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Discussion Starter #1
Hi all, from my previous thread, I got some good advice from you all and I want to put it to good use. Namely in a possible crash, buy OTM Puts and wait for the price to fall.

I was thinking of buying OTM Puts on some of the Banks. Reasoning would be the low interest rates (they aren't making as much money as before), Mortgage deferrals and possibly defaults, business/personal loan defaults (although I believe they set aside funds for this, which lowered earnings).

Someone suggested doing this with some of the airline stocks. AC CEO said this will be long hard two years to even get to pre-covid levels. Especially if we go back into lockdown.

If you wouldn't do it with these stocks, which ones would be good candidates. I wouldn't mind ETFs either as long as they are optionable.
 

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I should think banks would go down less than other stocks. Airlines, cruise lines, casinos and resorts I believe already took a beating. As to what will get hit next I don't believe in making predictions, I like to find them when they have already started moving. There should be a search function on your trading platform that allows you to search for stocks that are falling then check out the news.
Right now Wirecard seems to be heading for zero and the home builders are in trouble. Have not checked out the charts but that is what I see in the news.
 

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I only say the banks as they dropped a lot in the last financial crisis. For instance, CIBC was at $120/share and dropped to its lowest at $36. All the banks had a similar drop. It's a large drop but they may be better prepared this time around.

I've been looking at Air Canada, do you think it could drop to $0.82/share? I'm seeing some crazy price range in their put options chains.
 

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I can't believe Tesla stock is as high as it is. The company is in trouble, cars are not selling, there are a lot of complaints about quality, their dealership and service policy is rotten, the subsidies that kept them out of the poor house are coming to an end, and more car companies are coming out with electric cars. Worst of all Musk's halo is getting tarnished. To me Tesla is a big fat zero, it's just a matter of time, unless a major company ends up taking them over for the name. I have felt this way for a long time, good thing I didn't act on my conviction because it keeps going up. If I wanted to play the short side Tesla would be on my watch list.
 

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Takeaway here is don't short things you have no understanding of. #remindme when I'm old
 

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Discussion Starter #8
One thing about banks is, they are sure to come back if you buy them when they are down which is more than you can say for some companies.
Absolutely, these wouldn't be forever shorts. It would be to take advantage of the fact that they are down temporarily. They absolutely all come back, always. In fact, with the short money I want to make, my hope is I can pick up the stocks of the banks cheaply for the dividend they flawlessly protect. Long term, I'm a dividend investor, which I want to go back to being when this market finally hits bottom
 

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Discussion Starter #9
Takeaway here is don't short things you have no understanding of. #remindme when I'm old
I don't want to short it traditionally. It would be buying an OTM or ATM Put option and watch it go. All I would be out is the premium if it moves incorrectly, unlike shorting the stock which is unlimited risk
 

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Takeaway here is don't short things you have no understanding of. #remindme when I'm old
Back in 2005, I tried shorting AAPL. Went short at $43.83 and bought it back at $46.91. In split adjusted terms that was around $5 or $6 a share.

I thank my lucky stars that I bought it there instead of stubbornly holding on. It's now $359.
 
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