Featured image of post Reddits Tesla Shorting Delusion

Reddits Tesla Shorting Delusion

Reddits full of Tesla short sellers Translation: They bought put options hoping for a crash Remember the dot-com bubble? History doesnt repeat but it often rhymes Dont confuse gambling with investing

TL;DR

Redditors boasting about “shorting Tesla” are mostly buying put options, gambling on its downfall. This speculative frenzy echoes past market bubbles, reminding us that hype can be dangerous.

Story

Reddit’s abuzz with armchair analysts claiming they’re “shorting Tesla.” Most can’t afford it. They’re buying put options—bets that Tesla stock will drop.‣ Put Option: A contract giving you the right, but not obligation, to sell a stock at a specific price before a set date. It’s like betting on a horse to lose. If Tesla falls, they win. If it rises (or stays flat), they lose their bet. This isn’t true short selling.‣ Short Selling: Borrowing shares, selling them high, hoping the price drops so you can buy them back low and return them, pocketing the difference. True shorting is risky – your losses are theoretically unlimited. These Redditors are just gambling with options, dreaming of a Tesla crash. Remember the dot-com bubble?‣ Dot-com Bubble: Late 1990s surge in internet company valuations, followed by a dramatic crash. Irrational exuberance fueled by speculative bets. Sound familiar? Beware the hype. Options trading is complex, and betting against a volatile stock like Tesla is a gamble, not an investment.

Advice

Don’t fall for get-rich-quick schemes. Understand the risks before betting against a company, especially with complex instruments like options. Hype is a powerful drug – don’t let it cloud your judgment.

Source

https://www.reddit.com/r/wallstreetbets/comments/1ismseo/almost_all_of_reddit_lately/

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