Hi Lisa; Thanks for pointing me at that news, I can agree
with most of it..<G> But investors being worried is "good"
"the market climbs a wall of worry." That saying has been
around a long time, because it's true.
AS for the options getting "striped" I know what you mean,
I've traded them till I was blue in the face. And I call
it the " hidden spread"...
If a person has time and makes a "plan" options can be OK,
I never short an individual stock "naked"..I know from looking
at Brokerage house records the foolishness of that.
A person with time and a plan, can do OK if one finds the right
situation , buy the call, sell the put, and
short the stock..the call covers your up side risk, the
sold put gets you bought in at a set price, You make both
the drop on the stock, and the premium..but lose some of the
call value, ( buy calls futher out than you sell the puts,
as you may can re-use them, time prem gets cheaper when
you buy more of it) you make more selling the short puts month
to month, it's one way to stay short the stock, but here you have
a target with your short, ( not just the I wonder how much more she
will fall, I hope crappy ) you make enough to roll your calls down if you want to short her again, or you could take what value is left in the calls and go hunting again.
So what if the stock goes to heaven ?
Well you can call it at any time at the strike price,
and if your call prem was less than you collected on
puts you wrote you may still be ahead, expence has to be
measured as well.
It takes time and planing..and digging
but it can be done. Raw put buyers mostly don't know the
game. For shorting , buy the call, sell the put, short the
stock. ( more money in selling puts than often meets the eye )
At any rate the put pays for your short risk cover with a call,
if she goes above you call strike so what..just buy back the
cheaper puts and sell more expensive ones. Sell puts every
month roll them forward whenever the premiums say you can make
money doing it, untill you use up the time on the call then arb out.
So she goes up you write more puts she gets put to you above the
original short price ?<G> but that's why you had calls to start
with, you can dump her, call her, and dump her again if you
want, as by now your calls are well in the money, you can
then buy higher calls and sell puts and short the sucker again.
Just look at AOL. It's the naked shorts, and dumb put buyers
that has drove her up. About 10% of the shorts playing her
know how to play, the other 90% have lost their rollex, their
car, their shrits, and even their underware. The guy writing
the puts has made money month after month, and is still
short the stock. If your going to go short; go in a way you can't
be squezzed, ( stop losses are for suckers ) brokers pick them off
when the numbers get right, and so if you are going to go short you
have to be able to stay short , also it's less complicated if you
pick one that don't pay a div. ie like AOL, you got to plan
and be able to cruch numbers..not dream and wish and hope..and
wonder why she is so high, I can tell you it's not because of
her earnings reports <ggg> The shorts themselves have run her
up..
Jim
PS. any one want to talk shorting with me, please
go to
nasd.com
and down load all the short interset files back to early 95
put them in a spread sheet sort them, total the increase/
decrese month to month, chart it and compare it to the
index and see what you get. Pick the top 100 shorted stocks
note the increase/decrease month to mouth..chart it compare
it to the stock price..( if you haven't done this your likley
in for a surprise..the stock price falls after the shorts
fall off in number , and rises in the face of the shorts,
every single time were there is a 20% or more change in the short
ratio..( thats what you hunt for ) ( only stocks that have
25% or more of the float shorted apply to this )
any one to lazy to do the work does not need to make money trying to short.
And more over does not need to play one up-man ship with me
when it comes to talking about shorting.
I might add the data does not give the float, you have to put
that in yourself..( remember it's the shorts vs float that counts,)
I've forgot that a time or two myself. 25% of float puts it on
the radar screen, 20% or more change in the ratio from one
month to the next makes it a target..compare the ratio change
to the stock price, catch a spike in price , after a fall in
shorts..get ready to short..( as you just saw a squezz )
see shorts increase 20% as price continues to fall, get ready
to go long or buy calls, ( squezz in the making )..
This is no I think, this is fact from the data and the charts.
Lots of work went into it.
Jim
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