I have some experience trading but I still find it hard to choose between puts and shorting. They both profit when prices drop but I need clarity on which is better.
I’ve had success with puts but shorting seems simpler. What do you prefer and why?
Shorting can be complicated due to borrowing shares and incurring ongoing fees while holding the position. Those costs can add up quickly.
Puts, on the other hand, offer a simpler approach. You pay the premium upfront and that’s it. No borrowing fees or margin calls.
While both strategies profit from stock declines, puts allow for better risk management.
Puts require less margin and limit your losses better than shorting.
Shorting a meme stock once nearly wiped out my account. I lost 40% in three days because I held too long. Since then, I prefer puts. They have a fixed premium and help me manage my risk better. The peace of mind is worth it.
Puts cap your losses. You know your maximum loss upfront. Short selling has unlimited downside risk. For most, puts are safer.
Both strategies work, but timing is crucial. Puts lose value daily when the stock is stagnant due to time decay. Shorting lacks that pressure since there is no expiration. Proper position sizing is key. Be prepared for risk if the stock moves against you quickly. I prefer puts when I expect a drop soon, while I use shorting for longer-term plays where I think prices will decline over months.