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Going Short on a stock ?
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Going Short on a stock ?

  #1 (permalink)
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Going Short on a stock ?

I must confess , that I have never sold " Short " a stock , so I am wanting to get clarification on the process of fellow traders who have done so, and have experience in doing so.

There is a stock , ticker symbol OCLS
that back in March of last year, was a nice setup on it's Weekly chart ,
and had I noticed this stock / setup , I would have wanted to go short the stock.
It is not an optionable stock, so buying a Put is would have been out of the equation.

So , in preparing myself for the next setup I see on a stock that I want to go short on,
what can I expect ?

I'm guessing my broker will require I have the amount on hold in my account, that will be based on the price that the stock is trading, at the time I wish to go short the stock x the number of shares ?

So if the stock is trading at say $5 , and I want to go short 1000 shares, I ill have to have $5,000 ( plus the cost to cover commissions ) to place this trade ?



Pretty basic question / answer for most I'm sure,
but just making sure I understand what's involved in Shorting a stock

Thanks

P.S.
I attached a chart showing the entry on OCLS

Attached Thumbnails
Going Short on a stock ?-2015-03-09-ocls-short-trade.png  
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  #3 (permalink)
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mdsvtr View Post
I must confess , that I have never sold " Short " a stock , so I am wanting to get clarification on the process of fellow traders who have done so, and have experience in doing so.

There is a stock , ticker symbol OCLS
that back in March of last year, was a nice setup on it's Weekly chart ,
and had I noticed this stock / setup , I would have wanted to go short the stock.
It is not an optionable stock, so buying a Put is would have been out of the equation.

So , in preparing myself for the next setup I see on a stock that I want to go short on,
what can I expect ?

I'm guessing my broker will require I have the amount on hold in my account, that will be based on the price that the stock is trading, at the time I wish to go short the stock x the number of shares ?

So if the stock is trading at say $5 , and I want to go short 1000 shares, I ill have to have $5,000 ( plus the cost to cover commissions ) to place this trade ?



Pretty basic question / answer for most I'm sure,
but just making sure I understand what's involved in Shorting a stock

Thanks

P.S.
I attached a chart showing the entry on OCLS

When you sell a stock short you actually have to borrow the stock from an available lender, so the stock needs to be available to borrow in order to be sold...this is all done by the broker. The margin required to do that is different from broker to broker as i am aware. I do not believe that i would necessarily be the value of the stock as margin, it could be less. Your account will have the credit for stock that you borrowed and sold, well it should have.

Now i am 99% sure about this as I've been shorting stick for so long i no longer pay attention to what my account looks like when i do it...its a transaction that, with Interactive Brokers, you don't need to worry much about. Similar to going long a stock, its just a trade. You do need to be careful around dividend time though, as you could be responsible for a dividend to the lender, the opposite of going long again where you would collect a dividend from the company.

Hope this helps, perhaps the more detailed oriented equity traders can give you the specifics.

Edit: in your chart the stock seems a good short in hindsight, just be careful that there is ample liquidity as well. I think its Tim Sykes who claims to make a ton of dosh shorting these 'pump and dump' penny plays...

XS

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Hi XS

Thank you for your reply to my post.


You helped clarify for me and helped me understand the process of Short selling a stock

I guess what I'm still left with wondering is.... If I purchase a stock, is there any way that I can turn right around and sell it " short " If I'm Bearish on the stock , and I own the stock ?

I'm wanting the simplicity in trading stocks outright, that there is in Options trading, to where.... if you're Bearish or Bullish on a stock, you just simply buy a Put or a Call


This is what got me wondering if there was a way to just " Go Bearish " on a stock, was that...... I was studying up on all things Covered Calls, and how Covered Calls are Bullish plays.
So I said to myself..... I see great setups on all these stocks via the charts ( Bearish ),and I want to make the same trade on these via doing a " Covered Put " I.E. selling the Put and collecting the premium, all while owning the stock.

Put I now see that this is not possible..... The whole " Covered Put ".... selling these and collecting the premiums, month after month

Guess if I'm Bearish..... I'll have to be content with buying an Outright Put, doing a BearPut debit spread, or doing a BearCall credit spread

oh the heartache lol

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