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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: K. M. Strickler who wrote (36671)	4/5/1998 10:25:00 AM
From: James Fink	Respond to of 176387

Selling short provides you with extra cash to invest in other things subject, of course, to the 50 percent margin requirement. Thus, if you have $136,000 in proceeds from short sales, plus the $68,000 initial margin, you can invest the $136,000 in new stuff but must keep $68,000 untouched as margin (unless DELL goes down, freeing up additional capital). There is no interest charged for borrowing the shares (other than ordinary brokerage commissions). You must, however, pay any dividends paid by the stock to the lender. Also, unless you are a really large customer, you are not entitled to collect the interest on the short sale proceeds (except for the difference between the sales price and any price decline). Thus, if your initial sales proceeds are $136,000 based on DELL at $68 and DELL declines to $60 per share, you make interest on the difference ($136,000 - $120,000 = $16,000).