Replies to post #31282 on NorthWest Biotherapeutics Inc (NWBO)

[f3tt3f]

Pretty solid thoughts, mewards.

[maverick_1]

Mewards et al: Shorts DO hedge with out of money Call Options (Hedge Funds probably purchased April $7 Calls late 2014 and early 2015). And I totally disagree with your repetition of

The only other theory that I don't accept is that its a hedge for the shorts

What you've espoused of Hedge Funds which are short NWBO are NOT buying calls to hedge their short position is contrary to ALL my investing experience that span close to 4 decades as well as fully supported in lots of commentary
https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=hedging+a+short+position+with+options
exemplified in none other than ShaeffersResearch: which coincidentally explain and underscore Pyrhnn's recent put strategy:
http://www.schaeffersresearch.com/schaeffersu/so_you_want_to_trade_options/strategies/hedge_your_bets.aspx

Cover your shorts
Our last hedging alternative is a deviation from the rest, because it centers around calls, rather than puts. Short sellers might catch a lot of flak and take a lot of blame, but they need to hedge sometimes, too, just like everybody else.

As you might have heard me and my colleagues mention, we generally prefer put options over short selling. However, rest assured that I won't judge you if you decide to sell a stock short. I will warn you, though, that it can be a quite risky strategy if the underlying stock unexpectedly rallies.

So, how do you hedge a short stock position? Simply purchase a long call. By buying to open a call option on the stock you've shorted, you obtain the right to buy the shares at the strike price of the contract.

I recall a true story of how UNhedge short positions nearly DESTROYED a short seller Robert Wilson:
http://www.bidnessetc.com/business/his-last-bow-robert-w-wilson-commits-suicide/

In 1978, Wilson took up a short position in Resorts International at a price of $15 a share, according to Forbes. Wilson had bet that the stock would fall. Instead, the shares rose to $20, and had reached around $190 by the end of that year. Wilson was covering his short position, incurring massive losses buying the stock back at appreciated levels.

Wilson went on a worldwide vacation for two months (pre cell phone days) and his short positions went against him to the tune of hundreds of millions of dollars where his primary broker forced the cover to protect the short seller and the brokerage firm.

Moreover it has caused the closing of a fully dedicated 100% Short Fund, the notorious & famous short seller The Feshbach Bros (which I brought a few successful short ideas to).

The essence and applicability of hedging a position is a tenet!especially when the insurance is cheap vs the unhedged exposure

AND

for those still unconvinced reread and DIGEST this tome on the life of a short seller recently in post 30038 by gifted Hedge fund manager Whitney Tilson (even AFTER the 60 Minutes piece on Lumber Liquidators he shorted MORE! and is profiting handsomely.)

End of subject.