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To: upanddown who wrote (87274)	2/15/2001 12:46:03 PM
From: Timelord	Respond to of 95453

John, Well, there I was playing with my blocks in my sand box this morning, and gosh if I didn't get confused <g>. Off to my other job but would like to continue the discussion later. Cheers! Alex

To: upanddown who wrote (87274)	2/15/2001 8:11:51 PM
From: Timelord	Read Replies (2) \| Respond to of 95453

John - Shorting against the box (SATB). Well, I not only got my boxes mixed up, but I wanted to post my original response to sportsman - and I actually make trades first thing in the morning, that's scary <g>. All of my trades are short term (tax-wise) to produce income, so taxes and LTCG are the least of my worries. I also only focus on about six OSX stocks, and I would not play this game outside of this sector. As per my example in the previous post (CSCO), sticking to what I know is my absolute rule learned through hefty tuition payments <g>. Since I trade in 1K blocks to minimize commission expenses, mistakes come fast and can be costly. The odd thing is, analyzing last years trading showed me that virtually all of my larger losses came from very small trades (100-500 shares) outside this sector. The specific application that I'm using SATB in is a NE position I got "stuck" in. This last rally stalled short of my break even, and certainly short of my profit target. I went SATB actually locking in a loss. One I don't particularly want to take, but it's certainly acceptable. Much more acceptable than riding a roller coaster down to the 30's if that's what happens again. If we correct down to 45 (as an arbitrary example), I buy new shares and cover the short. Similar to having sold a cc, I now have a reduced basis in my long position. At this point I can analyze my options and either take the loss if things continue to slide, or smile and continue to profit if there is a reversal. I would rather do that than take a loss now in a stock which I feel will trade higher one day, or sit stubbornly and watch the value of my account deteriorate. Likewise, the same can be done if we run through my target price on the upside, with the obviously higher risk of holding a naked short. Here though, the odds are with me, as in 3 years I have yet to see this sector not reverse, particularly since we're trading on the high side. For me, an acceptable risk. For those having positions that qualify as LTCG, I'm glad you pointed out the negative tax consequences, as I wasn't aware of that. My point in suggesting SATB to sportsman was to use it as a "safer" way to test shorting, rather than simply going naked. Using this against S/T gainers that you wouldn't mind "losing" similar to a cc situation would work. Obviously, things can get ugly if you bobble the ball ala my CSCO experience, but I've found this sector's cycles to be very forgiving (if you have nerves of steel, a cast iron stomach, and fancy long roller coaster rides) <g>. Alex