Kragen Sitaker wrote:
> You're thinking of puts, which are sell options, and are (as you say)
> cheap and useful to protect your stock holdings, and essentially insurance.
> Shorts are a different ballgame altogether; shorting is selling a stock
> you don't own, hoping to buy it later at a better price and take home
> the difference in your pocket. Shorting a stock means the amount of
> money you lose is limited only by how much the stock rises. (The
> amount of money you gain is limited by how much you sold the shorted
> stock for.) It doesn't make sense to short a stock you hold, as far as
> I can tell.
> Whether or not it's a reliable metric for predicting stock prices, I
> don't know. I'd be willing to bet on "no", because if you had a
> reliable metric for predicting stock prices, you'd be very rich very
> quickly, and as soon as you (or someone else who understood that
> metric) controlled a significant amount of the money in the market, the
> metric would no longer be reliable.
> <email@example.com> Kragen Sitaker <http://www.pobox.com/~kragen/>
> TurboLinux is outselling NT in Japan's retail software market 10 to 1,
> so I hear.
> -- http://www.performancecomputing.com/opinions/unixriot/981218.shtml