The stock market can move up 1,000 points over 6 years and then drop 1,000 points over less than 3 weeks. Financial Institutions and Private Traders know how aggressive these bear markets can be and also know how to generate hundreds of millions of dollars out of these moves. One of these is professional trader and portfolio manager, Elliot Hewitt, who short sold SPX500 and USOIL contracts during the spring of the corona virus crisis.
“These kind of moves on the financial markets only happen once to twice every 10 years. So, the people short selling markets during these drops are essentially making the same amount of money an investor makes in 10 years, but only in a couple of weeks.” explains Elliot Hewitt, also known as YoungTraderWealth over social media platforms.
He continued: “As a trader you need to adapt to current market situations. A professional trader will know how to make money in a bull market (when the stock market is going up) but also in a bear market (when the stock market is going down).
In only 22 trading days, the SPX500 lost 35% of its global value. On 4th March 2020, Elliot Hewitt decided to sell borrowed shared in order to buy them back later at lower price. He effectively paid to rent someone else’s shares, to sell it and buy it back later. During the days that followed, he was a part of the short sellers that logged a one-week paper profit of $104.77 billion according to data from financial technology and analytics firm S3 partners measuring bets against U.S.-listed stocks and American Depositary Receipts.
On the 11th of March 2020, Elliot Hewitt then decided to short sell USOIL which is a CFD product based upon the pricing of the West Texas Intermediate (WTI) futures contract. He explains: “Oil prices seemed very vulnerable after price had broken a key corrective structure at $34.20 while Aramco also increased their max sustainable capacity to 13mil bpd. All this pushed me to think oil prices were overvalued and led to my decision to short sell the asset down to my target of $20. I was confident in my idea and had actually shared it across my social media platforms.”
Only 24hours later, on the following day, USOIL had dropped 8%. Over the following 9 days, the value of USOIL had lost over 40% and reached Elliot Hewitt’s ambitious target of $20 per barrel. While Elliot Hewitt accumulated three short selling positions, he returned 900% profit on risk from his first entry, 320% profit on risk from the second, and 200% profit on risk from the last, totalling a cumulative return on his risk of 1,420%.
