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re: Best sources to study to learn shorting
Posted on 11/16/22 at 2:04 pm to Auburn1968
Posted on 11/16/22 at 2:04 pm to Auburn1968
As a 15 year short seller who has known high profile short sellers I must tell you. Do not short stocks other than for hedging purposes. There are plenty is short ETF’s you can buy.
0
Posted on 11/16/22 at 4:15 pm to DTRooster
quote:
That’s true but at least I know how much but you can be wrong shorting an individual stock and lose all of it plus some
Exactly. You can incinerate your account and wind up owing a brokerage big dollars. Even assuming that one would let a long put die worthless at expiration, the maximum loss is capped at the premium paid plus commissions/fees. Unlike with a short equity position, you can’t lose any more than that.
Both strategies are speculative in nature. But the short equity trade has to be dead on directionally and time wise (because borrowing fees are ongoing). The long put *could* become profitable with just an expansion in IV, with the stock remaining flat.
But like I said, neither is really my cup of tea. I make a comfortable living being on the net short side in options. But if I was going to make a bearish speculative play, it would most definitely be with options, not short equities.
Posted on 11/16/22 at 8:42 pm to Auburn1968
Market rebellion
Posted on 11/17/22 at 6:01 am to Meauxjeaux
quote:
Since this is more gambler talk than investment talk, I would recommend only shorting with house money.
Not sure if this is a serious comment or a joke… but that’s just the thing you can’t define the potential losses on a pure short. They’re unlimited… in theory anyway. In reality you’ll get liquidated at a certain level.
Outright shorting doesn’t ever make sense anyway, the absolute max you can make is 100% for an insane amount of risk.
Posted on 11/17/22 at 9:25 am to TigerDeBaiter
quote:
that’s just the thing you can’t define the potential losses on a pure short. They’re unlimited…
Never played in the area, but I've followed those short squeeze disasters (or opportunities) with wide eyes. Too risky for me in that casino.
Posted on 11/17/22 at 8:05 pm to Auburn1968
It's a risky game, i always do through options. Unfortunately with options you have to get the timing right.
Case in point LINK
Down over 100% at one point since then. Needed bigger balls and longer term puts :(
Case in point LINK
Down over 100% at one point since then. Needed bigger balls and longer term puts :(
Posted on 11/20/22 at 9:41 pm to j1897
Make sure you understand margin and are comfortable and liquid enough to meet the calls.
Posted on 11/20/22 at 9:43 pm to bovine1
I personally prefer to write options usually calls.
Posted on 11/20/22 at 10:39 pm to DTRooster
quote:
That’s true but at least I know how much but you can be wrong shorting an individual stock and lose all of it plus some
That's what stop losses are for.
Posted on 11/21/22 at 8:58 am to Goldrush25
Stop losses won't necessary save you from an overnight move. Some big PR comes out and you can be out 100%+ if you're short on an individual stock
Posted on 11/21/22 at 10:36 am to DeSantis_2024
Oh I should've made clear that going all in on an individual stock should never happen. I was assuming a trader is holding multiple different positions so one isn't going to wipe you out.
Shorting can be done responsibly but like a lot of strategies, isn't for everyone. Takes a lot of time to learn and everyone is going to make mistakes along the way.
Shorting can be done responsibly but like a lot of strategies, isn't for everyone. Takes a lot of time to learn and everyone is going to make mistakes along the way.
This post was edited on 11/21/22 at 10:51 am
Posted on 11/21/22 at 6:15 pm to DeSantis_2024
quote:
Stop losses won't necessary save you from an overnight move. Some big PR comes out and you can be out 100%+ if you're short on an individual stock
Someone had mentioned shorting DIS awhile back in another thread. This morning’s gap open up is an example of what you’re talking about.
Posted on 11/21/22 at 7:34 pm to Auburn1968
I wouldn't recommend shorting a stock that didn't have options. That way you can short the stock and then hedge yourself by buying 10%-25% out of the money call options. Shorting without a hedge is just asking for pain.
Posted on 11/24/22 at 5:56 pm to RidiculousHype
quote:All you can lose on the put is the premium. Much much less than the potential infinity loss you have with shorting.
Theta decay and volatility premium add more complexity than almost any human can handle. You can be "right" and still lose a lot of money.
Posted on 11/25/22 at 7:18 am to BlueRunner
Yes but long term odds say that premium in a high percentage of cases expires worthless. Ask yourself why the marketmaker firms always operate from the write (sell) side.
Posted on 11/25/22 at 9:34 pm to SalE
quote:
Follow Jim Chanos...
And just buy puts.
Posted on 11/26/22 at 9:07 am to McLemore
quote:
lose everything if you guessed wrong and stock price continues to rise.
Basically this.
Problem is that even if a company is overpriced and has bad fundamentals, you don't know exactly when the stock will tank.
If you're going to play games for a quick buck, it's better to find stocks with a large beta and buy those on dips, then sell on spikes.
(And beware of the wash sale rule.)
Posted on 11/26/22 at 9:56 am to Auburn1968
charts are generally up and to the right. Shorts get rekd
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