Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Herm who wrote (8682)	9/24/1998 9:16:00 AM
From: Douglas Webb	Read Replies (2) \| Respond to of 14162

When you short a stock, what are your margin requirements? If I were to short 100 BTGC to protect the 100 I own (I sold off 50 yesterday, figuring I might as well hold the cash instead) Discover would require me to have $500 in reserve ($5 per share or 50% of the purchase price, whichever is higher.) Then, to maintain the position, I would need $5 per share or 35% of the purchase price, whichever is higher, plus $2000 minimum equity in the account. On top of that I imagine I would be charged interest on the difference between that $500 and the actual purchase price, which comes to $200 at the moment. I would count all of that as costs for shorting, plus the commissions you mentioned. If BTGC's price moves, the shorted shares move in the opposite direction to cancel out the change, but there's still a net drain on your account due to the margin costs. Of course, the more shares you own, and the more you short, the lower those costs get percentage-wise. So, if you've only got a small position, this strategy is probably not a good idea. Doug. PS: How's that little weather thing going?

To: Herm who wrote (8682)	9/24/1998 3:03:00 PM
From: RayV	Read Replies (1) \| Respond to of 14162

Herm If you're not completely blown away, maybe you'd like to talk a little more about the selling against the box technique? I'd like to know, for example, what you will consider good in your BTGC case. You say you want to win 8 out of 10 (as do we all) but I'm a little confused what will constitute a win in your BTGC shorting against the box. It seems like it might be a good technique for when you don't read the chart well .... er... exactly right and the underlying stock takes off. For example, take a look at the chart of TECD. askresearch.com I sold the DEC 45 calls at that little down turn in RSI you see near the right side, and I still think my decision was sound and I will make a good profit if TECD stays anywhere above 27, but now I'm intrigued by your Selling Against The Box technique. Does it have a place in situations like this? I see TECD is bid at 52 a few moments ago. As always, your thought and insights are greatly appreciated. Ray PS why can't I get that chart address to be hot? Anyone?