Boyd Stone
August 10, 2002, 08:28 AM
Hi,
You wrote:
> The amount of return you want will determine
> whether you buy before you sell, buy after
> you have made the sale or sell without
> actually buying.
You also wrote:
> I do not know how to cover my downside with
> Shorting Stock or Trading Futures and this
> is why I consider them risky.
In chatteling I know you guys trade futures. When you agree to sell someone a black 1991 Cadillac for $5000, to be delivered in two weeks, then take the $5000 and buy a Caddy that fits the description for $4700 and pocket the $300 profit, what you've done is sold a futures contract. You sold something you don't own, and whether you make a profit or not depends on if you can "buy back the contract" for less than you sold it for. In futures trading you win if you either:
* Buy Low and Sell High, or
* Sell High and Buy Low.
Either way is equally good.
Best,
- Boyd
You wrote:
> The amount of return you want will determine
> whether you buy before you sell, buy after
> you have made the sale or sell without
> actually buying.
You also wrote:
> I do not know how to cover my downside with
> Shorting Stock or Trading Futures and this
> is why I consider them risky.
In chatteling I know you guys trade futures. When you agree to sell someone a black 1991 Cadillac for $5000, to be delivered in two weeks, then take the $5000 and buy a Caddy that fits the description for $4700 and pocket the $300 profit, what you've done is sold a futures contract. You sold something you don't own, and whether you make a profit or not depends on if you can "buy back the contract" for less than you sold it for. In futures trading you win if you either:
* Buy Low and Sell High, or
* Sell High and Buy Low.
Either way is equally good.
Best,
- Boyd
