A Dive Into Short Sellers
There is a lot of noise around the Tesla community regarding short sellers and how this precentage jumped from 3.2% to 3.8%. This after a long run.
In this video I break down the two main types of short sellers along with what is really taking place. This is a market action and, to many shorts, the company means little. They are looking for moves in the stock price, that is all.
I provide a comparison of how NVIDIA performed yet this could also see an increase in position. It actually makes sense that short positions increase when big moves take place.
We dive into it here.
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STOPShort sellers react to stock price movements. Company impact minimal. 📉📊
I agree. A lot of short sellers look at the technicals of the stock. Whether it is overbought, how its moving averages look, and other chart patterns. There might be some that anticipate some company news like losses and lower sales, but relying on those usually means that they are already late.
For many, it is nothing more than a market trading move. And that is when it works best.
Those that are good at it, can really profit in a large way.
Many say short selling should be illegal. Wrong. It is an important part of price discovery.
I hate this derivative nonsense for the sake of "risk management" and balancing books. Betting for companies to fail, putting a real-world incentive out there for it to happen, is just bad business and an ugly look for modern finance. I hate it here.
Actually short sellers are using derivatives. People can short effectively by using options but a true short seller is selling the stock then looking at buying it back at a later date. It is nothing more than a loan.
And shorts are necessary for price discovery. Someone putting on a short might not betting on the company to fail. Instead, it is a bet the price of the stock will go down.
Stock prices go up and down all the time.