Help , I'am a new IB Trader, and I'am going short on EBay with 100 per cent margin, holding 10,000 shares. My share price is about $ 43.00, due to the market movement upwards. I do not want to buy cover right now as it would create a great loss for me. I would like to buy 100 December Call Options, with a strike of $35.00 as a hedge to cover my short position, but I'am not for sure exactly how to do this...... Will this work ? If it does work, then When and how do I purchase and exercise the contracts ? Do I need to place $350,000.00, in my account to cover the share purchases ? Should I call a Broker for help with this ? Thank you very very much for your input ....
you are in over your head. you should probably cover and reconsider the position before you get deeper in the hole. options require cash and you are already margined 100%
Thank you all for kindly reply. I do have additional funds in home bank to cover option's cost. and I'm planing to liquidate half of my position tomorrow or next couple of days. I'm just wondering if I could buy call option to minimze my loss. Waiting for more of your sugestions. Thanks again
No reason to get out right now since you already let it get to this point. Best bet is to hedge it with an at-the-money call first thing tomorrow and hope for a reversal.
Its the wrong time of year to be short Ebay, but if you can wait awhile you should get out with a good profit. I'm thinking February or March unless Ebay has a good Christmas, then could take till late spring to cool off. At 43 you don't have a big problem, it could go there tomorrow quite easily. What I am really thinking is get the hell out and recover your loss on another short, but not something that is going to bump up with holiday news. Short Apol at 75 or even Sbux is high. My wife says Cost is peaking, hope she's right given her position. Did you see that Chargers game today?
nkhoi, that's why I said 8 months. I figured in that he has excess cash to play with. After a few bad trades he'll slow down. He'll still make lousy trades, but they'll be spaced a month apart. That's how long it takes to forget the pain.