How to get short when shorting is illegal?

Can you still buy SRS, QID, etc? Those ETF's are going to obviously get hammered today. Who knows how they are going to do in this rigged casino. The government definitely isn't done playing games. I feel like I am watching the refs of an LSU-Auburn game.

ok, apparently inverse ETFs will work - they use something called "total return swaps" instead of shorting.

Put options is all I can think off, unless you can find something that is inversely correlated to what you want to sell and go long in it. But I can't think of what that is?

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ok, apparently inverse ETFs will work - they use something called "total return swaps" instead of shorting.

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ETA: Ok, not only am I too slow to post, but I'm severely out-knowledged on this subject.
At least I can make up words.

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I'd have to go back to my notes to remember exactly what it was, but I think with some combination of a call and a put you can create a "synthetic" short position.

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Long put; short call.

it appears that you can still directly short futures. So, if your brokerage supports it, you're still OK there.

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We are a smart bunch of people here. Making shorting illegal is a set-up up for a crash, and I want to be short for a crash. So, we need to figure out how to make money from a crash that doesn't involve shorting stocks. I haven't thought about it yet, but I will on the way to work. This will be the official thread for ideas of how to make money on a crash without being able to short.

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Here's a position that is sort of like a short position:

LONG 100 Shares XYZ
SHORT 1 XYZ CALL at a very low strike price
LONG 1 XYZ PUT at a very high strike price

The strike prices are chosen so the proceeds from the sale of the call pay for the put.

So, as an example, say you buy 100 sh XYZ at $5.00 a share, sell a call for XYZ at a strike of $3.00 and use the proceeds to buy a put for XYZ at $7.00 strike.

If the final price falls in between 3 and 7 bucks, both the call and the put are in the money. (7 - V) + (3 - V) + V - 5 = 5 - V
So if the final price falls in between 3 and 7 -for a dividendless stock, the result is the same as if you had shorted. For a stock that pays dividends - since you actually own the underlying, you'll be receiving them instead of paying them.

If the final price falls below 3, (7-V) + V - 5 = 2
Above 7 => (3-V) + V - 5 = -2

So unlike a true short position, your loss and gain are limited.



Its counterintuitive that you can mimick (though not precisely) a short stock using a position that has a long stock in it. The way I think of it though, is that the short call and the long put are both contracts, which if both are exercised, result in you selling the stock. So the two options represent 2 sales and the long position represents 1 purchase = 1 net sale.

see my post about put spreads earlier in this thread. Put options are not working real well right now.

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How to get short when shorting is illegal?
see my post about put spreads earlier in this thread. Put options are not working real well right now.

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What do you mean when you say citi is $2 a spread?

Does this mean the put options are mispriced, and if that's true, wouldn't there be opportunity for risk free gains above treasury returns?

Oh, OK, I got confused I didn't know you mean a bid/ask spread I thought you meant an actual option spread.

Why is it that high?