ManofOne
Plus Member
That kind of thing is dangerous thou, you kill market participation if fundamentals go out the door.
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Stock-Age: Stocks, Options and Dividends oh my!
- Thread starter koam
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That kind of thing is dangerous thou, you kill market participation if fundamentals go out the door.
BigBooper
Member
What if they own actual shares, but they trade at a lower price than the exchange listed price? I don't know if that's possible at all, just saw some people saying don't worry about the after market drop because it was manipulated in this way. I have no idea, but their explanation left a lot to be desired.
infinitys_7th
Member
Think of it like a sort of regulation - if the hedge funds try to short another company into the ground, these guys can cost them billions.
That's the sort of strategic check in the system which you need in a fully free market. If the establishment exposes itself to risk, there is now someone there to take advantage.
ManofOne
Plus Member
Shorting a stock doesn't necessarily make the stock go down. Remember that for most stocks only a percentage of the stock is shorted relative to the float. Shorts have to find and borrow that stock.
So what short sellers do is release STATEMENTS OR ANALYSIS about a stock. They would provide a full detail of why they think the stock is worth X,Y,Z. This would result in a situation where long holders (typically retail investors) get panicky and sell the stock. This drives the stock down to the benefit of the shorts.
So the problem here is demand and supply.
If everyone is demanding the stock and it goes to $1000 who is gonna buy it? The greater fool theory says that a fool must buy it at that price for the stock to rise but if everyone is selling who they gonna sell it too.
They would have to sell the stock at a significant discount to find a fool to buy.
See what I mean
UnravelKatharsis
Gold Member
If I understand you correctly, it still would result in the same loss between the hedges. So there wouldn't be any reason to do that. If I own a share at 10 and I'm obligated to sell it at 350, selling that obligation to another hedge means they have to cover it. If they're partnered they still lose the same amount of money. They can't buy shares that don't exist so since the stock is shorted over 100% I really don't think that's possible. But I'm def not an expert on the subject
quickwhips
Member
Someone will be left holding the bag.
UnravelKatharsis
Gold Member
Right. And if you hold too long it could be anyone. I'm just saying buying someone else's short would be insane.
...you weren't responding to me
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quickwhips
Member
I am now.Right. And if you hold too long it could be anyone. I'm just saying buying someone else's short would be insane.
...you weren't responding to me
infinitys_7th
Member
I know, what I'm saying is that when a stock is heavily shorted and these investment groups put a load of capital into it, this strategy allows them to be vulnerable. This is a hard counter to anyone shorting a stock to 140%+ ratio again. If they want to do it, there are now a group of autists who might decide to give them a very bad day.
Like you said, of course, this doesn't need the "rational investors", but the wildcard:
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But the these hedge funds shorted like 140% the number of shares. So they obviously didn't "find the stock and borrow it" properly. That's the whole crux of this and why it is working so well. You don't have to find a fool to buy cause they already agreed to buy by Friday (when a lot of the options expire). They literally are forced to buy between now and then.
Yeah that's the big secret they're not telling you. WSB only created momentum and it's the big institutions taking advantage. Notice how a lot of the biggest moves of gamestop and AMC, etc were after hours the last couple of days? Retail traders are not moving the price after hours I can guarantee you. That's the big boys. They're looking to bankrupt the competition and/or maybe get a piece of them cheap.
D
Deleted member 17706
Unconfirmed Member
Thanks... this dude on Reddit also had an explanation for what might have happened in that sudden drop. Not sure if true, but sharing anyway.
HawksWinStanley
Member
So what’s the short situation on GME right now? Over at WSB you see a lot of people talking about holding but not many mentions of buying. What kind of squeeze is there still to make this thing legit blow up far beyond what it already has?
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D
Deleted member 17706
Unconfirmed Member
Today is really the day that this story blew the fuck up and got everywhere. I am a moron, but I think there will be an explosion of interest from people looking to get in tomorrow, especially with the stock ending at under $300. We'll see!
infinitys_7th
Member
I'm assuming the way it goes is that:
Melvin shorted GME so heavily that they need to buy a ton of shares to make up the difference. The more people buy and hold, the less shares that Melvin can buy, and the more likely they get screwed. In turn, the demand for shares to buy to cover has been raising the price, and Melvin's desperate moves make it clear that those shares are genuinely in demand.
