~Stock Charts and OPTION plays

[Transat 5]

SA,

This post from mide has really caught my attention.
As you can see from my 'signature' I am one who is concerned about naked shorting and its negative effects on hoest traders.

Essentially what is being said is use your long stocks to take a short position. (As hedging or boxing).

Not only is it self insurance but it takes the stock out of the market and prevents it being used (or abused) by others to short against your long position.

I am sure you are aware of this already but I thought it might be of interest for discussion in hideout maybe.

.....................

I did some DD for those lazy on short selling DD, including IRS stuff so you can draw your own on this issue. Here are some links worth reading, although I must admit, as passed by our Congress....much like gas, in a rears...lol!

Selling Stocks Short (and appropriate SEC links, blah blah.)

http://www.turbotax.com/articles/SellingYourStocksShortTaxEffects.html?source=ttcom4home1#basic

Key Line..."Constructive sale rules only apply if you have a gain on the original stock."

http://www.asensioexposed.com/longshort.htm

A Fun read on a trader nailed for being dumb and dumber and yet got away with a bunch of stuff.."

KEY QUOTE:

"Q. Can the long/short strategy ever fail?


A. Of course. No strategy is foolproof. And this one often requires good timing--having the foresight to cover the short position before a company's fortune makes it too attractive to fend off enthusiastic buying. But obviously, the strategy would not still be with us were it not working for those who use it.


Q. Is the strategy more effective in particular kind of stocks?


A. Yes. It works best in thinly traded stocks. Targeted companies are often small firms in the R & D stage. Short-sellers who profess a particular concern about "scientific fraud" may be putting a clever spin on the real reason they target biomedical and technology stocks. Companies in these sectors often take a decade or more to generate revenues, for the simple reason that good science can take a long time. Their stocks are often thinly traded during these years. This makes them vulnerable to those who play the long/short game. A few institutional players acting in concert can literally take control of trading in these stocks."