To short overvalued stocks, what tools are there to improve timing?

[backtothebeach]

1 hour ago, This2ShallPass said:

Say it goes to $800 PE, then you have made more than your $40

You still lose $40 more on the short stock than you make on the call.

 

Shorting 100 shares and buying one $200 strike (OTM) call is equivalent to buying one $200 strike (ITM) put. The put costs around $39 right now.

 

p = c - s

[This2ShallPass]

10 hours ago, backtothebeach said:

You still lose $40 more on the short stock than you make on the call.

 

Shorting 100 shares and buying one $200 strike (OTM) call is equivalent to buying one $200 strike (ITM) put. The put costs around $39 right now.

 

p = c - s

Agreed, it was an error in my calc. You'll lose max $40, so buying ITM put is better than shorting and buying call. Doing nothing is even better.

 

[backtothebeach]

1 hour ago, This2ShallPass said:

Agreed, it was an error in my calc. You'll lose max $40, so buying ITM put is better than shorting and buying call. Doing nothing is even better.

Yes, sorry I changed my post when you had already answered, to include the formula p = c - s , which I found very useful to think about all the permutations when starting with options.

 

For example 

stock = call - put

stock - call = - put (the typical covered call)
call = stock + put
etc.

[Valuebo]

 

 

No I swear, markets haven't been frothy at times and participants are rational actors!

 

Not saying OPEN is one of those overvalued shares now per sé, but christ. Guess it's cheap marketing at only $100k...?

Edited November 12, 2025 by Valuebo

[brobro777]

https://www.cnbc.com/amp/2025/11/13/michael-burry-of-big-short-fame-deregisters-scion-asset-management.html
 

maybe this means AI/nasdaq top is near

 

haha 

 

[bizaro86]

22 hours ago, Valuebo said:

 

 

No I swear, markets haven't been frothy at times and participants are rational actors!

 

Not saying OPEN is one of those overvalued shares now per sé, but christ. Guess it's cheap marketing at only $100k...?

 

How could that possibly be a real thing. I'd take that bet in any size. That's ridiculous.

[MungerWunger]

OP top ticked the market when he made this post. Look at PLTR, it peaked on Nov 3 (for now ...)