whats the latest word? anyone found a substitute yet? It seems to me the quick scalping game is dying sooner than anyone expected.
Don was mentioning something about SAS Stock allocation System, i heard they have a handful of stock. I am waiting also to see what happens.
I heard some firms already provide month long conversions, but they are very expensive. For example for 1000 shares of 50$ stock for a month you would have to pay $1,500. If abyone have found more reasonable alternative i would appreaciate a heads up.
Wow! $1500 in your example works out to $1.50 per share for a month long conversion. That's obscene. It works out to around 7.5 cents per share per day. Way too much. Check out Don's posts for the Stock Allocation System http://www.elitetrader.com/vb/showthread.php?s=&postid=383657#post383657. Based on that alone, you could buy those each day for a little more than one sixth the price....
I was wondering if any other company still allows the use of conversions as Bright does. My company said to me that the SEC rule includes conversion and are therefore not permitted. I don't know if there are different types of conversions. The one I have is where you buy the Put sell the Call and own the underlying stock. I have it until march 2004 but have to get rid of it now. Is there still a grey area? Don would not admit still using them if they would be illegal?? Thanks!
I have spoken to Bob Bright about this and he feels conversions are legitimate even if the stock is used to sell downticks. My legal counsel (at $400/ hour) has spoken to the SEC. SEC makes the point that if your intent is to get around the uptick rule, it will probably take the position you are in violation of the anti-fraud provisions. Remember the word "scienter". It means "intent to deceive." Scienter is NOT a requirement for violation of the anti-fraud provisions. So, regardless of your intent , you can be violating the law. The best advice I have is not to use conversions to sell downticks at the present time.
or what that man's law firm thinks is not really important when it comes to going against any gov't agency.It is strictly interpretation and precedents. This SEC interp letter is so black and white about subterfuges to the uptick rule. When sh#t hits the fan, they will interpret the SEC letter and if you are on the wrong side of the interp you are royally fu##ed. Has nothing to do with fraud or anything nefarious. IRS interprets laws daily- as to what things to allow/disallow, what loopholes to close, what grey area deductions to allow or penalize. In the end you are at their mercy.
Bullets and conversions are not illegal; the use of them to get around the short sale rules is. Don's use of an internal SAS based on the firm having some big S&P 500 stock versus future package on is not a way around it. If you use hedged long stock to get around the uptick rule, you are violating the rules. If you are a registered person, you as well as the firm will be on the hook when the SEC comes a calling. Good luck.