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Originally Posted by Sidney Crosby's Hat
I know next to nothing about stock trading. Can someone tell me why it would be a bad idea to short GameStop and just wait for it to drop back down to, say, the $20 range? Eventually it has to, right?
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If you are shorting, you will need a margin account, margin accounts have a set interest rate; however, each stock action has a multiplier on that rate. The interest rate to short GME is high due to the risk of a short squeeze. And your risk losing it all, like everything, not just your account if the bet goes really wrong which it has for short sellers in that stock.
If you are buying put options, the cost of them is high, this would probably limit your risk, the multiplier on options, just isn't worth it to me. The cost of purchase is too high, so you would have to risk a lot to get a position. Your risk of losing is just to lose the amount you gambled.