Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: rkf who wrote (5553)	10/21/1997 8:49:00 PM
From: Herm	Read Replies (2) \| Respond to of 14162

Well, I was shocked to see that kind of short interest. On the one hand, if some institution(s) are shorting against the box it make more sense. That is, they buy an equal amount of shares to short there by locking in their profits regardless of the RXSD price movement. When the long stock price goes up, the shorted stocks shares go down in price. If the long stock price goes down the shorted stocks appreciate. It's the key neutral play to lock in every penny of your profit! On the other hand, if the stock splits and the liquidity is excessive if could depress the stock for a long while. On the other hand, if a short squeeze does occur it will drive the price way up. It is starting to smell like the VVUS replay. The short positions were held until the stock peaked and then they sold off the long shares. Afterwards, the stock dived causing the short shares to appreciate. Sort of a double wammy by the big boys! How to play it? Ride RXSD up until it peaks and sell your CCs at the money or sell long shares out. Immediately load up on the PUTs one or two strike prices down from at the money. You will make both sides of the whipsaw!