Short Cover Payout

General PPX Discussion

Having shorted a stock and all going well. It occurred to me to ask a question. If the IPO expires in my favor I have 2 options cover my position before it expires. Or let it expire. The question is since the payout is $100pop if the option is successful as stated. Why not the same if the short position is the winner? Is that actually the case?

3 Comments

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jamesmicoff

from Jacksonville, Florida

10/28/08 at 2:55 pm

James Micoff actually enjoying this

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mexican fisher

10/28/08 at 6:23 pm

hey james if you need help log on to ppxchat.com and log in to the forums and ask away!

see you there

NCFisher on ppxchat

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Kubie

10/29/08 at 9:20 am

James,

If I am reading your question right you are asking why you should wait for a stock to close short at 0. When you short a stock, say at 50 as the price goes down you start showing a profit if the price goes up you take a loss. That much is simple enough right? OK, if it closed at 100 you'd have a total loss. If it closes at 0 you have a $50 profit on top of the 50 you spent to buy it so you would be credited with $100,000(ppx bucks damn the luck)assuming you hold 1000 shares. If you covered the day before it closed and the price was $10 you would only profit $40 and would be credited with $90,000. As you can see I left the cost of each transaction out. It cost you $250 to short in the first place if you cover it you pay another $250 which you don't pay if you just wait till close.

If that doesn't cover your question let me know.