The electric car maker’s shares are booming, but there are investors betting that the stock price will fall. This bet, called “shorting,” is a risky trade that requires careful research and planning.Check this out :theinvestorscentre.co.uk
This article explains what shorting is, how it works, and the best strategies for trading Tesla shares.
Short Selling Shares
The simplest way to short Tesla is to open a margin account with a brokerage that allows it and then borrow the shares you want to sell. You then sell the borrowed shares at the market’s current price, hoping to buy them back later at a lower price. The difference between the sale and purchase price, plus any brokerage fees, is your profit. This strategy is popular with investors who are confident that a company’s shares will decline and have a high-risk tolerance.
Another option is to use derivatives like CFDs and options to short Tesla. These products offer more flexibility and are easier to trade, but come with greater risks. For example, if Tesla’s share price rises instead of falling, you would have to buy the borrowed shares back at a higher price, which could lead to losses that exceed your initial investment.
Finally, you can also short Tesla through a fund, which is an exchange-traded product that tracks the performance of the underlying share. These funds usually have a higher risk profile and may be suitable for more advanced traders.