ancona
Praying Mantis
Well, the mighty AAPL looks like it;'s going in feet first today. They lost their 600 handle and are now trading at 575 and change. I wonder how many hedgies and retirement funds got their asses handed to them with this stock?
crabAAPL
- Thread starter ancona
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DCFusor
Yellow Jacket
Um, they are handing me some of their money, since I've been short crapple since about 690 or so. I didn't mention it here as it didn't seem like a precious metal, just a good trade to be short on. Risky, but hey, you get bored just watching one or two things.
DCFusor
Yellow Jacket
It means in this case that through my broker I borrowed some AAPL shares to sell at a price of X, and when I close the trade I will be buying the same number of shares (to give them back) at price Y, later on.
It's always a game of buy low, sell high, it's only a question of which order you do those in.
You might not be able to borrow shares (this happened in one of my short attempts at faceplant) or there might be interest/fee your broker charges, or the stock may pay a divvie (which you then have to pay instead) while the trade is open. Shorting is in general, harder to get right (down goes faster than up, usually), but sometimes that's the way the elephant is moving, you just have to be more nimble.
In this case it was an utterly crowded trade, narrow exit (who wants to buy what the smart guys are selling?), I'm taking advantage of the crush to leave this lowering the price I'll have to buy back the shares at later. Three digit numbers of big funds have this as their major holding...and are otherwise not doing so well - this long AAPL trade was going to save them, and now they are panicking and just trying not to lose money. All at once.
It's always a game of buy low, sell high, it's only a question of which order you do those in.
You might not be able to borrow shares (this happened in one of my short attempts at faceplant) or there might be interest/fee your broker charges, or the stock may pay a divvie (which you then have to pay instead) while the trade is open. Shorting is in general, harder to get right (down goes faster than up, usually), but sometimes that's the way the elephant is moving, you just have to be more nimble.
In this case it was an utterly crowded trade, narrow exit (who wants to buy what the smart guys are selling?), I'm taking advantage of the crush to leave this lowering the price I'll have to buy back the shares at later. Three digit numbers of big funds have this as their major holding...and are otherwise not doing so well - this long AAPL trade was going to save them, and now they are panicking and just trying not to lose money. All at once.
silvercoinrn
Fly on the Wall
short is like buying with the hopes of the stock falling. kind of the opposite of buying stocks with the hopes of investment. Lots of people short the system when they think there is a stock whose bubble is bout to burst. Apple is one of them. I told a friend not to buy apple about a month ago . they did not listen and probably have no idea that they are losing money. I personally think it is way over priced and since their main products just came out they will have a while before they can improve the stock again. I think their time may be up. Looks like steve jobs (RIP) got out at just the right time
DCFusor
Yellow Jacket
To clarify further, here we are talking about an honest, legal short - the shares existed, someone loaned them to me to sell, trusting me to give them back someday. And my broker can enforce that.
What gets a lot of PM people upset is we think various actors are "naked" shorting things like silver (JPM) or gold - without the metal ever existing in the first place.
This can drive prices down by making it appear there is more in existence than really is...and force a price down. This can also be done with any financial instrument if you're a big enough outfit and can hide the fact you didn't play by the rules long enough to pull the trade off.
Naked shorting is in general, illegal, and certainly immoral. What I do is a little different. I'm not creating a fake supply of something that didn't exist already.
I don't always short things, this just looked too juicy and easy to pass up. Look at a chart of AAPL for a couple months. It could zoom next trading day and rip my face off - just like a stock you go long can gap down, and you're had.
There's a theory that says a shorted item can go to infinity and therefore shorting is riskier. I find that bogus - trees don't grow to the sky. But it's harder since things usually go faster on the downside and often bounce, than they do on the upside, so it's riskier for that reason.
What gets a lot of PM people upset is we think various actors are "naked" shorting things like silver (JPM) or gold - without the metal ever existing in the first place.
This can drive prices down by making it appear there is more in existence than really is...and force a price down. This can also be done with any financial instrument if you're a big enough outfit and can hide the fact you didn't play by the rules long enough to pull the trade off.
Naked shorting is in general, illegal, and certainly immoral. What I do is a little different. I'm not creating a fake supply of something that didn't exist already.
I don't always short things, this just looked too juicy and easy to pass up. Look at a chart of AAPL for a couple months. It could zoom next trading day and rip my face off - just like a stock you go long can gap down, and you're had.
There's a theory that says a shorted item can go to infinity and therefore shorting is riskier. I find that bogus - trees don't grow to the sky. But it's harder since things usually go faster on the downside and often bounce, than they do on the upside, so it's riskier for that reason.
bushi
Ground Beetle
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Great explanation, thanks DCFusor! Being around the financial blogs for a while, I knew instinctively what sorting is about, but it's always good to have things explained clearly, step by step.
Moreover, there's also purely statistical reason, why its more difficult to make money on shorting stuff - on average, stocks are moving up 75% of the time, and down 25%. So if you look at pure odds, they are in favor of long, not short trades. So you can win on shorting, but you must know what you are doing and why. Or listen to guys that do know. But then, you have to know how to find ones
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Moreover, there's also purely statistical reason, why its more difficult to make money on shorting stuff - on average, stocks are moving up 75% of the time, and down 25%. So if you look at pure odds, they are in favor of long, not short trades. So you can win on shorting, but you must know what you are doing and why. Or listen to guys that do know. But then, you have to know how to find ones
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silvercoinrn
Fly on the Wall
Out of curiosity if you short a stock and the company goes bankrupt do you make money or lose???
DCFusor
Yellow Jacket
If you're short a company, say, GM, and they go out of business, it's pure profit as their stock goes to zero and "covering" your short is more or less free, plus commission.
So, thanks, UAW for buying me a nice Camaro, not that long ago. Traded it in on the Volt, though. I must be getting too old for a car that really does go 0-100-0 in a very short distance and time.
AAPL bouncing today, maybe I should have closed that trade Fri, but for now, I'll hold it and see if that was just a "dead cat" bounce - it's not off it's downtrend as defined by chart lines of peaks and dips yet.
I think a lot depends on the election. Not as much who wins (right away) but whether or not we get a clear decision. Markets hate uncertainty. If we get another hanging chad/take it to court situation, expect a big spike down till that is resolved, then ??? but probably a short pop if it all goes cleanly, at least in some sectors, depending on who wins somewhat.
So, thanks, UAW for buying me a nice Camaro, not that long ago. Traded it in on the Volt, though. I must be getting too old for a car that really does go 0-100-0 in a very short distance and time.
AAPL bouncing today, maybe I should have closed that trade Fri, but for now, I'll hold it and see if that was just a "dead cat" bounce - it's not off it's downtrend as defined by chart lines of peaks and dips yet.
I think a lot depends on the election. Not as much who wins (right away) but whether or not we get a clear decision. Markets hate uncertainty. If we get another hanging chad/take it to court situation, expect a big spike down till that is resolved, then ??? but probably a short pop if it all goes cleanly, at least in some sectors, depending on who wins somewhat.