If some companies will thrive in a clean-tech world, it follows that others will suffer. You'll want to avoid those stocks, obviously. But you can also profit from their declines by actively betting against them. The generic term for betting on a decline in the price of an asset is "going short," and there are several ways to do this.

The traditional method is called short selling, and it works as follows: You identify a stock that you think is overvalued and sell some of the company's shares-without first owning them. Your broker borrows the requisite number of shares from another client's account and sells them, depositing the cash into your account. After the stock goes down, you close out, or cover, your short position by buying back the shares at the lower price and pocket the difference. Exchange-traded funds (ETFs) can also be sold short, making them ideal for betting against specific sectors. In some ways they're better than stocks, because they diversify away the risk that you'll be right on the industry but wrong on a given stock.

Shorting is very clean and simple, but it takes a bit of preparation. It can only be done in an account that is authorized for it, which means you'll have to set this up in advance with your broker by signing an extra contract that discloses, among other things, the risks involved in shorting stocks. If the stock you short pays dividends, they're your responsibility, adding a bit to the cost of holding a short position. And the risk-reward calculus of shorting is the opposite of going long: Your maximum upside is the potential downside of the stock, and since a stock can only fall to zero, your profit potential is capped at 100 percent. But your downside is the stock's upside potential, which is theoretically unlimited, so short positions have to be watched very closely. If your positions move against you (that is, if the stocks or ETFs you short go up), your broker might demand more money to cover the potential risk. This is known as a margin call, and if the money isn't quickly forthcoming, the broker will close out your short position or sell other shares in your account to raise the needed cash.

The Put Option

Another popular shorting vehicle is the put option. As the name implies, an option is a contract that gives its owner the right, or option, to buy or sell a specified number of shares at a predetermined price within a set time period. A call option allows a holder to buy (i.e., call away) shares, and a put option enables its owner to sell (or put the shares into someone else's account) at a given price. They're "derivatives," in the sense that their value is derived from that of an underlying security, most frequently the stock of a publicly traded company (though options exist for lots of other things). Stock option contracts control 100 shares of the underlying stock, so a quoted price, or premium of, say, $5 implies a cost of $500 for a contract. Because you're only paying for the right to profit from the change in the stock's price for a limited amount of time, you pay a lot less than if you bought or shorted the shares outright. Yet you gain, if you're right, almost as much as if you traded the shares directly.

Traditional options have one huge drawback: They're short-lived. Most run for nine months or less, so unless you're right on both direction and timing, your puts will expire worthless and you'll lose your entire investment. In response, the exchanges have designed longer-lived options, called long-term equity anticipation securities, or LEAPS, which last for two and a half years, allowing you to be fuzzy on "when" but still make money. You pay more for the extra time, but you'll still get more bang for the speculative buck than with short selling. Most brokers offer online options tutorials that explain the basics in more detail.