Jeroen,
We have put and call options here, too, but shorting is different in several ways. For one thing, options have a lifetime, and expire at the end of their lifetime, but you can keep a stock short forever.
Also, if you buy put options you can lose only as much as the cost of the options.When you short a stock, you have unlimited loss potential. You are selling stock you don't own, hoping to buy it back when the price is lower. If the stock goes up, you will have to buy it back at a higher price. Since stocks can go up infinitely, you can lose an infinite amount of money when you short.
Linda |
