No Stupid Questions

3298 readers

103 users here now

There is no such thing as a Stupid Question!

Don't be embarrassed of your curiosity; everyone has questions that they may feel uncomfortable asking certain people, so this place gives you a nice area not to be judged about asking it. Everyone here is willing to help.

ex. How do I change oil
ex. How to tie shoes
ex. Can you cry underwater?

Reminder that the rules for lemmy.ca still apply!

Thanks for reading all of this, even if you didn't read all of this, and your eye started somewhere else, have a watermelon slice 🍉.

founded 3 years ago

MODERATORS

admin@lemmy.ca

How or why is TSLA stock considered unshortable or very dangerous to try to short? (sopuli.xyz)

submitted 8 hours ago by sopularity_fax@sopuli.xyz to c/nostupidquestions@lemmy.ca

17 comments fedilink hide all child comments

you are viewing a single comment's thread
view the rest of the comments

[–] kersploosh@sh.itjust.works 13 points 7 hours ago (1 children)

Shorting is intently more risky than being long for two reasons:

Your theoretical loss is unlimited.
If the stock price jumps up and you start accumulating losses on paper, time is not on your side. You cannot simply wait for it to come back down. Your brokerage can force you to close your position and realize that loss without notice.

Now add the fact that Tesla is essentially a meme stock with a valuation based heavily on hype, hope, and the news cycle. You may as well play roulette at the casino. At least you would have some control over your losses that way.

[–] wetbeardhairs@lemmy.dbzer0.com 3 points 7 hours ago (2 children)

Most people short a stock by buying options. The loss in that situation is limited to the commission you pay to buy the option.

[–] cecilkorik@piefed.ca 7 points 6 hours ago

Stock options don't just magically appear out of thin air though. Someone has to provide them. At the end of the day, somebody is taking the unbounded risk, no matter how they've packaged it, and if that person or organization reaches their risk limit and says "nope, this is too risky even for me" then you're out of luck. Yes, realistically there will always be someone willing to take that kind of bet on Tesla, but it doesn't mean it'll be easy to find or that it will always be available through the usual channels.

[–] bluGill@fedia.io 3 points 6 hours ago

the downsides is options are time limited. If the stock doesn't crash before the end you have lost your investment. You can keep buying the option but time is still working arainst you