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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: gregor who wrote (3227)	2/25/2008 4:41:09 PM
From: rrufff	Read Replies (1) \| Respond to of 5034

I'm not disagreeing necessarily. I see a distinction. You are talking about using an ETF basket as a hedge for your holdings. There are many ways to do this. We're really discussing primarily on this board a different issue here and that is whether or not there should be naked shorting. With a regular common stock, there are arguments and policies that date back to formation of capital markets. The intent was to support development of equity capital and not to have markets for the primary purpose of gambling. With respect to an ETF, the argument would be somewhat different. One is a step away from direct equity formation and dealing with a derivative instrument. One would have to look at the prospectus and see how the balancing is done. Would naked shorting interfere with the relationship goal set by the fund between NAV and market price? I don't know the answer and, if you find the answer, please comment. As I posted previously, I've been using some of the ultrashort ETF's. Shorting them or writing calls would amount to a long position. The interplay of the options and the equity has been fascinating. If one adds failures to deliver to the equation, perhaps that explains the almost random movements of the equity rather than what is generally perceived as goals (ultra short = 2x the inverse of an index). Anyway, enough to give a minor headache LOL.