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Playing & Trading Strategy

In my WBROX fund port I reshort all the time (click through for thought process)

Posted by: MisterTony on Jun 05, 13:47 in response to PVL Admin's post I do not agree with this tip.

Usually I try not to be greedy on short profits...if something gets me 12-15% profit short and I need funds to buy into a new IPO (that fund has three next week) to me its better to take the profit and eat the 2% commission (1% to cover & 1% to reshort) than sell off something else and only pay the 1% commission to sell.

To me its a simply way to "raise cash" to buy other things when I think the stock will continue to go down and I don't want to reduce my position in other stocks.

Here's a good example of how to use this to your advantage.

Lets say you see the estimates come out friday for an opener and its well below expecations and should adjust to H$55.00

So you max out and short the movie when its priced at H$69.65.  By Saturday afternoon its dropped to H$61.83.  If you reshort then, you'd add about H$1.4 million back to your cash balance to use to buy the Saturday IPO for example. 

Then on Sunday afternoon the stock adjusts to H$55.00 and you still make another H$683,000 in the net value due to the adjust. 

Hopefully you bought on the right side of the IPO and you made an extra 3-5% on it from the H$1.4 million from the reshort without having to change your position in any other stock.

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I've put more money into things that I can short compared to things that I can hold long.  I can realize the profits and continue to make more money on a shorted stock than a long.  My mental calc (can be off a few percent) is that the cash i'll add to my balance from a reshort will equal approximately double whatever my net gain shows in my port for that stock.





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