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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: Douglas Webb who wrote (8685)	9/24/1998 12:12:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

DLJ Direct requires a 50% value in your portfolio to back up the short position. The dollar value is added to the account and generates interest for you provided you are not margined. Otherwise, the interest generated lowers your margin interest payout. At this point, I'm not margined in any of my stocks and own BTGC stock clear with 100% equity. For me, it makes no sense to not short BTGC against the box. It only adds more downside protection. BTGC came out with a new product patent announcement this morning. I used that small pop to short 600 shares even though I own 700 shares. The volume is light compared to normal trading for BTGC. Below average level volume spells a slow decline eventually. TNSI continues to be a die hard stock. It will be do or die for my TNSI OCT 5 PUTs starting next week when the decay will really kick in. Looks like we may have to bite the bullet on TNSI soon! I have not had a losing trade in quite a while! DIVE TNSI DIVE!

To: Douglas Webb who wrote (8685)	9/27/1998 12:12:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

SHORTING AGAINST THE BOX There continues to be a lot of interest and confusion on the technique of shorting against the box as part of W.I.N.S. tool box. First, let me suggest everyone to check out this link. They have an online calculator that will illustrate the shorting process. abcnews.com Second, let me point everyone to SI links on the subject. There are excellent questions and answers that you all may want to review. Subject 15249 Next, let me clarify some facts on a post I recently made. ------------------------------------------------------------------- To: +Douglas Webb (8685 ) From: +Herm Thursday, Sep 24 1998 12:12PM ET Reply #8686 of 8702 DLJ Direct requires a 50% value in your portfolio to back up the short position. The dollar value is added to the account and generates interest for you provided you are not margined. Otherwise, the interest generated lowers your margin interest payout. 1. If I use the value of my portfolio to back up the 50% requirement for "shorting a stock against the box" you can not usually write a CC against that stock. Why? The additional shorted stock would be considered naked since I already have short position with the CCs. So, you could do this if your brokerage allows (and you are willing) naked puts for shorting and CCing the same stock at the same time! Of course, you must have enough value to back up the naked short! Investors may want to seriously consider shorting against the box in cases where the CC buyers are not biting your CC bids and/or the cheap PUTs open interest is dead and you can't hedge your position. Also, if you are not happy with the price of the CC premies you could make more money by shorting against the box. The more shares you own the more the leverage. 2. You can use your value in your portfolio to back up the 50% requirement for shorting another stock. So, if you collect CC large premies from stock XYZ you could apply that value for shorting ABC instead. That is one reason why I like to grab large premies and use that value to pick up no brainers somewhere else. A shorted stock is sometime very easy to pick off for quick cash! At this point, I'm not margined in any of my stocks and own BTGC stock clear with 100% equity. For me, it makes no sense to not short BTGC against the box. It only adds more downside protection. Again, I could either CC or short against the box as a choice to protect the downside by hedging. Of course, what I use to gauge that is the use of the BB and RSI as my technical indicators. Finally, just about every book you read discusses shorting against the box as a tax avoidance issue. The last thing I worry about is paying taxes. If you are making profits taxes is a good sign and part of doing business. Buy and hold will most likely kill you if you are not using the W.I.N.S. approach. There is a lot to be said about shorting against the box. I feel shorting has it's place. The commissions are lower than trading options. So, if you don't own much shares it may be more profitable to short against the box rather than CCing and trying to buy PUTs as a hedge. Everyone needs to calculate the risk/reward.