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#1
10-22-2007, 01:30 AM
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How do you profit from a bust?
In another thread a poster said something like 'for every boom there is a bust, and the bust can have opportunies that are as profitable as the boom'
So if you knew of a bust ahead of time how would you profit from it? Would you just short stock? In an episode of 'Ultimate Force' there were these terrorists who were going to blow up London. One of the terrorists said something like: 'if you knew in advance that the UK economy is going to collapes you would make a lot of money' How would these tv terrorists profit from there evil doings? Sorry if this post seams retarded, i'm kinda drunk. 
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#2
10-22-2007, 01:34 AM
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Re: How do you profit from a bust?
You can "short" a stock. Then you make money when its on its way down. If you knew that the market was going to experience short term downward movements, there are also instruments you can buy which replicate -2x the markets movement. The name of this ETF eludes me at the moment.
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#4
10-22-2007, 04:56 AM
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Re: How do you profit from a bust?
there are TONS of ways if you knew ahead of time there would be a crisis type event:
- short stocks - long bonds - long put options just to name 3. - long eurodollar futures - short (most) credit spreads - short most expensive call options to name another 3. Barron
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#5
10-22-2007, 05:04 AM
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Re: How do you profit from a bust?
I've supplemented my income with options trading for a few years now, as well as hedged a few investments, that made up a large portion of my overall portfolio, with them. If your afraid a portfolio of stocks will get hit hard by a recession/depression, protect it with S&P500 put options. If you just want to speculate and profit off a market downswing, buy the "puts" and leverage them to get the most bang for your buck; this type of trade carries a relatively high level of risk if one doesn't know what they're doing. If you want some specific examples of a few of these trades I've made in the past, go ahead and PM me.
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#6
10-22-2007, 11:58 PM
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Re: How do you profit from a bust?
Off-topic. When you short, do you actually receive the money for the short at the time of opening it? If so, can you use those proceeds to buy other stocks? For example, could I short 100 shares of GOOG at ~$650 then take the $65,000 and buy 900 shares of CAT?
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#7
10-23-2007, 12:00 AM
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Re: How do you profit from a bust?
if you believe something will happen but dont know when then LEAPS( long term equity anticipation securites) are the way to go . you can buy puts or calls out on stocks that issue them, to a few years out.
you pay for the priviledge though.
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#8
10-23-2007, 12:33 AM
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Re: How do you profit from a bust?
[ QUOTE ]
Off-topic. When you short, do you actually receive the money for the short at the time of opening it? If so, can you use those proceeds to buy other stocks? For example, could I short 100 shares of GOOG at ~$650 then take the $65,000 and buy 900 shares of CAT? [/ QUOTE ] not to most retailers, no.
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#9
10-23-2007, 12:47 AM
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Re: How do you profit from a bust?
[ QUOTE ]
Off-topic. When you short, do you actually receive the money for the short at the time of opening it? If so, can you use those proceeds to buy other stocks? For example, could I short 100 shares of GOOG at ~$650 then take the $65,000 and buy 900 shares of CAT? [/ QUOTE ] if you find the right brokerage yes. Zecco so far has been letting me do this. Also if your portfolio is over 1 mm this is common to do, but for small fries (below 1 mm) most brokerages dont offer this.
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