Re:Tesla Faces U.S. Criminal Probe Over Musk Statements
by kasey_junk on Tuesday September 18, 2018 @01:06PM
(#18017026)
Pedantically shorting doesn’t have to be borrowing the underlying instrument. Put options are another way to trade on the idea that a stock will go down. I’d actually bet it’s the more common way. It would still be colloquially referred to as being short.
Re:Tesla Faces U.S. Criminal Probe Over Musk Statements
by mikestew on Tuesday September 18, 2018 @01:56PM
(#18017584)
That's actually the opposite of "pedantically" given that you're playing loose with the definition. Pedantically, shorting is selling a financial instrument you don't own, with the idea (though it is not a requirement to fit the definition) that you'll give it back later by buying at a price lower than it is now.
What you described is options trading, one method of which hedges against declines in stock price. Yeah, one could take a "short" position by buying puts, but it can be argued that a short position is not what puts were originally designed for. In contrast to short sellers who obviously intend for the price to go down, or they won't make any money.
I do question whether puts are the "more common way" given that they have an expiration. You can hold on to a short sell as long as you can pay the interest and the loaning party doesn't want their shares back.
Re:Tesla Faces U.S. Criminal Probe Over Musk Statements
by Boxxed on Tuesday September 18, 2018 @02:39PM
(#18017950)
Arguing over the definition of Pedantic. I think we've reached peak HN.
Re:Tesla Faces U.S. Criminal Probe Over Musk Statements
by JumpCrisscross on Tuesday September 18, 2018 @06:31PM
(#18019847)
"Short selling" refers to selling borrowed shares. "Being short" is the opposite of "being long" and refers to exposure, irrespective of the instruments or methods used to attain it. TL; DR one can be short through options or short selling.
If so, they make money. If not and the price goes up a bit, some shorts are forced to buy at the higher price to limit their losses. That pushes the price up further, forcing more shorts to buy, etc., causing a "short squeeze" where the price rapidly shoots up very high, "destroying" a lot of shorts.