Hog is on his own planet, not an unusual circumstance, as he is talking about futures which are not regulated by the sec. What you're suggesting is illegal and will be attacked under rule 10b-5 . The question will be one of intent. http://www.seclaw.com/seclaw.htm The legal course of action open to you is to hedge with stock options/ single stock futures.
You can do that, but why? Most retail firms don't pay you interest on the short stock money. You still have to mark stock short (unless exempt) for the sales in this scenario anyway. Don
I am getting confused here. Banjo mentioned it is illegal while Don says can. What is the real answer? My main purpose is hedging the overnight gaps for stocks and up till the next morning to decide whether my bias in direction is still true. I think options is not that good a bet, that's why my preference for long and short stock at the same time. Can someone please shed some light? Thanks to all those who have answered and will answer.
ask your broker and they will say no, does that answer your question? and yet we know some people do it anyway.
So it is really illegal. The way to overcome this is to do it with separate brokers but then one may run into trouble with the IRS. Dang Thanks nkhoi
Any INTENT to manipulate stock market prices is ILLEGAL... It does not matter if you succeed or fail... The law is always about what you INTENDED to do. That's the starting point... And then there are ** specific regulations ** designed to prevent stock price manipulation. Long/short same stock is called "short against the box". Traders will often NOT close out the short side because of the relative difficulty in... (a) borrowing stock (b) shorting stock So you "close" a short position by buying the same amount long... You end up with a "boxed" position... And can go back short anytime... Without borrowing stock or shorting... Simply by selling your long side of the box. If you are net short 5,000 shares... Say Long 5,000 shares if GM and Short 10,000 shares of GM... You can ONLY sell those 5000 shares on an uptick... or you are breaking the law. Circumvemting the uptick rule in this way is ** much more profitable in illiquid stocks**... Because illiquid stocks are easily manipulated. People do it all the time... Most clearing firms just look the other way when you do this... They just don't keep track of boxed positions... Almost no one ever gets caught... But if you do... NASD fines start in the $20,000 range or so.
Clearly, that is not true. There is no net position of 0. Your account will show 1000 shares of XOM and -1000 shares of XOM. Two separate positions. You could then "buy to cover" 500 XOM and minute later "sell" 500 XOM. Your account is still showing 500 XOM and -500 XOM. Two sepatare positions. Nothing illegal about that. You can do this all day long. Circumventing the uptick rule - that`s what is illegal. What he says: "If you are net short 5,000 shares... Say Long 5,000 shares if GM and Short 10,000 shares of GM... You can ONLY sell those 5000 shares on an uptick... or you are breaking the law." ______________________ I know there is one retail broker without "buy to cover" button. Only "buy" "sell" "sell short" buttons. So technically you can`t go short plus long there- he covers your shorts automatically when you "buy" shares.
I heard that alot of brokers allow boxed positions but you CANNOT sell the long side first That kind of defeats the purpose of circumventing the uptick rule Does anyone know of any brokers who dont have these restrictions?