Is that right,
ManofOne
?
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Had people at work who don't invest buying some this morning or talking about it. I think it started getting around quite a bit yesterday and has only been picking up momentum since.
Blanket mainstream coverage about a major run is, from my experience, usually the signal to close your position or stop adding to it.
D
Deleted member 17706
Unconfirmed Member
That would make sense in a normal situation, but this is anything but normal. It's not just a hyped up stock that's being pumped up to be dumped. If what is being said is true, there are massively rich companies on the line to buy up the stock no matter the price. I really have no idea if this is true, of course. I still haven't seen where people are pulling their convincing evidence that over 100% of the floating shares are being shorted.
Taxexemption
Member
Supposedly Citron got out of their short somehow, either they bought enough options to cover their short (which would be incredibly expensive) or had the ability to cancel their contract. The people at WSB last I checked think this is a bluff and it's not actually true, and that they still need to buy more than 100% of the shares in circulation on Friday, and so that any stock you still have can be sold on Friday for a higher price than it is currently being sold for, as they will have to buy all stock in circulation more than once putting immense pressure on the stock to go up. I don't know if that is true, that's just a claim I read on WSB.
Alternatively Gamestop could put a stop to this by selling enough of the companies own stock to to allow the shorts to liquidate, they would be able to raise an immense amount of capital. Alternatively they may not do this so that anyone shorting them eats a huge loss, and has a big incentive not to try to short in the future.
In general for people not aware, publicly traded companies are usually given the ability issue a certain number of shares that is far bigger than the amount they actually issue. So at any time they could decide "lets raise some funds" and start issuing new shares.
I'm not sure how exactly they know how many shorts are out there, but people on the subbreddit were saying earlier today that the stock was still being shorted, and that there are actually more shorts out there now than there were on Monday. I have no idea if this is true, I've rarely looked at shorts, and have no idea how you get information on this. This isn't the kind of investing/speculation that I do.
Personally I'm not touching the stock. I've never studied short squeezes before, and if I don't understand something when it comes to investments my instinct is to sit on the sidelines and watch.
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D
Deleted member 17706
Unconfirmed Member
This stuff has been fascinating to watch. I’m on the sidelines because I’m not a big gambler and this is all essentially gambling against the house.
It has been interesting to see left, right, and center all come together to stick it to the hedge funds.
It’s also pretty clear that the individual investor has the deck stacked against them. If the WSB crowd loses their shirt, then the financial media will overwhelming trash them for being uneducated idiots playing a game they don’t understand. It’s the same playbook on why you saw article after article trashing RobinHood investors. Of course if the hedge funds lose their shirts, they yell and scream about fraud or collusion while getting all their Wall Street buddies and the financial press to jump on board.
This is even more egregious when you realize that hedge funds don’t bat an eye at the damage they cause when they destroy a company (which damages both shareholders and employees who often lose their jobs). Often a hedge fund will decide to short a company while also utilizing their influence to put the idea in the public that said company is failing (ie through the media, by issuing “investment reports” etc..”) which causes investors to sell out of fear, further dropping the price, and bringing profits for the hedge fund.
It has been interesting to see left, right, and center all come together to stick it to the hedge funds.
It’s also pretty clear that the individual investor has the deck stacked against them. If the WSB crowd loses their shirt, then the financial media will overwhelming trash them for being uneducated idiots playing a game they don’t understand. It’s the same playbook on why you saw article after article trashing RobinHood investors. Of course if the hedge funds lose their shirts, they yell and scream about fraud or collusion while getting all their Wall Street buddies and the financial press to jump on board.
