by Recyclersteve » Tue Mar 10, 2020 12:03 am
For those who like to speculate (notice I didn't use the word "invest" this time) in the stock market, there are at least a half dozen companies working on immunizations for the COVID-19 virus. I am NOT in any of these and don't have plans to be. Also, if I were going to trade them, I would just as likely consider shorting the ones that have already moved up a lot betting on a pullback rather than buying them. Selling short is what you do when you sell shares that are NOT in your account. If you sell short 1,000 XYZ Biotech, then your account shows you have -1000 XYZ (not 1000, but -1000). You do this by borrowing shares from your brokerage firm. Later when you want to close out the position you BUY the stock. Buying 1000 shares when you have -1000 will bring you back up to zero (a flat position, if you will).
But, stocks that could be considered Hard-To-Borrow (after a big move up) often have big fees attached to securing shares. In other words, you need to locate shares of a stock that could easily fall, say, 30% to 40% in the next few days. But you have to pay a fee of 80% to borrow the stock in the first place so you can short it. To be fair this is often an annual fee- so it would be a lot less for a small portion of a year.
Caveat emptor.
Former stock broker w/ ~20 yrs. at one company. Spoke with 100k+ people and traded a lot (long, short, options, margin, extended hours, etc.).
NOTE: ANY stocks I discuss, no matter how compelling, carry risk- often
substantial. If not prepared to buy it multiple times in modest amounts without going overboard (assuming nothing really wrong with the company), you need to learn more about the market and managing risk. Also, please research covered calls (options) and selling short as well.