Continue discussing stock trade with Arthur/Carlos Pueblo

 Continue discussing stock trade with Arthur/Carlos Pueblo

The other day, my son Arthur showed me a number on his notebook for a stock appreciation. I told him to sell it without any thinking. We have then been discussed the stock trade for several mornings. I am glad that I have some study of the security finance due to the numbers of times to take the series 7 exams.

He is on the opposite side of a short seller on a computer game stock. He calls it the short squeeze. That short seller shorts a game stock in a big number and bet the stock will go down and a group of viewers purchase the stock against it. Now, the stock is up which means that it is appreciated. I did pass the license exam after several tries; however, I only practiced long, no marginal, no short, and no option. I still believe that they are more complicated than I can handle. I want to know what and how he invests the short squeeze. I have not learned such terminology so far. 

I ask him if he trades it with a broker dealer firm? I believe that when a person orders a short position which is required some kind of money to back it up. It is like the marginal or the option trade premium to pay on call and receive on put within a time strain.  He tells me that he doesn't get a call option for that short case because of my warning to stay away from the option. Finally, I get it straight that he purchases the named stock long. I am more released. I further ask him if he uses his large portfolio to do it. He says no and only a small percentage of his available cash. I am more released and less stressful. I believe that both the short and the option trade are 50-50 chance to loose while the long can make higher percentage people to win especially via the mutual funds.

In order to get the baby tiger, you must get into the tiger's den to get it. This is a famous Chinese proverb which means nothing ventured and nothing gained. I remind him we don't really need to go that kind of route to reach the financial independence. He is actually making a long purchase on that particular game stock. That is alright with me.