This is even more egregious when you realize that hedge funds don’t bat an eye at the damage they cause when they destroy a company (which damages both shareholders and employees who often lose their jobs). Often a hedge fund will decide to short a company while also utilizing their influence to put the idea in the public that said company is failing (ie through the media, by issuing “investment reports” etc..”) which causes investors to sell out of fear, further dropping the price, and bringing profits for the hedge fund.
BigBooper
Member
I don't see why Gamestop would want to bail out the companies that wanted to hasten their demise and hurt millions of potential customers. I can't imagine that will happen.
D
Deleted member 17706
Unconfirmed Member
The answer is always money. Money for somebody.
haxan7
Volunteered as Tribute
Who needs instincts when you’ve got gigantic balls?
finowns
Member
I
I bought 430 doge coin around $5Heads up.
Everyone looks to be pumping Dogecoin overnight.
Fucking Doge coin is trending and 'Doge to a $1'
If it does mange to hit $1...thats $8k for every $100 you drop right now
ManofOne
Plus Member
lol who agreed to buy on Friday ? You don’t NEED to execute the option. Ppl or funds can allow them to expire . You just lose the premium.
are people trying to put the funds in margin calls ? I don’t get the strategy here if otherwise?
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ManofOne
Plus Member
Anyone can do that. Not just funds. But the swings in the after markets are wild Bc of the lack of liquidity. So the spreads are larger.
ManofOne
Plus Member
I'm assuming the way it goes is that:
Melvin shorted GME so heavily that they need to buy a ton of shares to make up the difference. The more people buy and hold, the less shares that Melvin can buy, and the more likely they get screwed. In turn, the demand for shares to buy to cover has been raising the price, and Melvin's desperate moves make it clear that those shares are genuinely in demand.
Is that right,
Melvin’s out. Shorts lost $20 billion on the bet. Whoever is betting now is crazy bc the volatility premiums are high. The short interest is below 100%
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FunkMiller
Gold Member
Hmmm. Everything down this morning on all this hullabaloo. Might buy a few more shares up on the dip 
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{insert code here}
Member
Shubh_C63
Member
This story only now has reached our shores so that was a damn fun read.
Most what's gonna happen is these hedge funds will start seeking data and trend from these subreddit and groups for the future.
Because on paper I don't see anything illegal done by these companies short selling. Drumm ii ng influence to crash the stocks is probably true but impossible to prove.
I doubt reddit users care about what is said about them negatively over the news. The damage?/healing? is already done.
Most what's gonna happen is these hedge funds will start seeking data and trend from these subreddit and groups for the future.
Because on paper I don't see anything illegal done by these companies short selling. Drumm ii ng influence to crash the stocks is probably true but impossible to prove.
If anything happens it’s going to be against retail investors and/or free trading platforms like Robinhood.
CrankyJay™
Member
Throwing your weight(money) around to depress share price isn’t illegal the same way a bunch of teens with disposable income getting together isn’t illegal.
{insert code here}
Member
On Bloomberg live, they just said GME is still over 130% short interest and that other stocks were over 100% as well. The guy with the bow tie said, "they reloaded the cannon."
ManofOne
Plus Member
What Wall Street bets and others are doing isn't illegal. Gamma Squeezes are normal.
Every option contract is worth 100 shares. So delta (which normally gives you a figure between 1 and 0) determines by how much you will gain if the underlying assets increased for every dollar. So for example if delta was 0.6 the position would gain $60.00 if the stock increases by $1.00
What WSB is doing is called a gamma squeeze. So when an investor buys an option from a member firm, they have the opposite position typically to hedge against that position they purchase the underlying stock. So for example if I buy 1 contract with a delta of 0.6 then the member firm is short 1 contract and has a negative delta so they LOSE $60 for every $1 increase. So they hedge against this they buy the underlying share.
So this is where Gamma comes in, the closer delta goes to 1, gamma increases substantially. Gamma as you can see from above measures the sensitivity in delta. So the higher the gamma the more sensitive the delta essentially. So when gamma increases, the delta for member firms becomes more negative and the member firm must buy these positions to hedge.
