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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Dnorman who wrote (16044)12/11/1998 5:27:00 PM
From: Peter V  Read Replies (2) | Respond to of 18691
 
Boxing is done by buying an equal amount of shares as you have sold short, but NOT to cover the short position. So it freezes your profits and losses at that point, because the short and long gain and lose the same amount. It is used to protect your position from loss if the stock is moving up and you don't want to give up your short shares because they are tough to borrow, or whatever reason.

Some brokerages, like Datek, don't allow boxing because they automatically close your short when you buy shares. Dreyfus requires you to specify whether you are closing the position, thus allowing you to box.



To: Dnorman who wrote (16044)12/11/1998 8:34:00 PM
From: Roger A. Babb  Respond to of 18691
 
Dnorman, a box is when you are long and short the same stock, a neutral position. Advantage is that you can more easily trade in and out on the long side. For example, I shorted BFLY several weeks ago but no more short shares are available, so I don't want to cover. When I think it is in an uptrend, I buy BFLYW and thus box the position. Sell BFLYW when I think it is week.


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