Re: Bubble Boy.

Gregory Alan Bolcer (gbolcer@endTECH.com)
Sun, 09 May 1999 21:27:47 -0700

There's different mechanisms for buying and selling puts of
actual stock and buying and selling options. I don't understand
the distinction you are making between puts and shorts.
It's all from the perspective who writes the contract and
how much margin you need to put up. You can sell a stock
you don't own with options just as easily as selling the
actual stock. You can also be an option writer or an option
purchaser.

Greg

Kragen Sitaker wrote:

> You're thinking of puts, which are sell options, and are (as you say)
> cheap and useful to protect your stock holdings, and essentially insurance.
>
> Shorts are a different ballgame altogether; shorting is selling a stock
> you don't own, hoping to buy it later at a better price and take home
> the difference in your pocket. Shorting a stock means the amount of
> money you lose is limited only by how much the stock rises. (The
> amount of money you gain is limited by how much you sold the shorted
> stock for.) It doesn't make sense to short a stock you hold, as far as
> I can tell.
>
> Whether or not it's a reliable metric for predicting stock prices, I
> don't know. I'd be willing to bet on "no", because if you had a
> reliable metric for predicting stock prices, you'd be very rich very
> quickly, and as soon as you (or someone else who understood that
> metric) controlled a significant amount of the money in the market, the
> metric would no longer be reliable.
>
> --
> <kragen@pobox.com> Kragen Sitaker <http://www.pobox.com/~kragen/>
> TurboLinux is outselling NT in Japan's retail software market 10 to 1,
> so I hear.
> -- http://www.performancecomputing.com/opinions/unixriot/981218.shtml