This is one of the most important things that those "if you're so sure Apple/Gold/etc is overvalued why don't you short it?" people ignore.
Maintaining a short position is expensive. And even if you can afford it, holding it for too long can kill any upside you get when it finally does collapse. I can say that Gold is overvalued but I won't short it, and be perfectly consistent in saying that, because I admit that I have no idea how long it'll take for the bubble to pop.
Short positions on companies like Netflix should be initiated using capped-loss derivatives instead of assuming the unlimited risk of selling the company's stock short.
Buying a long-dated put option is often the best way to short something, assuming you have conviction.
Comments
This is one of the most important things that those "if you're so sure Apple/Gold/etc is overvalued why don't you short it?" people ignore.
Maintaining a short position is expensive. And even if you can afford it, holding it for too long can kill any upside you get when it finally does collapse. I can say that Gold is overvalued but I won't short it, and be perfectly consistent in saying that, because I admit that I have no idea how long it'll take for the bubble to pop.
>Maintaining a short position is expensive
Short positions on companies like Netflix should be initiated using capped-loss derivatives instead of assuming the unlimited risk of selling the company's stock short.
Buying a long-dated put option is often the best way to short something, assuming you have conviction.