主题：【原创】 又一个卖空对象 -- 倥偬飞人

The problem with directly shorting one stock is the huge risk coming from a short-term squeeze - meaning momentum traders could take advantage of you by pushing the stock price 30% higher in one day and you will be forced to buy the stocks back. Hence the risk is higher.

A long term put gives you a lot of room to play, as long as you know the high flying stock price cannot sustain over such a period. And more importantly, it takes less money to play options than the underlying stock, and often much higher return, e.g. 100% to 500% for a period of one year or so.

Take CRM as an example: if you short the stock today, the potential risk is when the stock price goes up 30% (about $12 dollars), you will lose $12/share from forced buying back. And that could happen anytime, e.g. in weeks or a couple of months as now the market is in the so-called suckers' rally mood. I will not feel comfortable with the probability of winning versus losing. But if you buy the long term puts expiring in Jan 2008, you will have 15 months to see if the stock price go down, the lower the more profits you will get. For strike price of $35, you pay only $5.10, and your maximum risk is to lose $5.10 per share, less than the potential $12 loss from direct shorting. If the stock price drops below $15 at any point, you will make 300%+ profit (not counting the time value). Bear in mind: the probability of this stock to go down in the next 15 months (a long term) will be very high based upon observations of the fundamentals of this stock as well as of the stock market, and relatively higher than a short term like 3 months.

So to play puts, you will have less cost, high probability of winning and likely higher profits, what will be your choice?