Row 55390

Row ID: 55390 | Dataset Entry | Axioma AXP Content Repository

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There’s a variety of ways to short a stock. They each make money in slightly different ways. I’ll explain two of the more common ones - selling borrowed stock and buying puts.

With selling borrowed stock, you find someone who is holding the shares and is selling to lend them to you. You typically pay interest for this service. Say you sell the stock for $100 and then it crashes to $60. You just go out to the market, buy a share for $60, and return it to your lender. You pocket the $40 profit (minus whatever interest you paid).

With buying puts, you go and pay a small amount to own a put. That put gives you the right to sell the stock to writer of the put at some agree upon price. If the stock is currently at $100 and the strike price of the put is also $100, you might pay something like $5 to purchase the put. After the stock drops to $60, you can buy a share in the market and then exercise your put, letting you sell it immediately for $100. You walk away with $35 profit.

FieldValue
text There’s a variety of ways to short a stock. They each make money in slightly different ways. I’ll explain two of the more common ones - selling borrowed stock and buying puts. With selling borrowed stock, you find someone who is holding the shares and is selling to lend them to you. You typically pay interest for this service. Say you sell the stock for $100 and then it crashes to $60. You just go out to the market, buy a share for $60, and return it to your lender. You pocket the $40 pr…
label r/investing
dataType comment
communityName r/investing
datetime 2024-05-23
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Raw Record

{
  "text": "There’s a variety of ways to short a stock.  They each make money in slightly different ways. I’ll explain two of the more common ones - selling borrowed stock and buying puts. \n\nWith selling borrowed stock, you find someone who is holding the shares and is selling to lend them to you.  You typically pay interest for this service.  Say you sell the stock for $100 and then it crashes to $60.  You just go out to the market, buy a share for $60, and return it to your lender.   You pocket the $40 profit (minus whatever interest you paid). \n\nWith buying puts, you go and pay a small amount to own a put.  That put gives you the right to sell the stock to writer of the put at some agree upon price.  If the stock is currently at $100 and the strike price of the put is also $100, you might pay something like $5 to purchase the put.  After the stock drops to $60, you can buy a share in the market and then exercise your put, letting you sell it immediately for $100.  You walk away with $35 profit.",
  "label": "r/investing",
  "dataType": "comment",
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  "datetime": "2024-05-23",
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Entry Information