Friday, September 19, 2008

Ways to Short Indirectly

Now that financial stocks are "unshortable" directly until October, below are some ways you can do so through derivatives:

1) Buying Deep In-The-Money Puts: the deeper ITM, the less time value it'll carry and behave like the underlying stock.

2) A synthetic short with options: long Put and short Call at the same strike price

3) Short single stock futures: though I hear the liquidity isn't all that great

4) Inverse ETFs (Exchange Traded Funds)

5) Shorting Index Futures: almost as good, as the financial companies are positively correlated to the stock indexes.

I'll add to this list as I think of more!

0 Reflections: