The answer is B — a USD 300 lo-To The Moon - Tiger Brokers Online Investing Community

The answer is B — a USD 300 loss.

Short selling may look like simply reversing a normal stock trade, but the risk is very different. You short 10 shares at $100, effectively selling for $1,000. When the stock rises to $130, you must spend $1,300 to buy those 10 shares back, locking in a $300 loss, before borrow interest, fees, or dividend compensation.

The more important lesson is that short sellers face an asymmetric risk. A stock can theoretically rise without limit, meaning losses can continue to grow. Meanwhile, borrow availability can change, margin requirements can increase, and a sudden rally may trigger forced buying or even a short squeeze.

GameStop was a powerful reminder: being right about a company eventually falling doesn't guarantee you survive the journey.

So before shorting, I think the better question is not “How much can it fall?”, but “How much can I afford to lose if I'm wrong?”

@Tiger_AU [思考]

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Comments

NoraPoe
09-10
NoraPoe
The ugly part is liquidity can vanish right when you need out. In small names a borrow recall or squeeze can turn a manageable loss into pure chaos

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Share with Tigers here!","image":"https://static.tigerbbs.com/d486ec735fcd6df1485888cfd9a03f01"}],"images":[],"coverImages":[],"title":"","html":"<html><head></head><body>The answer is B — a USD 300 loss.\n\nShort selling may look like simply reversing a normal stock trade, but the risk is very different. You short 10 shares at $100, effectively selling for $1,000. When the stock rises to $130, you must spend $1,300 to buy those 10 shares back, locking in a $300 loss, before borrow interest, fees, or dividend compensation.\nThe more important lesson is that short sellers face an asymmetric risk. A stock can theoretically rise without limit, meaning losses can continue to grow. Meanwhile, borrow availability can change, margin requirements can increase, and a sudden rally may trigger forced buying or even a short squeeze.\nGameStop was a powerful reminder: being right about a company eventually falling doesn't guarantee you survive the journey.\nSo before shorting, I think the better question is not “How much can it fall?”, but “How much can I afford to lose if I'm wrong?”\n<a href=\"https://ttm.financial/U/4106546596749190\"> @Tiger_AU </a> [思考]</body></html>","htmlText":"<html><head></head><body>The answer is B — a USD 300 loss.\n\nShort selling may look like simply reversing a normal stock trade, but the risk is very different. You short 10 shares at $100, effectively selling for $1,000. When the stock rises to $130, you must spend $1,300 to buy those 10 shares back, locking in a $300 loss, before borrow interest, fees, or dividend compensation.\nThe more important lesson is that short sellers face an asymmetric risk. A stock can theoretically rise without limit, meaning losses can continue to grow. Meanwhile, borrow availability can change, margin requirements can increase, and a sudden rally may trigger forced buying or even a short squeeze.\nGameStop was a powerful reminder: being right about a company eventually falling doesn't guarantee you survive the journey.\nSo before shorting, I think the better question is not “How much can it fall?”, but “How much can I afford to lose if I'm wrong?”\n<a href=\"https://ttm.financial/U/4106546596749190\"> @Tiger_AU </a> [思考]</body></html>","text":"The answer is B — a USD 300 loss. Short selling may look like simply reversing a normal stock trade, but the risk is very different. You short 10 shares at $100, effectively selling for $1,000. When the stock rises to $130, you must spend $1,300 to buy those 10 shares back, locking in a $300 loss, before borrow interest, fees, or dividend compensation. The more important lesson is that short sellers face an asymmetric risk. A stock can theoretically rise without limit, meaning losses can continue to grow. Meanwhile, borrow availability can change, margin requirements can increase, and a sudden rally may trigger forced buying or even a short squeeze. GameStop was a powerful reminder: being right about a company eventually falling doesn't guarantee you survive the journey. 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