Stock Market Ttrading Thread 2013....Let's Rock!

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Long PPC @ 16.28, also earnings tomorrow. Very ill-advised trading today.
 
McD5 said:
Shorting is the exact opposite of buying. If you think a stock is going lower, you can sell shares you don't own.

If the stock drops, you can buy them back (cover) at a lower price for profit.

If they go higher after you short, you will lose money.
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McD5 said:
Shorting is a higher risk strategy, because theoretically, your potential loss is unlimited. A stock you short could be bought out for infinity.

In the real world, if you thought your nextdoor neighbor's house was overpriced, you couldn't just sell it without owning it.

In the market, you can.
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Okay, I'm still a little fuzzy on this. Let's use BBRY as an example.

So, let's say back in February 2011, when $BBRY was $70 a share, you foresaw it crashing to the $9 a share it is today. How do you make money off of this? I do better with examples. :)
 
You would sell shares of BBRY at $70. Never having owned them.

When the stock dropped, you would buy them back. You would make the difference.

The profit, or loss, would be the same as if you had bought them at $9, and sold them at $70. It's just a reverse order.
 
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your short has a date where it expires too. so if the stock goes up to say $80 a share, you have to buy them at $80. You lost 10$/share on your bet.

you can buy them before the date (I believe it's called a 'call') to minimize the money you lost. So if your short expires in 30 days and blackberry is at $72/share and trending towards $80 and you realize you made a bad bet you can call your short at 72$ by purchasing those shares and minimizing your loss.

I think...

edit; there is some way to cover yourself. i think you would just purchase the # of shares at $72, which then cancels out your short because your short would be to buy for $80, but you'd sell the same number of shares you bought at $72 for $80, therefore making your total loss $2/share. they let you short-circuit that though instead of making everyone wait out the time.

shorts, or options, are the real gambling going on in the stock market ;)
 
That's not right t. Shorts have no predetermined date. You can theoretically stay short something for years. I believe you are thinking of options.

Now, if a stock has very few shares out there, it is possible for the short to be called in on you.....meaning you are forced to cover at the market price. From investopedia:

Short selling is the selling of a stock that the seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered. That may sound confusing, but it's actually a simple concept. (To learn more, read Benefit From Borrowed Securities.)

Still with us? Here's the skinny: when you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later, you must "close" the short by buying back the same number of shares (called covering) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.

Most of the time, you can hold a short for as long as you want, although interest is charged on margin accounts, so keeping a short sale open for a long time will cost more However, you can be forced to cover if the lender wants the stock you borrowed back. Brokerages can't sell what they don't have, so yours will either have to come up with new shares to borrow, or you'll have to cover. This is known as being called away. It doesn't happen often, but is possible if many investors are short selling a particular security.

Because you don't own the stock you're short selling (you borrowed and then sold it), you must pay the lender of the stock any dividends or rights declared during the course of the loan. If the stock splits during the course of your short, you'll owe twice the number of shares at half the price. (To learn more about stock splits, read Understanding Stock Splits.)
 
Okay, I was missing the broker loaning you the stocks to sell, part. So, you're repaying the "loan" of stocks at a much lower price, so that's where the money is made. I was wondering how you sold stocks you didn't own!
 
Lanky Livingston said:
Okay, I was missing the broker loaning you the stocks to sell, part. So, you're repaying the "loan" of stocks at a much lower price, so that's where the money is made. I was wondering how you sold stocks you didn't own!
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Yep. Now it is riskier than just buying a stock, by its very nature.

If a stock is at $10 per share and you buy it, the most you can lose is $10 per share.

If it's at $10 and you short it, it's possible that some other company buys it out for even $100 per share.
 
Ah, yes, I guess I was thinking of options. Thanks for the explanation!
 
McD5 said:
Huge! It looks like it's trying to work its way up to $60 in time.
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Hope so...would be close to 500% return on my initial investment. Don't see that every day. :)

EDIT: including a 1.5x split in May or June (EDIT 2: Or February, lol).
 
McD, do you trade for a living? Or are you retired or something? You seem to find a lot of time to monitor the market. :)
 
DDD missed its earnings estimate, and its stock price is down about 9% right now. Revenues are up, however - it could be a great time to get in. I still think the $60 mark is very attainable.
 
$DVAX is up big this morning, I believe due to the WHO coming out and saying that a Hepatitis B vaccine is desperately needed. Now its just a race to see who creates their vaccine first. Dynavax already has their vaccine, they just need some additional FDA testing to get it approved.
 
Really concerned i jumped the gun with cashing out my initial investment in facebook. I guess that's it though, you're always going to be bitter you sold too early/too late, I imagine it's rare you time the peak right.

at least i kept a portion of the stocks to cash in in the future. wont be nearly as much as it could have been though.
 
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