That "shorting the market" advertisement headline reads: "Claw Your Way to Profits in a Bear Market." (Talk about a bad pun! They make me look good! And I don't think of bears as "clawing" -- ripping to shreds maybe!) What it is pitching you on this same page that also contains its best growth stocks is a "Short Selling Home Study Program", which IBD justifies worthy of its efforts to have produced by then writing on this ad: "For quite a while, IBD subscribers have asked for a short selling product to help them take advantage of bear markets. After much research and analysis, we're pleased to introduce the IBD Short Selling Home Study Program." This "Home Study Program" will put (bad pun) you back $695! You cannot be serious, IBD!?! People actually pay $695 for this "instruction"?!? This is precisely the evidence that I have been waiting for in order to get the signal that this bear cycle's end could soon be near!
Here is what I suggest you do if you really want to learn what short selling is all about: go short Apple (AAPL)! That's right. Go short 100 shares. Be my guest. You will learn far more being short Apple than any "home study" program will ever teach you! Oh, and stay short it, maybe until the time when that short sale burns over and through $695 of your hard earned capital. Or, instead, you could save yourself some time and especially $695 worth of pain if you would accept the tangential philosophy of Robert Stovall, who once said: "Selling a soybean contract short is worth two years at Harvard Business School!"
Take a moment to review the T3/OP video with Jill and Scott as they walk you through the technical and fundamental case:
Now, back to that IBD 50 top growth stock list: I agree with Jill and Scott. AAPL is a buy on a fundamental basis and a technical basis as I do my homework on it. In addition, Apple is ringing the bell on two of my rules: 1) when a stock shows momentum and relative strength that is bucking a general stock market cycle, go with the direction of that stock; and 2) when a stock overcomes seriously bad news, and begins to move towards a break out, buy it. Certainly do not short it!
Given the remarkably bullish price action in AAPL, we still have to deal with this rough and tumble market. Thus as in almost any market, any options trade even involving a bullishly biased one on AAPL should be one that is hedged. This trade is medium in risk because it is hedged. This trade is medium in reward because -- it is hedged!
Trades: Buy to open 3 AAPL December 435 calls for $15.00 and sell to open 3 AAPL December 455 calls at $9.00.
The total risk for the spread is the premium, or $600 per spread.
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