5 Reasons to Go Short in 2010

#4 You Don’t Need to be Afraid of Going Short

Many people have heard horror stories about short positions gone wrong. I’ll say this: Individual investors should NEVER short stocks outright. If you do so, you are opening yourself up to unlimited risk. But if you use put options, you can take advantage of the stocks that will inevitably crash and burn in 2010 without risking the shirt on your back.

Put option volume is exploding, making them very liquid. What’s more, you have the ability to buy puts months, and in many cases years, out, which helps to give you enough time for your downside bet to work out. If you think a company is dead longer term, you can buy 2011 or even 2012 puts.

Learn How to Pick the Right Put Option.

Next: You Can Short Sectors Using ETFs