HOLLYWOOD STOCK EXCHANGE
THE ENTERTAINMENT MARKET
THE ENTERTAINMENT MARKET
Reshorting...
You short a $20 moviestock at IPO.
Over a period of time it goes down to $15 (and you made $500,000 profit).
You cover, for $15,000 commission.
Then you reshort for $15,000 commission.
You now have the same moviestock at the same price with $470,000 cash to invest in other stocks.
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You invest in starbond and it adjusts down 20pts.
Their next movie should make the starbond drop another 20pts, but that adjust is 3 months away.
You could, reshort that starbond so that you have the same investment but have freed your profits to go invest in other stocks.
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The lower the stock price, the better deal you are getting for reshorting.
If you have a $100 stock that drops 20pts and you reshort:
100 - 20 = $80 price = $80,000 commission to cover then $80,000 to reshort... you freed $200k but spent $160k (=$40k cash)
If you have a $30 stock that drops 20 pts and you reshort:
30 - 20 = $10 price = $10,000 commission to cover then $10,000 to reshort... you freed $200k but only spent $20k (=$180k cash)
I reshort stocks when their price gets really low (like below $5 - $10) and there is a lot of money to free up. I do this so I can see how my stocks are doing. One of the biggest mistakes players make is that their stock makes a profit (like 2mill) and then when they glance over their port and see that profit they assume they are still making profits from that stock (and most times those stocks are the ones who are "bleeding"... losing a little unnoticable profit each day that does add up over time).
Do you ever drop and re-buy to grab the lower price? And how much lower? {nm} Nov 29, 13:01
Why would you sell and re-buy and lose 2% commission? Or do you mean reshort? {nm} Nov 29, 13:40
Yes, re-short {nm} Nov 29, 15:04
yes, this is good way to built a small port {nm} Nov 29, 15:11
Back in the day, Delta House reshorted to generate cash for urgent purchases.Other than that it seems to make no sense. Nov 29, 15:20
Reshorting... Nov 29, 16:48
Are you fully invested? Even that grooming factor seems weak if you have fallow cash. Nov 30, 16:49
That is a lucid, intelligent, well-thought-out explanation. Thank you. {nm} Dec 01, 06:51