Now if you have a contract, you don't necessarily need to execute the contracts. You can just let it expire. Member firms also have numerous delta hedging positions.
BTW I WOULD SELL BEFORE FRIDAY. B/C WHAT CAN HAPPEN FOR SHORTS CAN HAPPEN TO RETAIL INVESTORS WHEN THEY TRY TO SELL ON FRIDAY.
Here is a good post on reddit explaining it.
"So what happens next and why is Friday so important?
Since a great deal of call options are well into the money, brokerages are now expecting traders to exercise their options or sell their positions to be exercised else-wise. Since the 29th is a massive day for option expiration, millions of people are looking to cash in and dump shares / exercise to profit.
However, many of these traders do not have the capital required to actually open a position. This causes a huge problem because now all of those traders with options will A) be sold back to the MM who will immediately sell/ adjust their net delta to the downside to protect their risk exposure OR immediately exercise and sell their shares to avoid margin calls/ interest.
Not only does the take away of millions of option contracts and the exercise of such add a massive supply of shares to the market ( to be sold) it also forces dealers to sell shares to reduce their exposure they were forced to originally buy to hedge their delta from the calls. So, in theory the opposite of what happened on the way up can happen on the way down, but this time as dealers unload their shares forcibly to control their delta, shorts will also tack on to add pressure on the way down, also short selling shares to create a massive sell off."
Every option contract is worth 100 shares. So delta (which normally gives you a figure between 1 and 0) determines by how much you will gain if the underlying assets increased for every dollar. So for example if delta was 0.6 the position would gain $60.00 if the stock increases by $1.00
What WSB is doing is called a gamma squeeze. So when an investor buys an option from a member firm, they have the opposite position typically to hedge against that position they purchase the underlying stock. So for example if I buy 1 contract with a delta of 0.6 then the member firm is short 1 contract and has a negative delta so they LOSE $60 for every $1 increase. So they hedge against this they buy the underlying share.
So this is where Gamma comes in, the closer delta goes to 1, gamma increases substantially. Gamma as you can see from above measures the sensitivity in delta. So the higher the gamma the more sensitive the delta essentially. So when gamma increases, the delta for member firms becomes more negative and the member firm must buy these positions to hedge.
Now if you have a contract, you don't necessarily need to execute the contracts. You can just let it expire. Member firms also have numerous delta hedging positions.
BTW I WOULD SELL BEFORE FRIDAY. B/C WHAT CAN HAPPEN FOR SHORTS CAN HAPPEN TO RETAIL INVESTORS WHEN THEY TRY TO SELL ON FRIDAY.
Here is a good post on reddit explaining it.
"So what happens next and why is Friday so important?
Since a great deal of call options are well into the money, brokerages are now expecting traders to exercise their options or sell their positions to be exercised else-wise. Since the 29th is a massive day for option expiration, millions of people are looking to cash in and dump shares / exercise to profit.
However, many of these traders do not have the capital required to actually open a position. This causes a huge problem because now all of those traders with options will A) be sold back to the MM who will immediately sell/ adjust their net delta to the downside to protect their risk exposure OR immediately exercise and sell their shares to avoid margin calls/ interest.
Not only does the take away of millions of option contracts and the exercise of such add a massive supply of shares to the market ( to be sold) it also forces dealers to sell shares to reduce their exposure they were forced to originally buy to hedge their delta from the calls. So, in theory the opposite of what happened on the way up can happen on the way down, but this time as dealers unload their shares forcibly to control their delta, shorts will also tack on to add pressure on the way down, also short selling shares to create a massive sell off."
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ManofOne
Plus Member
I not seeing the change thou, its at 98.8%.
eot
Banned
The bald guy dissing games, and then the old dude saying he owns every console lol
{insert code here}
Member
quickwhips
Member
Who is ready to make some money this morning?
{insert code here}
Member
I'm trying to understand how KOSS is up 3000%+ in a week. Yes 3000%.
ManofOne
Plus Member
Not me, ya'll GME people killing market makers. They exited their positions. TSLA down 4.0%
finowns
Member
NOK better go up