Is there any sense in shorting AIG when it's trading THIS low?
Answers
2222 points
readytoretire answered 9 months ago …
With the potential gain only 40 some cents, and the upside unlimited (however unlikely), not much reward for the risk. So I can't see why people are shorting it. Ones that already shorted may be wanting to ride it completely into the ground.
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4085 points
EthanR answered 9 months ago …
I do not believe you are permitted to short a stock whose price is below $5.
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2183 points
ChaosNantuko answered 9 months ago …
Shorting from $0.40 to $0.30 is still a 25% roi, so if your outlook on AIG involves it falling further, no reason not to short. Just be aware of where you would put your stop losses first, and see if they justify the trade. It could very well be that the Reward:Risk ratio just doesn't justify shorting AIG in this case. Personally, i'd put a stop at $0.65 right now if i were to short AIG right now, and so i wouldn't be willing to enter the position with the current Reward:Risk ratio, but if I could get the short in around $0.55, then that could make for a good trade. Unfortunately, i suspect you can't short AIG, as it strikes me as a hard to borrow stock, but it depends on your broker.
As for not being permitted to short a stock whose price is below $5, it depends on your broker.
go to http://www.investopedia.com/ask/answers/03/110703.asp for more information on that.
