It seems less risky to buy puts, not short directly. I wouldn’t want to be short if this goes up another 10x, even briefly. It will go back down but you might get wiped out first.
The problem with puts is they can expire before this calms down. If you can get a short in and not get a margin call this is the opportunity of a lifetime. Only the biggest players dare risk it though.
This is true, but you can also go broke if you mess up your entry point. What if it happens to triple before it falls back down? Will you have the ability to sustain those losses, psychologically and financially?
I knew a guy that wound up going short on a stock that was going to the moon. He was down almost a years salary at one point. I'd rather go with a longer-term put option to keep the risk under control. It just lets me sleep at night. Everyone is different.
As I said, only the biggest players dare risk a short at this point. I'm not sure even the likes of Bill Gates are big enough, but there are many institutions that are bigger than him.
Not exactly a 1-3 year timescale, but Elon Musk tweeted something about Signal earlier this month, causing SIGL (completely unrelated to the messaging service to which he was referring) to spike from ~$0.50 to $40 per share. Three weeks later, and SIGL seems to have settled down at around $5 per share - 10x the original price. In other words, the price after the shock is not correlated with the price prior to the shock.