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Author: kuhlfool One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 44593  
Subject: Re: Quick & Dirty....... Date: 3/25/1999 5:46 PM
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This is my first time on this board and I'm trying to learn more about shorting.

What is pyramiding?

It strikes me that as your short falls in value, it takes a greater drop in price as a percentage to realize the same return in $.

ie. short @ $10, price drops to $8 (20%) make $200/ 100 shrs. Price drops another $2, represents 25% drop, but only make $200. This problem is compounded as the stock price falls, $4 to $2 (50% drop) only nets $200.

Should you increase your short position periodically so that you dollar cost average? If so, how much is reasonable? Does this unnecessarily increase your risk if the stock rebounds?

Thanks

Ant


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