Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited.

Is short selling a good hedging strategy during overzealous market conditions?
Short selling can be a good strategy to hedge, but you have almost unlimited downside.  If a stock price skyrockets, you may be forced to cover your short by the brokerage before you want to or put up more capital. A smarter strategy to hedge, that limits your potential downside is to buy puts if you think the market is going down.  Your downside is limited to the total amount that you purchased the put for and no more. Another way to hedge is to SELL calls that are covered because you own the shares the calls refer to.  You might do this if you thought your stock was going to go down but you didn't want to sell your shares right now.  That way the only downside if the price goes up is you give up your shares at a predetermined price and you miss out on the upside, but your downside is now diminished by the premium you were paid for the option. (You'd still lose money if the shares went down since you still own them, but you got paid the option premium so that helps offset that).