With the obligatory Sunday night short-squeeze heating up as of 1:45 a.m. EDT, we have determined to scale in shorts, buying Diamond puts as stocks move higher. We are implictly accepting the possibility that this suicidal rally will continue for yet a while longer — indeed, it is becoming so uncomfortable to stay short that that is why we are increasing the size of our bet. Keep in mind that we waited for a sizable rally before we even started buying puts.
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It’s been tough to be short with tight stops for sure. I’ve switched recently to ITM puts in lieu of shorts on some positions and pairs trades with looser stops on some others.
BTW, you may be interested in taking a peak at our short selling site. It uses a predominantly fundamental screen, but some of us complement it with technical analysis on our own. DM me if you’d like demo access to it.
Best,
DP