Trading 101: How to Short a Stock -Zacks Market Edge Podcast 27
Zacks Market Edge
English - April 12, 2016 18:56 - 23 minutes - 21.5 MB - ★★★★ - 255 ratingsInvesting Business Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
In this episode, Tracey is joined by Jeremy Mullin, Zacks Stock Strategist and Editor of Zacks Counterstrike, a long and short trading service.
But this leads to the question: How DO you short a stock?
Tracey admits that she has never shorted an individual stock before so she brought in Jeremy to discuss the various scenarios that he looks for to create the most favorable short selling conditions.
There are 2 main scenarios:
1. When an “event” of some kind happens.
Recent examples of this were with Lumber Liquidators (LL) when it was the focus of a 60 Minutes segment about its Chinese laminate flooring and Chipotle (CMG) which had to shut restaurants after a health scare. Both “events” caused the stock to plunge.
2. When there are disappointing fundamentals.
This usually happens when a company reports earnings or pre-announces disappointing sales or guidance. Recent examples of this scenario were with LinkedIn (LNKD) and Michael Kors (KORS). Both stocks plunged on earnings fears, and rebounded. But is the selling really over or is another shorting situation appearing?
How do traders play both of these scenarios? How do you figure out your risk and reward?
Should you only be shorting the glamour names? What about those stocks that appear to be overvalued?
GoPro (GPRO) certainly seemed ripe for the short sellers after its shares soared and that turned out to be a big shorting opportunity for the savvy investor.
If you don’t want to short individual stocks, should you stick to the ETFs?
Shorting stocks doesn’t have to be scary. Think of it as just taking the other side of the trade.
Jeremy takes on all of these questions and more in this week’s podcast.
Chipotle: http://www.zacks.com/stock/quote/CMG?cid=cs-soundcloud-ft-pod
Lumber Liquidators: http://www.zacks.com/stock/quote/LL?cid=cs-soundcloud-ft-pod
Michael Kors: http://www.zacks.com/stock/quote/KORS?cid=cs-soundcloud-ft-pod
LinkedIn: http://www.zacks.com/stock/quote/LNKD?cid=cs-soundcloud-ft-pod
GoPro: http://www.zacks.com/stock/quote/GPRO?cid=cs-soundcloud-ft-pod
Follow us on StockTwits: stocktwits.com/ZacksResearch
Follow us on Twitter: twitter.com/ZacksResearch
Like us on Facebook: www.facebook.com/ZacksInvestmentResearch