Short selling shall be defined as selling a stock which the seller does not own at the time of trade 2 All classes of investors viz reta il and institutional investors shall be permitted to short sell 3 Naked short selling shall not be
of Socialized Credit Losses. VALUEx. Vail Conference. June 17, 2011. Dan . Amoss. Editor, . Strategic Short Report. http://strategicshortreport.agorafinancial.com/. Approach: top-down (macro) analysis identify most attractive sectors for short ideas.
The seller or (writer) of a Call options contract is obligated to deliver the underlying the underlying asset at the agreed upon price. Short Naked Calls has . UNLIMITED. risk of loss. The seller (writer) of a Put option contract is obligated to .
Focusing on Building Relationships. 1. 6. th. Edition. David J. . Lill. and Jennifer K. . Lill. DM Bass Publications. A Career in Professional Selling. Learning Objectives. Appreciate . the role of selling in our economy.
Learning Objectives. Define personal selling and describe its unique characteristics as a marketing communications tool. . Distinguish between transaction-focused traditional selling and trust-based relationship selling, with the latter focusing on customer value and sales dialogue..
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Presentation on theme: "Short Selling"— Presentation transcript:
Most people assume day trading is buying a stock at a low price and selling it at a high
price. It may be that, roughly, 90% of traders buy long. This is just a more commonly
known way to trade on the market.
However, you can also make a
profit by placing a bet against the stock. All you need to do
is sell the shares high and buy them back low. That is called short selling. Basically, you are
betting the current price of the stock will go down. Short selling makes sense when a stock
gative news or any other kind of negative catalysts.
Selling short vs. Buying Long
It’s important for you to know that short trading implies higher risk. When you take a
negative position, you could lose more than you own. Let me clarify that statement by
giving you an example.
When you want to buy a stock and go long, you can only buy as much as your capital allows. And if the trade goes down against
you, making the
case scenario happen, the maximum amount that you can lose is 100% of your investme
nt. To be clear, if you trade using a margin loan, a
100% loss could be more than the cash you have in the account. Nevertheless, if you buy 100 shares at $1/share and the price
goes down to 0,
you lose the entire $100.
But when you’re selling short, you
are borrowing the shares that you’re trading from your broker. Let’s say you started with 100 shares at
$1/share, and the price went up dramatically, hitting the $5 mark. When you took your position, you borrowed the shares, inve
sting $100. But
once the st
ock price hit $5/share, your total investment became $500 since you still have to buy the shares that you’ve already sold at
This way, you have just lost $400 on your initial investment of $100.
This may sound unrealistic to you right now, but w
e’ve recently seen stocks go up 1400% and more within one day. As you can see, you can lose
your money very quickly when short selling. To avoid that, you want to have your trading plan in place. More specifically, y
ou need to have an
exit strategy. If yo
u don’t know when to exit safely when a trade gets out of hand, you can effectively lose your account in a matter of minutes.
At Cobra Trading, we want to make sure that you’re prepared for all situations in advance. We want you to know what you’re ge
into and feel confident when trading.
HTB and Borrows
Another thing that isn’t discussed often enough in relation to short selling is borrows. When you’re trading, some stocks are
to borrow. What does that mean?
Before you ent
er the trade on the short side, you need to borrow shares from your broker. If the stock is HTB, you’ll need to request those
shares and you may have to agree to an upfront locate fee, typically a flat amount per share. Now, every broker is different.
with Cobra, you may be able to locate the shares directly through your platform and also have access to us using a one
one chat. We are
often capable of giving you these borrowed shares at no additional cost. We do it because we strive t
o provide the highest level of customer
service. And if we can’t get you those shares without the upfront cost, we’ll make sure to try and get them at the lowest pri
Bulls and Bears: Which One Are You?
So this is a brief introduction to short
selling, otherwise jokingly named trading on the dark side. It’s exactly the opposite of traditional trading
when you buy low and sell high. Instead, you sell high and then buy low.
Alternatively, you might have heard people talk about bulls and bears. Bu
lls are long buyers and bears are short sellers. If you want to be called a
bear and you’re willing to go against the grain while betting against the 90% of other traders, selling short may be for you.
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