I’ve stated in my previous post that prices for AI stocks (Nvidia, ARM, and the likes) are bound to fall. So how can I profit from my brave prediction?
I know of 2 basic choices - short selling and put options. But I’m wondering whether there are alternatives, so I ask the best financial advisor in the world - ChatGPT.
The all-knowing entity starts with the 2 strategies I already mentioned. For the short position, it encourages me to use a stop loss, which makes sense.
It then offers three more that I wasn’t aware of:
- Bear put spreads, which is when you buy a put at a lower strike price and you sell another at a higher price; both on the same stock and the same expiration date.
- Inverse Exchange Traded Funds (ETFs), which are ETFs designed to move in the opposite direction of the underlying asset.
- Contracts for Difference (CFDs); financial derivatives that follow the valuation of the underlying stock price and, unlike options, are cash-settled.
I have to say, I’m genuinely impressed. These were trading ideas that never came across my mind, and they seem right. Well, in the next post I’ll be opening a brokerage account and checking how accurate this information truly is.