Shorting a Stock Questions

[zyzzyva57]

You are fed up seemingly as soon as you buy a stock, the stock tanks

Or, ah-h, when Cramer blesses a stock, the stock spikes, then drops, and you think, you have to be good at shorting--a no brainer! Cramer hoops and hollows over NitPicker, Inc.

(With no commission for this question) you short NitPicker, Inc. at $10 on May 1. You cover on May 15th by buying NitPicker, Inc. at $9.50--heehaw, you caught the Cramer Bounce/Drop. Even better, NitPicker, Inc. paid a dividend of $0.50 on May 10th. How much did you profit when you repaid the share?

http://www.investopedia.com/university/shortselling/shortselling1.asp

Suppose with NitPicker, Inc. with so many thinking like you (the big boys & gurls with tons of money) shorts NitPicker, Inc., while the opposite group (the "Cramers") hate "shorters" and decide to do a Squeze Play on NitPicker, Inc. What is a Squeeze Play by the "Cramers"? Could you be financially hurt?

http://www.investopedia.com/terms/s/shortsqueeze.asp

[bobwatford123]

I've often wondered about dividends during shorting. Obviously, you don't get the dividend....but do you get dinged for it??

[Hanger]

Yes, you owe the dividend that was paid.

[zyzzyva57]

From the enclosed article as well as from what Cramer says in his "Confessions..." book your profit is 0. I did not realize this or think of this until I read his book. From the article, apparently you also give up any "rights." Bottom Line: shorting and options, etc, could be dangerous, if as a Newbie such as myself, you are still in Stocks 1-0-1. Plus, I suspect your broker would want a lot of real money up front to do this. I sense most think shorting is a no-brainer way to profit off something they see in CramerLand: bet against his picks. The problem is you tend to want to see what you want to see. When you study Cramer, you see he is more right than wrong, but you can easily feel the opposite is true. Another problem is when you spot a no-brainer stock to short, the Big Boys and Gurls are already there. My rule is this: DO NOT GET INVOLVED IN A PISSING CONTEST WITH THE BIG BOYS! FLOW WITH THEM! Now, if you get to be your own Cramer later, go for it, but until then, be patient and be cautious!

[redrum]

Dumb question # 1
Does the "short interest" mean the actual # of people shorting a stock, or does it reflect those just "interested"?

Dumb Question # 2
Does the "short interest" also include the put and call options?

[zyzzyva57]

I am a Newbie, so I would not dare venture into giving you advice or answering your questions, so maybe someone can answer these questions

[bobwatford123]

Short interest is the actual number of shares shorted.

As for puts and calls I don't think these are included in short interest.

Options are a much better way to bet a stock will go down, compared to shorting it. There's a good chapter in Cramer's latest book on it.

[zyzzyva57]

I am still learning basic stock market and all the features of Scottrade to go charging off into shorting and options

At this stage, the basics are enough on my plate

I have no desire to get into a pissing contest with the real world Cramers at this point

I have not enough money nor knowledge for these contests of high stakes poker

I'll pass--I do not want to be their smirky dessert :)