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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: KFE who wrote (4931)	3/27/2002 6:05:36 PM
From: Don Green	Read Replies (1) \| Respond to of 4969

KFE So in the case of Nortel and Lucent, to short these stocks you need to borrow them (a.k.a.) provide 100 of their value to the lender. then short it. Is there a level where it must be covered lets say $1.00 for example? I was told years ago you could only short a stock below $5.00 if you made special arrangements with your broker before hand. Thanks Don

To: KFE who wrote (4931)	3/29/2002 2:55:37 AM
From: Sword	Read Replies (1) \| Respond to of 4969

Read your own link. For those stocks already listed, the requirement for continued listing as an OTC marginable stock is $2, not $5. Read it carefully. You were confusing the first paragraph which pertains to the initial requirement to get on the list in the first place. Once on the OTC marginable stock listing with the exchange, the requirement reduces to $2. You can find brokers that lower their requirement to $2. Pershing, through whom Yamner clears their trades, is not one of them, much to my chagrin. "2) The minimum average bid price of such stocks, as determined by the Board, is at least $2 per share;" But as to the a requirement that the stock be marginable in order to be shorted, that is nonsense. The amount of equity that is set aside in one's account to cover the liability of the short position is greater with non- marginable stocks, of course. It is equal to the cash value of the position. Take this as an example: Posi # Shares Value L/SS Price Margin ERTS 100 $6,080 SS 60.80 $2,189 HC 200 $3,598 SS 17.99 $1,295 ALGX 2,000 $6,000 SS 3.00 $10,000 IMCL 200 $4,926 SS 24.63 $1,773 MLTC 2,500 $5,600 L 2.24 $5,600 MEDC 300 $4,215 SS 14.05 $1,500 WEBX 200 $520 SS 2.60 $1,000 MBAY 2,000 $6,800 SS 3.40 $10,000 INVN 100 $4,020 SS 40.20 $1,447 CLHB 500 $5,820 SS 11.64 $2,500 QPUDU 1,000 $2,800 SS 2.80 $10,000 CQEDM 500 $1,000 SS 2.00 $10,000 AKSY 1,000 $8,780 SS 8.78 $5,000 Each of these positions is either short (SS) or long (L). They are each "secured" positions no matter whether they are marginable or not. The "margin" column shows how much money is set aside to support that particular position. As you can see by studying this example, the low priced stocks like MBAY and ALGX have large requirements relative to the actual value of the position. This is driven by the $5 minimum that Pershing uses. A $2 minimum would provide for only 2/5ths of that amount set aside. It is important to understand the exact margin requirement for every position in your accounts. By doing this, one can manage risk/reward and maximize return for a given set of portfolio opportunities. -Sword

To: KFE who wrote (4931)	3/29/2002 3:14:55 AM
From: Sword	Read Replies (1) \| Respond to of 4969

Read your own link. For those stocks already listed, the requirement for continued listing as an OTC marginable stock is $2, not $5. Read it carefully. You were confusing the first paragraph which pertains to the initial requirement to get on the list in the first place. Once on the OTC marginable stock listing with the exchange, the requirement reduces to $2. You can find brokers that lower their requirement to $2. Pershing, through whom Yamner clears their trades, is not one of them, much to my chagrin. "2) The minimum average bid price of such stocks, as determined by the Board, is at least $2 per share;" But as to a supposed requirement that the stock be marginable in order to be shorted, that is a commonly held falsehood. The amount of equity that is set aside in one's account to cover the liability of the short position is greater with non- marginable stocks, of course. It is equal to the cash value of the position. Take this as an example: Posi Shares Value L/SS Price Margin ERTS 100 $6,080 SS 60.80 $2,189 HC 200 $3,598 SS 17.99 $1,295 ALGX 2,000 $6,000 SS 3.00 $10,000 IMCL 200 $4,926 SS 24.63 $1,773 MLTC 2,500 $5,600 L 2.24 $5,600 MEDC 300 $4,215 SS 14.05 $1,500 WEBX 200 $520 SS 2.60 $1,000 MBAY 2,000 $6,800 SS 3.40 $10,000 INVN 100 $4,020 SS 40.20 $1,447 CLHB 500 $5,820 SS 11.64 $2,500 QPUDU 1,000 $2,800 SS 2.80 $10,000 CQEDM 500 $1,000 SS 2.00 $10,000 Each of these positions is either short (SS) or long (L). They are each "secured" positions no matter whether they are marginable or not. The "margin" column shows how much money is set aside to support that particular position. As you can see by studying this example, the low priced stocks like MBAY and ALGX have large requirements relative to the actual value of the position. This is driven by the $5 minimum that Pershing uses. A $2 minimum would provide for only 2/5ths of that amount set aside. The last two positions in the example are option positions and are driven by the $1,000 minimum per contract at Pershing for stocks under $50 and $1,000 minimum margin per contract for stocks over $50. This is another area where Pershing is more conservative than some other clearing houses. It is important to understand the exact margin requirement for every position in your accounts. By doing this, one can manage risk/reward and maximize return for a given set of portfolio opportunities. While Pershing manages their risk more conservatively than some other outfits, limiting leverage for the customer, that does provide some added safety. I think that Yamner and Pershing are probably one of the safest places to have your equity in this industry. -Sword

To: KFE who wrote (4931)	6/18/2002 12:00:08 PM
From: steve goldman	Respond to of 4969

Sorry, I havent been around. Its been busy. And since questions come onto the site so sporadically, its tough to keep track. I'd love to get some good dialogues going again if anyone has questions or thoughts worth everyones' time... Ken is correct. There is a difference between a stock being shortable and marginable. You can short sub-$5 stocks but you will be required to provide margin as though it were a $5 stock. That, for many, can eat up buying power. On the flip side, you can have a $100 stock that is not marginable and thus you'd have to maintain a full $100 against the short position. None of the above means its not shortable. steve@Yamner.com