How many of you have been stopped out of trades these past 2 days?

[Out Too Soon]

GM have a hydrogen car they may release in 4 yrs time (The pigs r in flight on the way to the moon).
Realistically arent BHP, Woodside & even Drillsearch a buying opportunity at the moment? I'm only a beginner so forgive me but isn't short selling blue chip stocks only ensuring a loss?

 

[haemitite]

BHP is considered a “Blue Chip” business, or share. In my opinion, the business is profitable, but has a very low return. It has some serious question marks in regards to the Depreciation charges and related questions regarding the outcome of Capital Expenditure spending.

Is this a joke?

 

[Magdoran]

GM have a hydrogen car they may release in 4 yrs time (The pigs r in flight on the way to the moon).
Realistically arent BHP, Woodside & even Drillsearch a buying opportunity at the moment? I'm only a beginner so forgive me but isn't short selling blue chip stocks only ensuring a loss?

When you “short” a stock you literally borrow a stock from your broker “to open” (which has to be returned), and sell it on the market in the hope the price will go down.

If the price goes down, and you buy back the stock to “close” the position the net difference in price is the profit you make. For example, if you sold XYZ stock at $10 and bought it back at $8 you would make $2 a share profit.

If however the price goes up, and you wind out the position by buying the stock back to close at a higher price, the difference is the loss you would make. For example, if you sold XYZ stock at $10 and bought it back at $12 you would make $2 a share loss.

So in answer to your question, it depends on the price you sell the stock, and the price you buy it back at.

However, often the term “short” is used generically to cover a range of bearish strategies such as buying a put, selling a call (often hedged with a bough call at a higher strike – a bear call spread), but this can cover ratio back spreads, selling futures, selling CDs, and any number of equivalent bearish strategies.

In sum, if the price goes down, you will make money if you entered a bearish position correctly. In fact, I've bought puts on BHP many times and made money on it by trading at the right time. But options are complex instruments, and time values etc can adversely effect the profitability of this kind of derivative so be careful. But theoretically if the price goes down this is what you want to happen if “short” a stock.


Hope this helps

 

[GreatPig]

Magdoran,

So in answer to your question

I may be wrong, but I get the impression the question wasn't so much a technical one about shorting, but rather one regarding the wisdom of shorting blue-chips, which presumably always (or mostly) go up.

Cheers,
GP

 

[MichaelD]

I get the impression the question wasn't so much a technical one about shorting, but rather one regarding the wisdom of shorting blue-chips, which presumably always (or mostly) go up.

Such as TLS?

 

[Magdoran]

Magdoran,


I may be wrong, but I get the impression the question wasn't so much a technical one about shorting, but rather one regarding the wisdom of shorting blue-chips, which presumably always (or mostly) go up.

Cheers,
GP

Hello GP,

How are you?

Yup, it is ambiguous, but the more I looked at it, the more it looked like a technical question, but you could be right, it may have meant isn’t shorting blue chips suicide…

I thought my response answered both…

Also, because Wayne, Ducati, MichaelD and I had commented on a potential fall, it seemed reasonable to assume the technical question…

We’ll have to wait and see I suppose, won’t we?


Mag

P.S. How are the warrants treating you?

 

[Magdoran]

Such as TLS?

Hahahaha... now that's funny! Love it!

Mag