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Let me try to use simple terminology...if possible.

Posted by: mrbinns A DECADE AT HSX (a.k.a mrbinns) on Oct 25, 22:28 in response to kruger's post My previous post contains more than just the title (sorry...

The term "short" is borrowed from the real world. In the real world, you short (sell) shares you do not own and have a limited time to buy them. (I will pay you tomorrow for the hamburger I eat today said Wimpy) THAT is NOT how it works here.

Originally, HSX was all long. Either you bet that it would go up (buy) or bail out.

In the great crap game of HSX, Short is the "Don't Pass" bet.

Shorting was added to allow you to say, this is not worth the current price. There are lots of reasons for MOVIE to drop in price. Read the news on the Movies board. ACTOR decides not to do the movie. DIRECTOR is doing a different project. MOVIE will not be released on time, or at all, etc. Of course there are the obvious: Ticket sales are rotten; MOVIE is going straigh to Video or Cable TV, Disney pulled the plug on the project, Etc.

People sell their shares on all sorts of news. The price goes down. If you feel that that is the way the Security will be going, you buy SHORT shares. They cost the same but have slightly different commission rules (Do not worry about that now) When you buy Short shares they have the grey shading around the word short. When Short shares decrease in value, your net gain increases (green) If Short shares INCREASE in value, you got it wrong, and the net gain gets smaller, or goes negative (red)

If you look at the graph of any security, there are ups and downs. Just like in the real world, you would like to buy low, sell high. But here you can also short high, cover low.

At any time, you can pull the plug on any security that you hold. If you are "long", you sell it to liquidate your position. If you are holding "Short" you cover to liquidate your position.

You can short any security. In the BOND market, there are definite movemets for a lower price due to the nature of StarBond adjusts and that is a whole other long post. In deriviatives, every week there are Calls and Puts. These are smaller "bets" based upon the opening weekend. Generally, if you think that the Call is the way to go, that a MOVIE will do better than the strike price, you would buy the Call and logically short the Put . Or you can buy the Put long (MOVIE will do LESS than the strike price) and short the Call. You are always allowed to do both. And ALWAYS, at least one of them will delist at zero. (The trick is to guess which one!)

HW's are going to be IPO'd next week.....Most people are optimistic about all 12 right off the bat. Fine. Now you come to a MOVIE opening and it looks like it will not do nearly as good as the hype. (Especially when early numbers come out on Saturday AM) You can sell the HW and then Short it.

Oscar Nominations and Award options are coming. If you think that one of the people will not get the nom, then Short it.

TV Stocks can be shorted if you think that the show will be cancelled before the number of episodes shown matches the current price.

American Idol warrants can be shorted if you think Sunjaya WILL be voted off

And so it goes.

What's the difference between selling and short selling ? (i read the help section :s) kruger Oct 25, 12:10

answer... RazorHawk Oct 25, 13:27

Thanks but still lost ! kruger Oct 25, 16:58

addition on last reply kruger Oct 25, 17:02

Here's some additional thoughts on Shorting.... Flash Oct 25, 17:26

adding more... lapuckfan Oct 25, 17:53

Also, the terminology might be confusing you... Chefbobcat Oct 25, 19:46

Thanks but then what's the difference with "call" and "put" derivatives kruger Oct 25, 21:43