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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: KevinD who wrote (11597)	9/23/1999 7:30:00 PM
From: KFE	Respond to of 14162

KevinD, Why does "shorting against the box" no longer have utility? Shorting against the box formerly was used to postpone paying taxes on gains. This is no longer the case due to IRS code changes. Some people used to erroneously use shorting against the box to avoid the upbid and uptick rules for shorting and the problem of finding stock to borrow. This was never legal and regulators are currently vigorously enforcing this rule. Firms are required to net any offsetting positions in any accounts under common control. It no longer has any utility because it would be more efficient to just sell the stock involved and buy it back if desired in the future. By selling you have 100% buying power restored. Shorting against the box will require a 5% reduction in buying power. Regards, Ken