weekend charting 29-01-10, page-143

Kookeboy,

with shorting always remember that the downside is unlimited. Playing long you stand to lose a maximum of your investment. While playing short your potential loss is not limited by zero, but rather by infinity.

I quite commonly short things by CFD in which I also hold long equity positions. This is referred to under the heading of hedging.

There are however equities which I am unable to short by CFD. These I commonly short by proxy within the sector, if a suitable proxy for the equity is available. If it is not, using options is a viable method, as the option provider will the short the stock for you for the amount of the options. The effective spread, represented by the premium, can be steep, but it also limits the downside.

Also check with your provider the position on franking credits, if the dividend you are covering is franked.

...and the posts were great, thankyou, hope to see more of your work.

T91