Shorting is intently more risky than being long for two reasons:
Your theoretical loss is unlimited.
If the stock price jumps up and you start accumulating losses on paper, time is not on your side. You cannot simply wait for it to come back down. Your brokerage can force you to close your position and realize that loss without notice.
Now add the fact that Tesla is essentially a meme stock with a valuation based heavily on hype, hope, and the news cycle. You may as well play roulette at the casino. At least you would have some control over your losses that way.
Stock options don’t just magically appear out of thin air though. Someone has to provide them. At the end of the day, somebody is taking the unbounded risk, no matter how they’ve packaged it, and if that person or organization reaches their risk limit and says “nope, this is too risky even for me” then you’re out of luck. Yes, realistically there will always be someone willing to take that kind of bet on Tesla, but it doesn’t mean it’ll be easy to find or that it will always be available through the usual channels.
the downsides is options are time limited. If the stock doesn’t crash before the end you have lost your investment. You can keep buying the option but time is still working arainst you
Shorting is intently more risky than being long for two reasons:
Your theoretical loss is unlimited.
If the stock price jumps up and you start accumulating losses on paper, time is not on your side. You cannot simply wait for it to come back down. Your brokerage can force you to close your position and realize that loss without notice.
Now add the fact that Tesla is essentially a meme stock with a valuation based heavily on hype, hope, and the news cycle. You may as well play roulette at the casino. At least you would have some control over your losses that way.
Most people short a stock by buying options. The loss in that situation is limited to the commission you pay to buy the option.
Stock options don’t just magically appear out of thin air though. Someone has to provide them. At the end of the day, somebody is taking the unbounded risk, no matter how they’ve packaged it, and if that person or organization reaches their risk limit and says “nope, this is too risky even for me” then you’re out of luck. Yes, realistically there will always be someone willing to take that kind of bet on Tesla, but it doesn’t mean it’ll be easy to find or that it will always be available through the usual channels.
the downsides is options are time limited. If the stock doesn’t crash before the end you have lost your investment. You can keep buying the option but time is still working arainst you