Real Time Case Study of Short Selling

and how the Wall Street publicity machine getting you to think about options

I literally just wrote about short selling and the potential consequences of it the other day.

Do you know how to Short stocks?

And wouldn’t you know it, Moderna shows an extreme and rare case of a multi billion dollar company moving over +100% in one day.

So that means if you shorted $10,000, you would have lost more than your $10,000 trade and would have been stopped out, or your broker took your cash reserves to cover the short position.

Curing cancer or the potential of it will move the goal posts on any investment.

So money management and how to overcome a bad beat is important for your bank account and mental well-being.

But was it short selling that caused these big moves?

Not directly, but through SELLING call options on out of the money Moderna stock. Essentially you are selling insurance to buyers of a policy that you expect not to be paid off.

(If you are not familiar with these statements, I suggest you use ChatGPT, or go to Investopedia, or a Youtube video to get familiar with this.)

When Moderna shot through these options levels, these sellers of insurance had to cover these contracts and force an exaggerated demand of shares to cover their liability.

So if these options writers have been doing it for awhile, they probably gave back years of profits in one day. Kind of like picking up quarters in front of steam roller. It’s fun until you are rolled like pizza dough and tomato sauce all jammed up into one.

But a bad beat doesn’t mean you give up. If your strategy works and you show up each day, it means to just keep going until the rhythm picks up again.

And it will work. Why? Because this huge one day explosion will get MORE people to participate in options and pay premiums that the sellers will profit even MORE from.

When investors missed out, maybe 99%, or the ones that just owned Moderna passively, they are now thinking how to amplify their profits. This is yet another way that Wall Street is going to rub it in your face by sharing details of all the multi-millionaires that were quietly made on this trade.

At least I think so judging from Kalshi, from Crypto, from Gamestop, from Poker, from AI, anything that can make you quick buck or the appearance of it will get interest.

Curing cancer and you can profit from it is probably a good theme.

So now conservative accounts may dabble in options, options writers will now see the “risk”, and be buyers of options, etc.

Rinse, Cycle, Repeat

Moderna +100% → headlines about fortunes made → people experience FOMO → more people buy options → option premiums/volatility attract sellers → sellers eventually become comfortable harvesting premium → another extreme event eventually punishes them → repeat.

Unfortunately, there were losers on this and if it created financial problems I’m sorry for the loss. But the market and most people will readily forget this and focus on themselves and this is how the market heals and recovers through

a dose of Greed.

My argument is forget the Greed and stay the course and no the environment you are trading in.

Something that my software beta helps focus you on. Test it out for all paying subscribers this month.

Carpe Diem

Eric