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Pastimes : ETRADE Sucks! -- Ignore unavailable to you. Want to Upgrade?

To: RickT who wrote (2289)	4/23/1999 6:44:00 PM
From: Iceberg	Read Replies (2) \| Respond to of 3262

>I sell short 1000 shares XYZ at $6 >How much, if any money do I need at the sale? Where must this money be - Margin, cash? RickT, My understanding is that to operate on margin, going either short or long, you need to initially provide 50% of the transaction in cash at the time of the transaction. That is, 1/2 of the market value [MV] of the stock, or 1/2 MV. So if you short 1000 shares of XYZ at $6/shr, the total transaction [not including commission] would be $6,000. Therefore, in order to enter such a short transaction, you would need to provide $3,000, up front, in cash from your account. Same thing, if entering a long position. >They also say that "You must pay for at least 50 percent of the value of the securities sold short", which doesn't make much sense. Why does that not make sense? Again, you need 1/2 MV, short or long, to enter a transaction on margin. It seems to me that many of the questions you are asking are accounting questions. You are talking about equity [EQ], market value [MV], net account balance [NAB], current balances and so forth. For example, NAB = EQ - MV. Similarly, EQ = NAB + MV. I'm not sure it would be fair to expect Etrade's service people to explain to you how their internal accounting procedures work. I would suggest taking such questions to an accountant, or maybe ask to speak to one of Etrade's accountants [good luck with that one]. I'm not an accountant, so I can't help you too much either. The above is just my understanding of a portion of it, and I know just enough about it to know it can be a very tricky process keeping track of all the figures, knowing what they mean, how one figure interrelates to another, when and why...and especially when short transactions are mixed in with long transactions. Plus, it's hard to answer accounting questions without knowing the entire picture of your account, and how it might change from day to day, taking into consideration the various associated charges and expenses, such as interest and commissions and so forth. Having said all that, I can share your frustration. You basically want to know where you stand at any point in time, and why. Unfortunately, there is all-too-often a lack of any effective interface between brokers, customer service personnel and accountants who can accurately answer customer's questions such as the ones you raised. They are all good questions. But I'm afraid there are no easy answers to many of them. Again, my best recommendation would be to ask an accountant to explain how it works if you are really interested. Best of luck. Ice