What is short selling? How can people make money on a stock that is decreasing in price? This video explains the concept of short selling and how you can utilize the technique to increase your return on investment.
As always, thanks for watching! If you have any questions or comments, feel free to leave a comment below and I’ll do my best to respond as soon as possible!
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this is jonathan you are bavk my boy
+JM7 Hey Jonathan what’s up!
Good video thank you
+Mysteryqueen86 Thanks for watching!!! What video would you like to see next?
its been a while
+HotVinesTV haha yes it has!! Thanks for the support!
welcome back. nice explanation. was hoping for some stock picks like the old times though
+Tyler Winkle Thank you for the support! Don’t worry we will get to those videos!
Welcome back
+Levertis Brock Thanks for watching!
I have the same mic, what are you plugged into? Phone? Recorder? Thx
+DougieFresh9 I use a Zoom H1. The audio qualitt seems to be fairly decent for the price!
Opinion of $MU and $BA?
dang bro i forgot u existed mate hahah.
+Rayan Amir It has been a while!!
Long time no see! How have you been??
I know it has been a few months! I’ve been doing great. I am excited to create more videos in the coming weeks! Any suggestions?
what kind of trading account do you need to short sell? I heard that you need a margin account, can you clarify? thx
Yes I believe you do need to have a margin account.The reason you need to open a margin account to short sell stocks is that shorting is basically selling something you do not own. As the short investor, you are borrowing shares from another investor or a brokerage firm and selling it in the market. I hope I was able to clarify! Thanks for watching!
Shorting is always an interesting time. Dangerous but money can be made! 🙂
+Dividend Reaper I personally do not short the market. It can be very risky. There’s a documentary on netflix called “Betting on zero” it is very interesting, I would check it out if you have time!
Its a very high risk high reward plan.
HOLY SWEET MOTHER, GLAD U R BACK!!!!!!!!!!!!!!!!!!!!!!
+zee khan It has been a while!! It’s great to see that you are excited! I’ll be releasing many more videos soon!
“How to short sell stocks” – easy, purchase a Put option instead.
I will never understand why anyone would borrow shares that you don’t own in order to sell them to market and hold infinite risk while having to pay back interest. Another problem is that “Joe” can, at any point, do a stock recall, forcing you (Kevin) to liquidate your position with the market at whatever price it currently is set to. Granted, the chances of it happening are slim when it comes to highly liquid shares held by brokerage firms….but the risk is still there, and you have no control over it.
Instead, if you think a stock is going down, then why not just purchase an OTM Put option. For example, if you think V (visa) is going to suddenly drop after hearing some news about a security hack, shorting 100 shares at $109.82 (current price) will cost you $2.40 a day in interest, not to mention infinite risk to the upside of a company poised to hit $115 in the coming week, possibly (news could be bogus?). Now, consider buying a December 105 strike Put for $46, being that it is 27 days away, you save $18.80 in comparison to the interest in the same timeframe. You may not gain as much in delta as you would shorting (because it has to go below 105), but you also won’t lose infinite of your money if the stock goes up…..and, you can always manage the position if the volatility increases (as options do when stock falls fast), or get some of your money back if you’re wrong.
The hilarious part about this, is that I personally do not understand why brokerages don’t use this technique for clients to short positions with synthetic covers……allowing them to have no inventory to do so. Meaning, if Kevin calls up broker Joe and says “I want to short VLC”, then all Joe has to do is purchase a LEAPS Put for the position and credit Kevin for the full amount in a margin attachment……when Kevin closes his position, the LEAPS is resold (or exercised) and the difference is charged back to Kevin as interest to restore, no shares have to ever be borrowed. Plus, any dividends force Kevin to pay Joe that amount as well (more profit directly into Joe’s pocket). Joe only has to manage the LEAPS to roll between 180 to 240 days in order to remain at low theta, but this is more for profit for Joe than it is to save Kevin any money. For example, a December 2019 110 Put for V is $12.57 with open interest, which comes to 5.72% “interest” that can be charged to Kevin.
…..it’s like trying to explain to someone that betting $18 on black at a roulette wheel that gives back half if the 0/00 hit is better odds than betting $1 on each of the 18 black numbers.
This is my life, ever day.
Never heard this option before, very insightful. Ty
Do you have a page/blog that includes more like this, or ever recommend any?
I just wanted to say that this is hands down the best explanation of short selling I’ve found. Do you have a patreon page or better yet do you do personal coaching? I know you don’t get super huge views but you really deserve them. I’d love to support your work.
Hello Victor! Thank you so much for the support! I do have a Paypal donation page: paypal.me/NateOBrien
You can send any questions you may have to nateobrienofficial@gmail.com
As you may have noticed, this video was filmed in a classroom. I am a student at Penn State University & I enjoy creating investing videos and sharing knowledge with the world!
Thank you so much for the positive comment! Your support means the world to me!
God bless,
Nate O’Brien
Well explained, many thanks! I was always wondering how short selling worked if the value of the stock went down. It makes more sense now knowing you need to borrow stocks and sell at a higher price before buying at a lower price.
Thanks David, hope this video helped!
Kevin is happy
Dan is suicidal
I just saved a shit tons on my car insurance
*NOTES*
Short Selling Explained
Kevin sees VLC is going to drop
Kevin calls up Banker Joe. Joe is willing to lend him shares to do his short
Kevin calls up Dan, who wants to buy VLC. Dan gives him 10k
Kevin calls up Banker Joe, takes 1k shares, gives the shares to Dan
——————The stock market drops on VLC——————–
Kevin calls up Sarah who owns VLC (and wants out because it dropped) and asks if she wants to sell at lower value
Sarah gives 1k shares for $5k
Kevin now gives 1k of shares he got from Sarah now, to Banker Joe
Banker Joe:
Gets interest from the deal
Dan:
Got his shares from Joe
Sarah:
Got out and gives her shares to Kevin
Kevin:
Gives Sarah’s shares back to Banker Joe, restoring the cycle.
Kevin makes his money now from the swip swap and his bet going right.
Went back to an older video since Nate is always talking badly about them. The video isn’t bad, cuz the content is great.
Exactly!!
He is just too modest and humble xD
Seems valid for tesla stock, they seem overvalued due to q1 2020 speculation
Lol I’m watching your current videos and you have improved immensely…
x2
That’s the point to grow.
hi nate! can you please make a video on bitcoin?
you improved a lot bro. nice transformation
This may sound weird, but i follow you since March and didnt really dig in my finances till now. Today i’m starting to binge all your videos and put my sht together for good.
Please never delete your older videos. They’re motivating, it shows growth and that no one is that great just starting out.
Yeah, Nate’s newest video on confidence brought me here to the old videos he has made. It really is motivating me and the information value of these videos will stay the same even when times change.
Yea it is amazing; came back to see his channel three years later just to see he’s made it over one million now! Outstanding
I have had it explained to me a few times and now I finally get it after watching your video
It’s funny this video recommended after gamestonk.
Nice
love the figures hahahah so cute
Great video, lam looking for more videos like that