By Friday’s close, the market had set a new yearly low. The exuberant traders from Monday were now liquidated or frozen in fear. Meridian Capital, however, was up 12% on the week.
"It’s the second leg down that breaks people," Elias murmured to his protégé, Sarah. "The first drop is a shock. The rally gives them false hope. But the second leg? That’s where the real wealth transfers happen."
Elias pointed to a major tech conglomerate whose stock had surged 15% in the relief rally despite declining earnings. "Look at the volatility. It’s cheap right now because everyone thinks the worst is over." The Second Leg Down: Strategies for Profiting a...
As the week progressed, the rally began to crumble. Heavyweight retail stocks started missing their targets. Instead of picking individual losers, Elias moved into .
"No," Elias said, leaning back. "Indiscriminate shorting is how you get run over. When the second leg starts, you need a scalpel, not a sledgehammer." Strategy 1: The Tactical Put Spread By Friday’s close, the market had set a new yearly low
Sarah looked at her screen, where the S&P 500 hovered precariously near a key resistance level. "So, we don't just short everything?"
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The air in the "War Room" of Meridian Capital was thick with the smell of burnt espresso and quiet desperation. It was October, and the market had just spent three weeks teasing a recovery. The pundits on TV were calling it a "V-shaped bottom," but Elias Thorne, a veteran short-seller, wasn't buying the optimism.