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Microcap & Penny Stocks : APA optics...APAT...very interesting..any thoughts....... -- Ignore unavailable to you. Want to Upgrade?

To: ed doell who wrote (224)	11/27/1997 1:23:00 PM
From: craig crawford	Read Replies (3) \| Respond to of 342

Hi Ed. You sound pretty knowledgeable and I usually agree with you but I differ on some of the points you made in your post. << I have no idea why people short 9$ and 10$ stocks. >> I do. There are plenty of $9 and $10 stocks that become $1 stocks or even less. I have shorted stocks that traded less than $9 or $10 quite successfully. << The gain is finite: if the company goes bk they get 9 or 10 at best; >> The gain is the same whether the stock traded at $9 or $90. If you have $10,000 available for shorting purposes and you short $10,000 worth of DELL and it goes to zero you made $10,000 (minus commissions and interest) on your short. If you took that same $10,000 and shorted 1,000 shares of APAT at 10 and it goes to zero you made out the same. Also, you can make more than 100% return on a short (actually 200% if you count margin). If you short a stock at 10 and it goes to 8 you will have more margin to short more stock. If the stock slips another couple of points your equity will increase further and you can short even more. So when people say that profits from shorting are limited to 100% it is not entirely correct. << if the stock goes up for various and sundry reasons, the loss is not measurable. >> This is true in theory but not in practice. If the stock you short starts running up fast you will receive a margin call. If you don't answer that margin call your broker will cover the position and your loss will be limited. Also, you should cut your losses short (nice pun eh?) before they get out of hand anyway (long or short). The only way you can lose big is if the stock your shorting gets bought out. Most stocks don't get taken out for more than twice the current value of the stock so once again your loss is somewhat limited. Having said all that, there are numerous other reasons why shorting APAT is not a good idea. Like you said small float and illiquidity should instantly tell shorters to stay away. Auric, do you think it's any coincidence that only 1% of APAT's outstanding is short? Some of those might even be boxed shorts. The low short interest is telling you something Auric. Stray away from the kitchen if you can't stand the heat...

To: ed doell who wrote (224)	11/27/1997 3:23:00 PM
From: Duane L. Olson	Respond to of 342

Ed, Sage advice ! There is an intelligent way to do Shorts, and.... Part of the strength, I understand is that there is an open order under the stock, trying to accumulate a fairly large position... and there isn't much float here. I am gradually starting to set new short positions again myself, but not in the APATs of this world!! I'd rather be short something like INTC or MOT (I've covered both for the time being, so feel safe in mentioning on the thread)..or even an IFMX, NOVL, or OAKT. I hadn't heard the term "short trap" before...but will remember it for future use. Good chatting again, ED!! dlo