April 02, 2011
– Comments (18)
Tradeking and TD never have these china frauds available to short. Does anybody have a brokerage that does or know of one that does?
I've routinely heard Interactive Brokers is one of the best in terms of having shares available to borrow. I've also heard good things about OptionsHouse. Most of the brokerages that seem to cater mostly to long-only investors (TDAmeritrade, Tradeking, E-trade, Fidelity, Scottrade) probably aren't great for people who love to short.
You can buy puts and/or sell naked calls on most of these dubious Chinese companies if you can't locate a borrow of shares available.
Hey GMX, which route would you go: buy puts or sell naked calls? I would personally rather buy puts, because some unexpected rally can't wipe you out (I don't like having outstanding options that can be exercised against me).
Selling naked calls or shorting stocks themselves is too dangerous especially for a nonprofessional. With the puts your loss is at least fixed. One problem you might have is a liquidity issue in trying to buy and sell the puts. You would really want to put a limit order in either way since bid/ask spreads can be wide on thinly traded options.
totally depends on the situation. In stocks where there is nothing available left to short such as DEER at present, and where the puts have crazy premiums, shorting calls makes sense.
Typicallly, though, I prefer puts, but I hate overpaying. Lots of China names are just too expensive to buy puts -- you only get 2 or 3:1 on your money if the company is a complete fraud over the next 6-12 months -- terrible risk/reward.
(Disclosure: profitably short Apr $5 DEER calls)
I'd like to add that most of my options trading is buying LEAP calls when a stock gets whacked, not buying puts or selling naked calls.
I like awallejr's point on liquidity and GMX's answer that it depends on the situation (which is true just about everytime). I was just curious (I often am).
I like LEAP calls as well. My 2008 stake in Western Refining was largely through a load of long-duration $5 calls (stock was at $6.50). Put down $2/share to control a share instead of $6.50 and returns are, obviously, much greater when the stock rallied to $12 fairly quickly (well before the calls expired)
A great benefit to buying LEAP puts or calls is that you are paying less time value per contract than you do for shorter term contracts because you have such a long period until expiration. I have recently considered a "Buffett on Steroids" type portfolio of buying LEAP calls on deep value/margin of safety names such as RIG, V, and PFE.
The premiums are way too high for the china stock puts. I dont think I am allowed to sell naked calls with my broker. I also don't know how to time these things, which is why i want to short it. If it pops, I can average down, because I am sure they will go close to zero eventually
Does interactive brokers let you short leveraged ETFs? Do you guys ever short them in real life? I never understood why somebody would not. If you only use 5% of your portfolio to short crap ETFs its basically free money.
I am thinking about buying some SPY LEAPS, but I dont have much experience with calls that last more than 2 weeks.
If you dont mind me asking, what % returns do you make on your portfolio per year with selling calls and puts? It seems like if you do it right you could damn near double your money, but theres no way thats possible.
I wish I could post pictures of sodomy on here, so I could show you what I am going to do to you on here Harry
I'm flattered, but will have to respecfully decline. I don't swing that way.
Sorry to mislead you, must have been the oversized glasses and black fedora that enticed you :)
I'm curious why did you pick my score as your personal goal to beat?
Honestly, I'll congradulate you if that day comes.
Haha mostly just because 1) youre in the 98 range, and so am I 2) I figured you would make it slightly competitive, without getting offended
are we going by score or rank,
you've got me beat an accuracy right now. Something that I been trying to inprove on.
you've got me beat on accuracy right now. Something that I've been trying to improve on.
Wow! I cans type some reel bad sentance wen not payin tention: )
I BEEN TRYNA IMPROVE ON DAT!
Going by rank, not score or acciuracy.