I have changed my mind about shorting stocks and especially call options. The problem is that sometimes a stock I shorted rises sharply on significant or insignificant news (which I didn’t notice myself until the price already shot up a lot), and I get very worried that maybe it’s the next Tesla and will keep rising and wipe out all or a significant fraction of my net worth, and so I panic buy the stock/options to close out the short position. Then a few days later people realize that the news wasn’t that significant and the stock falls again. Other than really exceptional circumstances like the recent Kodak situation, perhaps it’s best to leave shorting to professionals who can follow the news constantly and have a large enough equity cushion that they can ride out any short-term spikes in the stock price. I think my short portfolio is still showing an overall profit, but it’s just not worth the psychological stress involved and the constant attention that has to be paid.
I have changed my mind about shorting stocks and especially call options. The problem is that sometimes a stock I shorted rises sharply on significant or insignificant news (which I didn’t notice myself until the price already shot up a lot), and I get very worried that maybe it’s the next Tesla and will keep rising and wipe out all or a significant fraction of my net worth, and so I panic buy the stock/options to close out the short position. Then a few days later people realize that the news wasn’t that significant and the stock falls again. Other than really exceptional circumstances like the recent Kodak situation, perhaps it’s best to leave shorting to professionals who can follow the news constantly and have a large enough equity cushion that they can ride out any short-term spikes in the stock price. I think my short portfolio is still showing an overall profit, but it’s just not worth the psychological stress involved and the constant attention that has to be paid.