Reply to Shorting against the box- what was DH thinking?

Forum Index » Money and Finances

Reply to "Shorting against the box- what was DH thinking?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous]This looks like a failed Covid trade, he was long 1500 DIA  value was $362K in early 2020. He wanted to protect that at little cost, put option protection cost was  going up due to the market slide in early 2020. So he borrowed and sold 1300sh to be neutral and protect his gains at that point.  Hence short the box.

For whatever reason(s), he did not take the trade off.  That was a strategic error, it is a trade, it went against you, have to close it out.  Typically people short positions for weeks or maybe months, but not years.  Sometimes when you short positions the brokerage will charge you an interest rate to borrow the shares, that is a cost but in your case with the DIA maybe its nil.  Plus short shares must pay the dividend so that is addl cost.

I'm assuming this is part of a larger portfolio. He needs to close this short position out with shares of DIA or $$$, or a combination of both.  So now he needs to look at the tax consequences of whatever method he decides upon.  [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics