TL;DR

Shorting Carvana (CVNA) might seem tempting with talks of a potential 90% drop, but it’s a risky move. Remember, betting against a stock can lead to significant losses if the price goes up, and following the FOMO crowd is rarely a good strategy.

Story

“So, you’re thinking about Carvana (CVNA), huh? I get it. The stock’s been on a wild ride, and a 90% drop can be tempting for a short seller. But let me tell you, shorting a stock is like playing with fire. You can get burned fast.\n\nImagine this: You bet $50,000 that CVNA will go down. That’s a huge chunk of change! You’re basically saying, ‘I’m so sure this stock is going to tank that I’m willing to risk a lot of money on it.’ Now, some folks on Reddit are cheering you on, while others are warning you. ‘Good luck,’ they say, or ‘Best of luck, bro.’ But they’re not risking their own money, are they?\n\nOne commenter smartly points out that ‘Puts are really pricey.’ A put option is like buying insurance against the stock going up. It’s expensive because a lot of people are betting against CVNA. Another person reminds us that CVNA is a volatile stock. If the market goes south, CVNA could easily drop 50% or more. Yikes!\n\nThere’s also the fear of missing out (FOMO). Everyone’s talking about shorting CVNA. ‘God speed,’ they say. But remember, following the crowd can be dangerous. Especially when you are dealing with options, don’t just follow the trend or the hype. It’s your money, so be careful. \n\nIf you’re new to this, shorting a stock means betting that its price will go down. You borrow shares of the stock, sell them at the current market price, and then (hopefully) buy them back later at a lower price to return them and pocket the difference. But if the price goes up instead of down, you have to buy them back at a higher price, losing money. \n\nRemember, financial decisions should be based on careful research and risk assessment, not emotions. Shorting stocks is particularly risky. As someone wisely said, ‘The obsession of this sub with buying options after a move in that direction which also increased IV (making the options more expensive) is always impressive to me.’ Don’t chase the hype. Don’t let FOMO get the better of you.\n\nDo your research, understand the risks, and consider consulting a financial advisor before making any big decisions. Investing isn’t a game—it’s about securing your financial future.”

Advice

Before jumping into shorting a stock like Carvana, do your homework and understand the risks. Consider the potential downsides, and never invest more than you can afford to lose.

Source

https://www.reddit.com/r/wallstreetbets/comments/1hsqpl1/50k_short_cvna/