A Cover-stop violation is a situation where the weekly closing price of one of
our Short positions came in above our tolerance level. It is an indication that
the stock has become too risky to continue to hold. With Cover-stop violations,
we use a three strikes - you're out philosophy.
Note in this example with SCFS how we divested of our position using
Cover-stops to limit our risk on 6/1, 6/8, and again on 6/15 for a mere 2.2%
loss:
Note in this example with HON how we divested of our position using Sell-stops to
lock-in profits on 5/4, 5/11, and again on 5/18 for a lucrative 33.7% gain:
