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

To: RayV who wrote (7128)	3/20/1998 3:11:00 PM
From: William G. Murray	Read Replies (1) \| Respond to of 14162

Good Afternoon RayV, I loaded Turbo Tax on my machine last night and went through their listing of tax updates. For 1998 the IRS has imposed new restrictions on "selling short against the box". I read it several times and it made little sense to me. Maybe someone on the thread is a tax expert and can field this one. B.M.

To: RayV who wrote (7128)	3/20/1998 5:01:00 PM
From: Herm	Read Replies (3) \| Respond to of 14162

In the interest of learning new techniques, let me ask you if anyone can do this shorting against the box or is it one of those methods you have to wait for higher approval. Also shorting in general, can anyone do this too? As far as I can tell anyone with an account can short a stock. Shorting against the box means you hold an equal long position and at the same time you establish an equal short position. That value is placed in your account and earns interest. Any up or down price movement in the stock is countered by the other position. Thus, you lock in your profits regardless of price move. The trick is to unload one of the positions and have the remaining position increase in value. The only new tax rule is you have to cover by Jan. 1 of the following year! So, in the recent case when VVUS reached $15.00 and then pulled back to $10. Had you shorted against the box at that point you would have locked in that profit. Just imagine then covering your short position by picking up the stock for $10 and grabbing that $5 profit for good. As long as you have the equity you can do it! Does anyone know the required frozen deposit for shorting against the box? Is it 20% reserve?