Smitty-48 wrote:I'm not sure I understand, are you going short with options? AAPL short 90 long 140 kind of thing, or are you saying you're going to short Apple without a hedge? No calls, no puts, you're just going short and rolling the dice?
Remember last year when guys were saying "oh, it's time to short AAPL, they're doomed"? And you know, it's up 38%, just because iPhone market share has dropped, I don't think quite time to bet the farm against AAPL yet.
I'm not actively shorting (holding puts on) Apple at the moment, just AMD, because they spiked up on nothing, and long (holding calls on) AFSI (my soon to be former employer) because they tanked on nothing.
All I'm doing is buying a put or call (buying premium) to bet on what happens with the stock within a given timeframe - that's the hard part. Usually, it's timed for after the next earnings date. So, if I believed that now was the time for Apple to come back down to reality, I'd purchase a put near what I thought the stock was going to, and for the week after their next Earnings. If I had a specific target in mind, given chart patterns, I'd also sell (short) a put around that price. That way, my entry is even cheaper, and I'm targeting a certain move within that timeframe. I make a closing order to get rid of the position when it's at max value, and let it sit.
You can also short options (sell premium), which is much riskier, but much more likely to pay off. The problem is that you're liable for whatever-the-hell that option's value is when you close it. So, if I sell a $150 call on Apple for next week (for example), it currently pays out around $40 in premium to me. If Apple doesn't go over $150 by next friday, I keep it. If it does, I'm on the hook for 100x the stock price over $150.
The entire concept of options revolves around betting on the movement of 100 shares, without actually owning them.
