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To those who are thinking about shorting it when that becomes available: If you buy LinkedIn at $100, the most you can lose is $100. But if you short at $100,
by stevenj 15y ago
To those who are thinking about shorting it when that becomes available:
If you buy LinkedIn at $100, the most you can lose is $100. But if you short at $100, your loss can be infinite.
As a short seller, you could run out of money before the promoter(s) runs out of ideas.
Being short a stock, while seeing some promoter taking the stock up would be quite agonizing.
You may be right about it being overpriced, but that's not enough. When it comes to shorting, it's the timing that you have to get right. And that's really hard.
It's okay to just sit this out.
- supercanuck 15y agoput another way ... The market can stay irrational longer than you can stay solvent. - John Maynard Keynes
- DarkShikari 15y agoIf you're long LinkedIn at $100, the most you can lose is $100. But if you short at $100, your loss can be infinite. This is what put options are for.
- stevenj 15y agoThat's true. But IMO, to make it worthwhile, you still have to get the timing right. That's the hard part. Identifying a bubble is relatively easy. What you don't know is how big it'll get and when it'll pop.
- Gaussian 15y agoDefinitely a ripe spot for put options... but there are no public put/call options available for LNKD yet, as far as I know. It's impossible to price an option without having some history of the underlying security's volatility--and we have zero history for LNKD. The spread would have to be gigantic to lure market makers into such a trade--and, rightly so, investors aren't interested in gigantic spreads. If you want to get bearish on this you'll have to strap on your helmet and just short it.
- ecq 15y agoLEAPS, which are basically long-term options, allows you to speculate longer (1+ years).
- smanek 15y agoJust buy a put with a strike at $100. Accomplishes effectively the same thing as the short, but limits your downside.
- ScottBurson 15y agoIt's true. I mused publicly about shorting it in a previous thread, but you're right, the timing with shorts is tricky. Also, shorting a company that seems likely to eventually catch up with its stock price, even if that takes longer than its current stockholders expect, leaves one with a relatively limited profit expectation. Long-term shorting is best done on stocks that have a visible shot at going to zero.
- robertmrangel 15y agoAnother way to "short" is to buy put options. The most you can lose is the price of the option. Are there any puts for Linked In? I'd buy those... maybe.