Many active investors only “buy stocks by going long” and at some later date they sell. However, traders really don’t care if they buy or “sell short”, as long as they make money.
Many times there are just obvious opportunities to “short” a stock and make fast money in just a few days. Here is an example from this week. Retail companies have been reporting poor earnings this last week, all the talking heads on CNBC have been agreeing that retail will report lower revenue and profits for the quarter.
Therefore I took a quick look at Macy’s (M), saw that it has already been weak and decided it was an obvious “short” opportunity. On Monday, May 9th I “shorted” 300 shares of Macy’s at, $37.80 my cost was $11,384.
Here is what the transaction looked like in my Fidelity account.
This morning before the market opened, I added a limit “Buy to Cover” order for M at $34.00.
Here is what the order looked like:
As expected Macy’s reported earning this morning and as expected they were terrible, the stock crashed and my stock automatically sold as the market opened at $33.84. I made a profit of $1,232 in two days on a very low risk simple, obvious trade. Shorted cost $11,384 bought back for $10,152, profit $1,232.
I could have sold short much more than this but I never get greedy.
Smart investors aren’t afraid to “short” stocks that are going down just as often as they buy stocks to go long.