how do I short truth social on monday? I have never shorted a stock before

[Trekologer]

15. No offense but if you have to ask, you probably shouldn't

Last edited Fri Mar 22, 2024, 07:57 PM - Edit history (1)

Shorting the stock means selling shares at today’s price that you borrow with the promise to buy the same number of shares in the future at whatever price it is. If the stock goes down, you make the difference in profit. If it goes up, you owe that difference and potentially that loss is unlimited.

Edit: Here's why the loss is unlimited.

DWAC closed at $36.94 today. Let's say that on Monday, you shorted 100 shares of the stock. You borrow 100 shares and sell them on the open market for $3,694. If the share price goes down to, say $30, you cash in your position which means you buy 100 shares at $30 each to replace the borrowed ones, netting you $694 (minus whatever fees your broker charged you). But let's say the share price goes up to $40 (and in after hours trading so far today, it actually has gone up). You now owe your broker $306 to close out your position.

You could hold onto your contract and hope that the share price goes back down but your broker will charge you fees and interest. There's a saying that the stock market can stay irrational longer than you can stay liquid. What happens if the stock continues to go up? There are likely plenty of potential bag-holders who think they're going to get rich off of poopy suit's deal that could keep buying shares to prop the price up. Let's say they're able to pump the share price up to $50. That's now a $1,306 loss for your 100 share short contract.