Question about short selling during reporting season

[Aussiest]

It just occured to me that it might not be a good idea to short sell during reporting season (unless you are experienced and can day trade it) due to price fluctuations and the threat of the impending dividend.

The thougtht of having to pay the dividend, combined with a possible price increase, skews my thinking processes and i find i am less likely to make a rational decision. Eg, i buy XYZ, and i am sure it is going to depreciate. Well, reporting has been positive for shares in same sector, which pushes XYZ's price up. I am not stopped out, but the dividend payment would add extra costs to my position.

Question is: do i close out now? Or do i hold during dividend and hope that XYZ will depreciate past my b/e point, less dividend amount?

I guess i could use the dividend payment as part of my stop-loss...

Thoughts?

(I am sure there are some short selling experts out there, and probably some who operate on a short-term basis, but i find it hard)...

 

[Aussiest]

I just realised i didn't really post a question.

My questions are, and this is purely out of curiousity, are you less likely to short sell during reporting seasons?

And, do you find reporting season and the thought of having to pay a dividend causes you stress, thus making you less likely to take the position, or to stress out if you are already in a short position?

 

[CAB SAV]

I just realised i didn't really post a question.

My questions are, and this is purely out of curiousity, are you less likely to short sell during reporting seasons?

And, do you find reporting season and the thought of having to pay a dividend causes you stress, thus making you less likely to take the position, or to stress out if you are already in a short position?

No, div or no div, if info eg guidance/expectations weak leading into the season, etc etc,good chance some will drop heaps and i won't mention BNB, but fin. service sector is weak as. IAG report tomorrow, could be ugly, AMP next week, both eg have been struggling, more chance that market will punish for slightest thing

 

[CanOz]

I don't like to hold over reporting season, short or long really. I do think though that it can depend on much liquidity there is in the market during the reporting season. Some moves can be pretty severe and knock you out with a good degree of slippage.

My

Cheers,


CanOz

 

[nomore4s]

Holding a short over reporting season can be slightly more risky due to the chances of the stock gapping on a good result or vice versa for a long.

I think you are worrying too much about the d/e, generally a stock will drop by the d/e amount or thereabouts when a stock goes ex div, especially if the stock is already showing signs of weakness (hence the reason to be short).
Also it is pretty easy to find out when a stock goes ex div and what the d/e is, and if this extends your risk too much close the short out. Remember this game is all about managing your risk.