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Summary: Short selling can be a lucrative trading strategy when executed correctly, but it’s essential to understand the risks involved and to conduct thorough research before placing any trades. That said, if you’re interested in how to short Alphabet stock, we recommend registering an account with a reputable broker platform like eToro.
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eToro USA is registered with FINRA for securities trading.
About Alphabet
Alphabet Inc. is a multinational conglomerate known for its dominance in the technology industry. Founded in 2015, Alphabet owns several major subsidiaries, including Google, YouTube, and Waymo. Its stock is listed on the NASDAQ stock exchange under the ticker symbol GOOGL.
What is short selling?
Shorting or short selling, as some refer to it, is a trading strategy where an investor borrows shares of a stock from a broker and sells them on the market. This is done to buy them back later at a lower price. The difference between the selling price and the eventual buying price represents the profit for the investor.
Traditional short selling
In traditional shorting, an investor borrows shares of a stock from their broker and sells them on the open market. If the price of the stock declines as anticipated, the investor can buy back the shares at the lower price and return them to the broker, pocketing the difference as profit.
What are financial derivates?
On the flip side, investors can use derivatives such as options, swap contracts, or futures contracts to short a stock. These financial instruments allow investors to profit from the decline in a stock’s price without actually owning the underlying shares.
How to short Alphabet stock: Step-by-step
To start shorting stocks like Alphabet, you can follow our step-by-step guide in the following segment.
Step 1: Choose the right broker
To short Alphabet stock, you’ll first need to register an account with a brokerage platform that offers short-selling services. Our chosen platform is eToro, a popular online broker known for its user-friendly interface and diverse range of financial instruments, such as options and CFDs (not available in the US).
- Commission-free stock trading;
- Access to over 2,000 stocks from 17 different exchanges;
- Limited margin accounts;
- Charting tools;
- A user-friendly platform that simplifies the trading experience.
Disclaimer: 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. This content is not intended for US users. eToro USA LLC does not offer CFDs, only real Crypto assets, Stocks and ETFs are available.
Highly Rated Stock Trading & Investing Platform
-
Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
-
eToro USA is registered with FINRA for securities trading.
Step 2: Fund your account
Once you’ve selected a broker, you’ll need to fund your trading account. This typically involves transferring funds from your bank account to your brokerage account. Most brokers offer multiple funding options, including bank transfers, credit/debit cards, and electronic payment services.
Step 3: Open a short position
Go to the Alphabet stock page on your selected platform and tap on the Trade option. Pick the expiry date and strike price for your option. Evaluate the option’s pricing, risk factors, and other pertinent metrics on the selection page. Then, determine the number of 100-share contracts you wish to purchase.
Afterward, carefully review all the details of your trade and swipe up to confirm the purchase. If you’re unsure, you can also save it as a draft for later consideration.
Step 4: Manage your position
Once you’ve made the purchase, you have the option to hold onto it until expiry in hopes of making a profit if the stock behaves as predicted. However, if the market doesn’t go your way, your option might close with a partial loss or become worthless upon expiration.
If waiting until expiry isn’t your preference, you can sell your option on the market. Navigate to your ticket, select an order type (market, limit, or trigger), and if you opt for a limit order, set your conditions. Then, wait for a buyer to execute the sale.
Alphabet stock price today
Pros and cons of shorting Alphabet stock
Pros
- Profit from decline: Shorting Alphabet stock allows you to profit from a decline in its price;
- Hedging: You can use short selling as a hedging strategy to offset losses in other positions.
Cons
- Unlimited risk: Unlike buying a stock, where your losses are limited to the amount you invest, short selling carries unlimited risk since there’s no cap on how much a stock’s price can rise;
- Margin requirements: Maintaining a short position requires you to have sufficient margin in your account, which can tie up capital and increase risk.
If you’re looking to short stocks of other popular companies like Tesla, feel free to check out our guides on the following:
- How to Short Apple Stock;
- How to Short Amazon Stock;
- How to Short Meta Stock;
- How to Short Microsoft Stock;
- How to Short Nvidia Stock;
- How to Short Tesla Stock.
Common mistakes when shorting stocks
- Underestimating risk: Short selling carries significant risk, especially if the stock price rises instead of falls;
- Lack of research: Shorting a stock without conducting thorough research on its fundamentals and market conditions can lead to unexpected losses;
- Ignoring stop-loss orders: Failing to use stop-loss orders to limit potential losses can result in significant financial damage if the trade moves against you.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about how to short Alphabet stock
Can I short Alphabet stock with any broker?
Not all brokers offer short-selling services, so it’s essential to choose a broker that supports this feature, such as eToro.
What happens if the stock price rises after I short it?
If the stock price rises after you’ve shorted it, you may incur losses. To limit your losses, you can use stop-loss orders or close out your position by buying back the shares at a higher price.
How much margin do I need to maintain a short position?
The margin requirements for short selling vary depending on the broker and the specific stock. It’s crucial to understand and adhere to your broker’s margin requirements to avoid margin calls.
Highly Rated Stock Trading & Investing Platform
-
Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
-
eToro USA is registered with FINRA for securities trading.
