Today, let's talk about some of my insights on how to short sell.
In fact, I have always believed that for trend followers like me, short selling and going long are essentially the same. It's about following the direction of the candlestick chart trend.
Just like going long, I have two methods for short selling: stocks and options. Some experts also use futures, but I don't and have never tried.
Short selling stocks is relatively simple, you can just short sell directly. Compared to options, it doesn't have time decay, but the leverage ratio is relatively smaller and there is also the risk of margin call. Currently, in my portfolio, the short position of the goose feather stock, Yandex, has once frozen the withdrawal function of my account, which is very embarrassing.
Web link
In addition, there are options, which are also divided into long and short positions. Short positions and short-selling of underlying stocks have the same risk of margin, but with the disappearance of time value, time becomes a friend of short positions.
What I mainly want to talk about is long positions in options, which means buying put options directly. The characteristic of doing so is that there is no risk of margin, the leverage ratio is relatively high, and time value is key.
The timing of holding is a key factor for the success of long positions in options.
At the beginning of 2019, shortly after pdd holdings went public, I saw that the candlestick chart at that time happened to meet my judgment for entering a long bull market, so I bought in January, I remember it was around 27 yuan. I bought both stocks and options. Because I believed it would perform well in the long run, I bought call options that would expire in six months. After more than a month of buying, the stock price indeed...