General Discussion
In reply to the discussion: I Lost $7,000 Today and Trump is Gloating About It [View all]7962
(11,841 posts)As opposed to affecting the price NOW by selling a ton of shares. You & I would have little to no effect. But people like Soros, Shkreli, etc, have an INSTANT impact on a stock price when they sell a large block of shares short. Believe me, I was a victim of Shkreli years before anyone here ever heard of him. I've always thought someone should grab him off the street and beat the shit out of him. Its very easy to short a lot of shares, then come make a public statement that XYZ company is way over valued, or allege fraud, or some other such BS. Shkreli was a master at it. And when his followers would see him short a stock, they'd do the same. A company that isnt highly traded can be devastated by this action.
But buying the put option still allows you to take advantage of actual issues that will affect the stock without crushing it by dumping shares. Other MAY follow you, but the action isnt instant and doesnt have the same effect on a share price.
Small investors wont have any impact, but when a Soros shorts a million shares, the price WILL go down. And not only is it not fair, its actually legal manipulation.
Buying options still allows you to profit if your opinion of the stock being over priced was correct. If their earnings are bad, or a drug doesnt get approved, or whatever, the price will drop on its own.