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NorthStar Realty Finance Corp. Message Board

  • dar200 dar200 Aug 29, 2013 3:21 PM Flag

    OT--my very first short--OT

    Well, after over 30 years in the stock market, I just made my first short sale. I did it because I wanted to see what it looked like in my Fidelity account. I sold 1,000 VZ short because I think it will go down if the buyout talks fail or it will go down because VZ pays way too much to buy out Vodaphone. It won't go ex div until Oct, so I may not get the chance to see what a pay in lieu liability looks like.

    Within the same account number, you can have a cash account (type 1), a margin account (type 2) an option account (type ???) and a short account (type ???). The cash proceeds show up as a credit (positive) in the short account and the shares are market to market (last trade) as a liability (negative). The short account then has either a positive balance (proceeds exceed last trade) or a negative (price up since short).

    If we get an end of day selloff I might make it a dinner trade or I may watch for an outcome of the talks. Never been here before and am down 100 bucks that like paying twice for dinner??

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    • Yesterday, 9/5, my buy to cover settled. Last night Fidelity transferred my profit to my margin account thus reducing my margin debit (loan). The cash from the short sale settled on 9/4, but that stayed in the short account while I continued to pay interest on a higher margin loan.

      Now I'm curious to see how this works holding a short position through an ex-dividend and payment date, so I'll probably do it again with a very small amount of money. This really turns a long head around. 30 years of Pavlov's dog salivating on a rising stock price. I'll have to find out if my aging mind can handle a 180 on reacting to the bell.....or worse, doing both at the same time, depending on the position.

    • I see said the blind man. Here's how Fidelity makes more with a short sale. The cash from the short sale is credited to the short account, not to the margin account where it would pay down margin debt on the settlement date. I don't think the cash in the short account earns interest (but fidelity does by loaning it to somebody else) while I keep paying margin interest on the cash credited to the short account.

      In any event, I needed a dinner trade for tonight, so I took it by closing the vz short.

      I think I'll do it again some day and hold the short position through an ex dividend date just to see how it works. But this is kinda hard on the mind. Over thirty years looking for oversold and now I must watch for overbought in a position I'm not long in the taxable account because short against the box (meaning you are also long the same security) is considered a taxable sale of the long position.

      This was interesting. I got a dinner out of it instead of drowning underwater, like so many NRF shorts are doing.

      • 2 Replies to dar200
      • All shorts are margin transactions. I believe that means you pay interest on the value of the stock you borrowed, because the stock, and hence its value, is on loan to you.

        One thing I've noticed about all margin transactions, long and short, is that they impose a short-term outlook on your trading. I've always been looking for nickel-and-dime profits on margin transacitons, whereas the stuff I put in my cash account stays there with a long term mentality.

        I know that's a purely psychological distinction between margin and cash, but it's an important one nontheless.

      • I am glad it worked out for you. I sold all my aamrq this morning for a 37% gain in 10 trading days. I was following the situation but Govt involvement always makes me nervous. Your post on this board pushed me over the edge to pull the trigger. Thanks again, I owe you one

    • I have never shorted a stock either with only about 20 yrs in the market. Anyway, OT to you Dar - how are you handling aamrq? Are you going to hold through possible exit from bankr or sell the pops like today? Thx long aamrq and nrf

      • 1 Reply to saacoo3
      • I'm out of aamrq. I flipped it 7 times in 3 days making over 10 grand for the Christmas fund. Watched it for a few days and did not see the dip I wanted. I've been out since the first week.

        Anybody who bought below 3 should be smiling today. I still think this is a political move and there will be a political solution, like give up some gates at National. News of settlement talks should give a 50 cent boost, imo. Settlement will mean another 50 cents, minimum. Stalemate on talks = go to trial = delay = reduced pct opportunity.

        Get in at 2.60????.....sell at least half for a great flip, imo More can be had if things go right, but bird in hand is a nice bird to take.

18.39Apr 1 4:04 PMEDT