Quote: (08-08-2014 05:07 PM)WestIndianArchie Wrote:
1) How can I (as a retail client of etrade etc) gamble on my hunch of a public stock?
2) For a non-public stock, What can I do prior to the IPO?
3) fOn day one of their IPO?
This is a post about rampant speculation for those of us with play money.
This is not a post about investing.
Thanks.
WIA
Are you saying you think the company is overhyped and it's going to go down in price?
You can short a stock but that's margin work and in a heavily shorted name gets either very expensive or impossible (to short a stock, you have to borrow from someone who owns it, if nobody's willing to loan it, you can't be short).
Probably a better way to play is with options, because you don't have to own the stock. I've read up on options about a dozen times and I don't fully understand them, it's a complicated topic. Also understand that an option is a time-limited instrument and if the option's out of the money when it expires, you lose your entire investment. I'd start with searching out some info (Investopedia is a great resource) and probably spending the money on an intro type book. And play with fun money, because everybody I know who's played with options starts out losing money.
Pre-public, there are markets for pre IPO stock, but that's very difficult. Companies have right of first refusal on sales, so they can nix the sale at any time, and volume is small so you're dealing with an illiquid market. It's not possible to short a stock in a non-public company. SecondMarket is the best known exchange for pre-IPO securities, but remember there's significant restrictions on trading.
For day one stuff, I think you'd have to use options, probably in some sort of covered call strategy. You're dealing in a very illiquid security in a volatile situation, and acquiring a short position would likely be very difficult.