Excited About a Stock Going Down
*image by CNN Money
How many people do you know get excited when their stock drops in price? Many folks who actively invest (choose their stocks individually) only going long (buyers) in the market. They buy low and sell high. Well what about selling high to open and buying low to close a trade?
This is the concept of shorting a financial instrument. It gives you one more method of making money off a stock of ETF. We are in our first short position in one of our managed accounts. We shorted Alaska Air Group (ALK) by selling a vertical call spread. Emerald Chase also alerted the trade on 03 Apr:
The trade in summary means that we speculate that ALK will remain below $62.50. You sell a vertical call when you are bearish the name. The status of the trade is that in the beginning it was not looking good as ALK actually rallied shortly after we got in. However over the last two weeks she has come back down to profitable levels and hopefully trades below $61 through 18 May.
You must have more than one trick as a retail investor and when you swing trade you can make money within the same name as the stock breathes up and down.
CAUTION: shorting can be extremely detrimental to your trading account if you short sell "naked". In the trade provided in this blog we had upside protection via buying the further out of the money call $65 strike. Eliminate the fear of stepping into the securities market and sign up for a class today.
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