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

To: Xplorer who wrote (58516)	8/17/1998 1:28:00 AM
From: stock bull	Read Replies (1) \| Respond to of 176387

Xplorer, thanks for the response to my posting. I guess using a % of the current price in setting a Stop Loss limit is a very personal thing. One wants to get out if thing are really going wrong, but not get taken out to soon. I'll have to give this some thought, as I intend to use a Stop Loss this Tuesday. Stock Bull PS: As I post this message, the S&P futures and Asia/Japan are falling apart once again. Do you realize that Hong Kong's stock market index was 18,000+ before it crashed?

To: Xplorer who wrote (58516)	8/17/1998 1:37:00 AM
From: Spaw	Read Replies (1) \| Respond to of 176387

X, Buy the LEAPS puts. --spaw--

To: Xplorer who wrote (58516)	8/17/1998 10:27:00 AM
From: Geoff Nunn	Read Replies (1) \| Respond to of 176387

re: locking in a capital gain Xplorer - There is no proven way of locking in a capital gain, short of selling the stock (and triggering capital gains taxes). As an alternative to selling, you can hedge your position. A hedge is defined as holding two positions simultaneously, such that a loss on one of them will be at least partially offset by a gain on the other. Unfortunately hedges also all seem to involve taxes. Nevertheless, here are several possibilities: 1. If you own X shares of Dell, you can sell short X shares of Dell, holding both positions. This creates a perfect hedge. No matter what happens to the price of Dell, any gain or loss in your long position will be matched by an equal, opposite change in your short position. You now have an asset with a fixed value XP, where P is the price at the time you sold short. There is only one problem. You have a sterile asset which pays no income and which cannot appreciate. However, your broker may be willing to pay you interest on the cash proceeds generated from the short sale. Bear in mind that the interest you earn will be fully taxable. 2. Various imperfect hedges can created using puts and calls. For example, you can sell call options. If Dell drops in price, the income you receive from writing calls will help offset the losses you sustain on your Dell shares. Or, you can purchase put options as insurance against a fall in the price of Dell. Unfortunately, income from writing options is taxable as ordinary income, and profits derived from put options are taxable. I'm unaware of any hedge strategy using options that doesn't involve taxation. Use of stop loss orders to lock in a gain is probably never advisable. One problem is that stop orders work only if stock prices move in short term trends, i.e., a stock that is moving down is likely to continue to move down. In fact though, solid statistical evidence suggests that short term stock prices move randomly. Given randomness, you have no reason to believe a stock will continue falling after you have executed a stop order. It may of course, but the chances are equally good it will turn around and rise. In fact, given the ability of MMs to manipulate the execution of stop orders, the odds of rising are probably better than 50-50! Chuz had a good post advising against stop orders a while back. Geoff