By Linux Today reader Ray
Chabot
[ The opinions expressed by authors on Linux Today are their
own. They speak only for themselves and not for Linux Today.
]
For those of you lucky enough to get in on the Redhat IPO or who
bought early on, I want to make you aware of a trade type known as
a “STOP LOSS” or “STOP LIMIT” order.
As I write this, RHAT is trading at about $85, representing a
great profit. However, if the market goes sour or if profiteers
start dumping shares then the price could easily halve itself in a
matter of minutes. Even if you were watching you might find it
virtually impossible to get a “SELL” order in on time.
What you can do is set a “STOP LOSS” order to protect yourself.
What this means is “sell X number of shares if the price falls
below ‘y’ dollars.” You can do this on a daily basis or GTC (good
’till cancelled). For example you might set a “STOP LOSS” order on
RHAT at $75 now so if the stock goes into a nosedive you will
preserve your profit. You can then re-buy when it stabilizes.
This profit is known as “capital gains” and will be reported to
the IRS.
Be vigilant.