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I do a lot of short selling as a day trader. There is a pattern that I trade often. This one asks me to short and keep my position for several days. The problem I have is that the broker charges too much to keep my position overnight. On MEDS in the last days, I could pay up to 500 USD to keep my position overnight. How can I use options as a workaround? Can you give me an example?

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  • If you ask for the very basic logic of how to use options, my advice is that if you want to keep your money, do not even think of buying options.
    – AKdemy
    Jun 29, 2023 at 4:31
  • @AKdemy Why are you saying this? Can you elaborate
    – David
    Jun 29, 2023 at 13:02
  • Anyone who feels that they have to ask how a certain trade in a certain type of financial instrument works, pretty much by definition should not be trading in those type of financial instruments. Options especially because they are highly leveraged, risky investment instruments which should only be used by experienced investors who fully understand what they are doing. Even more so if you only intend to keep positions for a few days....
    – AKdemy
    Jun 29, 2023 at 14:13
  • @Akdemy - In general, warnings of the dangers of options are appropriate but I think that your reply was a bit much. The OP indicated that he short sells as a day trader so it's a reasonable assumption that he's experienced. Also, not all option strategies are "highly leveraged risky investment instruments" (investments?). Jun 30, 2023 at 13:40

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If the implied volatility is reasonable (not likely if the borrow rate for shorting is sky high), you could buy a high delta put (the put's strike price is much higher than the stock's price).

To offset the aforementioned IV, you could utilize a vertical spread but then you'd have delta correlation issues.

Alternatively, you could create a synthetic short position - sell an ATM call and use the proceeds to buy the same series ATM put.

None of this helps you as far as I can see, MEDS doesn't offer options.

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