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I'm less familiar with put and call options , compared to common shares and selling short; But one of the challenges to sell short, compared to buying long, is
by jmccaf 3y ago
I'm less familiar with put and call options , compared to common shares and selling short;
But one of the challenges to sell short, compared to buying long, is that your upside is limited and liability unlimited.
Whereas the inverse for common stock, upside is unlimited and liability is limited.
If you place 176 bets and win big 8,
I think will be more successful buying long , like the venture capital model.
- oh_sigh 3y agoThere are options for limiting your losses, eg a bear put spread - buy put options at strike price X and sell put options at Y where Y < X.
- LatteLazy 3y agoPeople say this, but of course if you invest via a hedge fund (or other similar corporate structure), your total downside is just whatever you invest. The fund maybe run up 1tn, or 1000tn in loses somehow, but that just means a lot of disappointed creditors meeting limited liability...
- idoh 3y agoIf you buy an option (the right but not obligation to either buy or sell at a certain price), then your liability is limited to what you pay for it.