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You might think that selling short is similar to planning a put option. After all, both are about investing in something with the assumption that the value will go down after a period of time. There is a very substantial difference to consider.
A put option is selling a stock at a certain strike price on or before that option expires. This includes possibly getting a put option with a strike price at $50 while making a profit a few weeks later as the stock falls to $45.
Meanwhile, a short sale involves the actual shares of a business. It is not like what you would get out of an option. You could use the short sale for the same amount of time as that of an option, but even then you might be putting yourself at risk of losing money in the transaction. The risk of a short sale is much higher than that of a put option. A short sale entails the possibility for you to lose a significant amount of money. This is because the short sale has a specific time period for the deal to expire.
What would happen if you sold your shares short at $50 and then the stocks went up to $70? You would lose $20 for each share that you sold if you had to buy those shares back at $70. Even worse, it might be difficult for you to get out of that trade before the expiration date. You could try and get out of it early, but not all brokers will let you do this. Any fees associated with exiting early might be too costly.
A put option, on the other hand, has an expiration date but also the choice to end the contract before that date. Also, the most that you would lose is the premium for the option. You would know what the maximum loss would be before the put order is sent out.
