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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (86376)	7/30/1999 8:24:00 AM
From: GVTucker	Read Replies (2) \| Respond to of 186894

Paul, RE: When somebody short sells a stock, and that stock subsequently RISES, the short seller is charged interest on the net LOSS he has incurred - until he covers his short position. That is incorrect. Let's take, for example, a short sale of 100 shares of Intel at 70. The cash I would receive would be $7,000. If there were no other securities at all in the account, I would need an initial margin of 50%, or $3,500. I would receive interest on $10,500 cash. If Intel were to rise to 80, I would receive interest on $10,500 cash. If Intel were to decline to 60, I would receive interest on $10,500 cash. If Intel were to rise to the extent that my equity declined under 30% (in this case, about 116«), I would need to either deposit cash or securities in the account, or buy back some Intel to raise the equity back above the maintenance level of 30%. Note that I still have not been charged any interest. The only reason you have to pay interest is when you borrow money. A short seller does not borrow money. A short seller only borrows stock. The cost of borrowing stock is negotiable, and for most stocks, that cost is zero. I thought you were in the securities business ? I am. And it is quite apparent that you aren't. A person of your purported wealth should take advantage of all the tools permissible under the rules of the SEC. If your broker is not giving you those tools, you should find another broker.