Rooting for Donald Trump to fail has rarely been this profitable.
Just ask a hardy band of mostly amateur Wall Street investors who have collectively made tens of millions of dollars over the past month by betting that the stock price of his social media business — Truth Social — will keep dropping despite massive buying by Trump loyalists and wild swings that often mirror the candidate’s latest polls, court trials and outbursts on Truth Social itself.
Several of these investors interviewed by The Associated Press say their bearish gambles using “put” options and other trading tools are driven less by their personal feelings about the former president (most don’t like him) than their faith in the woeful underlying financials of a company that made less money last year than the average Wendy’s hamburger franchise.
If you don’t understand how shorting stocks work then don’t do it. Better to just buy a bunch of put options or derivatives that go up in value when the stock drops and have a built in stop loss.
If you short a stock directly the theoretical losses are infinite and the max profit is only the money you received from the short sell.
Unsurprisingly, the put options were crazy expensive at IPO.