"Shorting stocks can get retail investors into a boatload of trouble, especially given the potential pain that could be dealt out in the event of a short squeeze, or worse, a meme rally that draws the attention of the folks over on Reddit. After the great Gamestop ( NYSE:GME) meme rally, no short-seller is safe, and that makes bearish put options a more compelling option to bet against certain names that one thinks are overdue for a big plunge."
"I do think that it makes sense to perhaps consider the bear case a bit more if you're a shareholder in a company that's made such a short list. Perhaps hitting the sell button or doing some profit-taking could make a lot of sense if your favorite investor (like Burry) made a bearish bet against one of your portfolio's larger holdings."
"Fortinet ( NASDAQ:FTNT) is a cybersecurity firm that JP Morgan recently downgraded, citing competitive pressures and "risks to growth" beyond the fourth quarter. Undoubtedly, shares of Fortinet have been under serious pressure over the past year, now down close to 27% from its all-time highs. With a fairly high 34.2 times trailing price-to-earnings (P/E) multiple and the potential for AI-augmented rivals to take share, I certainly understand the bear case for the stock."
Shorting stocks carries major risks for retail investors because short squeezes and meme rallies can inflict large losses. Bearish put options can provide a less risky way to profit from downside expectations. Avoid initiating shorts solely because a stock appears on a short-ideas list from a firm or individual. Consider trimming positions or taking profits if a credible investor takes a bearish position on a major holding. JP Morgan's short-ideas list includes Fortinet, which was downgraded due to competitive pressures, risks to growth beyond Q4, and valuation concerns amid potential AI-augmented rivals.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]