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

To: Paul Kim who wrote (1812)	11/30/1997 4:39:00 PM
From: steve goldman	Respond to of 4969

Using hindsight, over the past few weeks, shorting gap up openings has been succesfful as the market and stocks seem to open at their day's highs and then retreat before recovering and moving higher, if at all. First, as a trader, this is why you never buy right at the open, but rather doyou selling, if the market is up, and visa versay if it is down, although sometimes the market takes about 20 , 30 minutes to establish its opening stance, as listed stocks take time to get open. One way to capture theupside premium would be to flat out try to short the stock finding an uptick and having borrowed the shares. Not easy in a stock that is fading fast from a gap up opening. Nonetheless, it usually rocks to and from and so you might be able to sell inbetween on selectnet, an ecn or even at the offer, etc, in a deteriorating market. One strategy I utilize is to establish a long and short position in the stock. You decide that a stock might be a good short candidate over the next few days/weeks. Prior to the short opportunity, you buy it long in your type 2, margin a/c, and then sell it short when the volatility is down. You are now long xx shares in your type 2 account and short in your type 3, short account. You are now net flat, zero, to the market. It doesnot matter what the stock does because your long position offsets exactly your short position. Margin deposit on the position in only like 5%, I believe, so its doesnt hurt you too badly to maintain this position. Now lets say the futures are up 7 points, market is poised for its usual "open and then pull back" days. You now can simply go ahead and sell the long position without an uptick since the two positions you have, long and short are distinct. You can sell the long psotion without an uptick, just smack the opening bid once you are sure it has opened at a big enough gap or do nothing. If you end up doing nothing and want to close the short/long position, simply tell the margin department to "flatten the long position in xyze against my short position" in my account. This strategy does not helpyou on "news" items, story stocks, or items that were not anticipated. Nonetheless, you can establish these positions with earnings known to be coming. A few great ones would have been AMAT, etc. Good luck and becareful. I have not done a lot of shorting in the past year since I think it is similar to pissing against the wind. The same type of correction happened two july's ago and those who didnt cover are out about 1800 points on the dow and a couple hundred on the nasdaq. regards, steve@yamner.com