Prohibited from transferring the stock and completing the sale. However, seem out of place in an otherwise well-reasoned thesis.In spite of these caveats, I'm not a complete skeptic.
The more I research the market, the more I see the need for more than one type of hedge, because when you take a look at what's going on with the S&P 500 or the S&P MidCap 400, there are some important factors that can create risk and volatility for both long- or short-term investors who need to hedge their risk and for clients that need to hedge their risks. It is the hedge vs. risk equation. In this particular case, the author's premise is correct, but it could have been made worse with another assumption: that short-term traders could not take advantage of a price spike to buy the stock. It is very easy for shorts to buy at the top or bottom of a move, when their price matches the previous move. This is known as overbought×oversold conditions. However, in the example above, the author assumes that the short-term price will still match the last drop, and therefore he may be missing the opportunity for a trade here.
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