeat process in #5 is not limited to once a day, it is controled by how frequently your short position exceeds the margin call amount and could be multiple times in a day.
IMHO, given the information you initially provided, you should cover ASAP. Even the guys that short for a living get burned once in awhile and for us little guys it can be a kiss of death.
As I said at the beginning, just my opinion.
Regards to all and back to lurking,
Bob |
