can you buy a stock hoping it will go up and short sell it? so if the stock doesn't go up u make money if the stock jumps down and just cancel the order to buy for long? what about with options? can i buy puts and calls on one stock to increase the odds of making a better return? hope you guys get it.
Being simultaneously short and long the same stock (or anything else, for that matter) is just an offset. You don't make money if it goes up and you don't make money if it goes down as long as both positions remain open. Actually, you lose because you've paid a commission. As for buying puts and calls, you can do that. If you think the market is going to move big, but you're not sure which way, you can enter a straddle (long put and call at the same strike) or a strangle (long put and call, but with the call at a higher strike). Just keep in mind, though, that if you think the market is going to increase in volatility (lke because of an FOMC meeting), then the market has probably priced that in to the options so they won't be cheap.
if I am understanding your post you are talking about a working order not a completed trade as you state just cancel the order to buy. you can place working orders both long and short on a stock at the same time with no problem. If you wish to have trades both long and short in a stock at the same time you need to set up that style of trading account. ie. you could open an institution account with IB. This allows you to have several accounts all trading individually with their own margins and bp but still under the one master account enabling you to trade both long and short in the same stock at the same time. In our case it serves the purpose of allowing a trader to trade as a day trader in the stock plus hold a long term position trade in the direction the trader believes the stock is going within their risk management. I believe you are talking about a straddle with reference to options. We write calls and puts within the stocks current trading range to receive the premiums and trade the stock long and or short while being hedged. I also acknowledge the hedge is limited as we have written the options versus buying. We do buy the options if the sentiment changes and we see a possible breakout into a new trading range. w
It is not illegal to be short and long the same stock simultaneously. Some institutions do that to defer their taxes. You lock in your gains without showing that you have made a profit on paper. That's pretty much the only reason. You're better to be long a stock and short the index if you want a good hedge.
If you buy a stock, and then short sell it....you are "flat" with no position and a locked in profit (provided you shorted it higher than the buy price). Buying puts and calls are seperate bets, both can be very costly...all you can lose is everything you paid for them, not much consolation in my mind. Don
definition of short selling against the box " The act of short selling securities that you already own. This results in a neutral position where your gains in a stock are equal to the losses. For example, if you own 100 shares of ABC and you tell your broker to sell short 100 shares of ABC, you have shorted against the box. what are you referring to?
Quote from rcj: short against the box is NOT simultaneously holding a long and short position in a stk. -------------------------------------------------------------------------------- definition of short selling against the box " The act of short selling securities that you already own. This results in a neutral position where your gains in a stock are equal to the losses. For example, if you own 100 shares of ABC and you tell your broker to sell short 100 shares of ABC, you have shorted against the box. What are you referring to? .................................................................................... Z ... Yes, of course, that's pertty much the standard definition of what it means to " short against the box". An explanation of shorting the box is not at issue here. You are NOT taking/holding two positions at the same time when you short against the box. When you do the second transaction the result is you have no position.(see Don's msg above) As someone pointed out earlier one can certainly initiate two orders, say, 100sh short and 100 sh long for the same stk. Seems like i recall on ET someone saying that, on their trading platform that both sides of an executed box would sit/show on their trading page. But, the reality is they are flat as Don stated. On IB's platform, executing a box will "zero" you out. No position. Of course, one could, with identically registered accts at different brokers, hold a long position in one and a short position in the other. I believe this could bring about fines(at least) if caught. ... rj