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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Math Junkie who wrote (43399)	3/9/2001 12:53:54 PM
From: Sam Citron	Respond to of 70976

Richard, Congrats on completing your first naked short position. Your caution is commendable and not at all inappropriate for a first timer. As you get more experience you can gradually increase your risk tolerance for greater reward. FWIW, I'm still short AMAT at 50.875 and short Jan '03 40 AMAT Put LEAPs at 9.125. My first naked short position was Home Depot in 1983 at a split adjusted price of $0.59. The warehouse shopping concept was in its infancy and all the rage and I thought the premiums were unjustified. I am extremely happy to report that I survived that near death experience having covered a few months later at a split adjusted price of about $.45. bigcharts.com You certainly do not want to overstay your welcome in a short position, especially with companies that are fundamentally well positioned like an AMAT or a HD. However, it is well worth experimenting (small lot sizes hopefully) with various tactics including targeting specific entry and exit points and mental or actual stops (regardless of time period held or extrinsic market fluctuations). If you approach shorting in such an experimental yet disciplined fashion, and retain a basic cautious and conservative approach, you will gain a valuable tool in your trading arsenal. Sam

To: Math Junkie who wrote (43399)	3/9/2001 1:30:37 PM
From: Jacob Snyder	Respond to of 70976

Yes I'm still holding all my AMAT shorts; also the TXN puts I bought a few days ago when TXN nudged above 36 briefly. Doing it cautiously is probably a good idea. Having a stop-loss point, which you decide when you initiate the short, is the main method of staying out of trouble. Always have a backup plan, because noone is right all the time. TXN is actually a good example of an excellent short, because: 1. the Nasdaq is in a bear market 2. the sector is severely out of favor 3. the company has warned, with no hint of when the bad news will end 4. The stock bounced repeatedly at 36-37. Then, that support failed. The stock plunged, then came back up to the 36 level and stalled. Support became resistance. The place to short is right at that level, when the chart looks like that. I prefer shorting when a stock has already come down a lot. This might seem counter-intuitive, but I think it's safer. Once a stock has established a strong downtrend, rallies tend to fail. The picture is clearer; the momentum traders are scared, and get shaken out easily.