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Just because you believe a stock will eventually be at a lower price than it currently is doesn't mean it makes sense to short it unless you also think you can
by georgemcbay 14y ago
Just because you believe a stock will eventually be at a lower price than it currently is doesn't mean it makes sense to short it unless you also think you can time the drop perfectly, and if you think that you're a fool.
The virtually unlimited downside of shorting is a lot of risk that has to be factored into any decision and thus shorting isn't to be taken lightly even if you're pretty damn sure of your opinion.
- eru 14y ago> doesn't mean it makes sense to short it unless you also think you can time the drop perfectly, With the right options, you don't have to time it perfectly. Just good enough. You can limit the risk of shorting relatively cheaply by buying way out-of-the-money call options.