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GameStop Is Rage Against the Financial Machine

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Re: GameStop Is Rage Against the Financial Machine

#61

Post by ISL »

dannyw wrote: post #40
ISL wrote: post #15

Earlier quoted context omitted.

In the short term, the market is a popularity contest. In the long term, the market is a weighing machine. If you look at the option chains, it is clear that traders value GameStop in the long run far below the current trading price. https://www.nasdaq.com/market-activity/stocks/gme/option-cha... A November 2021 "put" at the present market price of ~$360, the right to sell GameStop stock in November at $360, is selli…

You don’t actually understand option prices. Put-call parity. The reason why options are so expensive is because of high implied volatility. Both calls AND puts are expensive; as they always will be, because if they’re not balanced, a risk free arbitrage ensures. Here’s an article on why calls and puts must be the same price: https://robotwealth.com/why-arent-call-options-more-expensiv...

I think I do understand them, from a value-investor's perspective. If I buy an option, I actually intend to exercise it or hold it until expiration, not hedge with it.

If I bought a GameStop put today, for the pricing in my post above, it would be because I was willing to make a strong bet that GameStop's intrinsic value in November would remain below $60/share and that I was fairly sure the market would return to its senses by then. How the option-seller reaches her offering price is entirely irrelevant to me.

It is true that much of the pricing of options comes from volatility, but for me, as a buyer, it is perhaps irrelevant.

Thanks for your perspective, though. I'll read your link with interest.

Re: GameStop Is Rage Against the Financial Machine

#62

Post by blhack »

ISL wrote: post #32
ping_pong wrote: post #4

It's really not. Because eventually retail is going to get destroyed. Yes, some hedge funds have lost their shirts, but those are the first ones who were in the short before the squeeze. The hedge funds and more importantly day trading shops making money right now are the ones who saw the activity and are goosing the stock price right now. I don't know if people realize that there are thousands of day trading shops w…

It isn't just retail that is going to get destroyed -- the option-sellers may not have enough capital to hedge effectively. A lot of parties are going to be harmed by this; it is an expensive tuition payment to the school of hard knocks. The most interesting technical thing about this fracas is the fact that WSB has managed to play the options-sellers off against the shorts to set this off. The kids have temporarily…

Reading through the comments on WSB, I actually don't think the losers care. They just want to see the short sellers suffer. They're just mad, and while I think they hope they make money, I think most of them just want to see the people they feel like control their lives suffer.

It's past clever trading at this point.

Re: GameStop Is Rage Against the Financial Machine

#63

Post by lukeramsden »

ping_pong wrote: post #26
tempsy wrote: post #19

Earlier quoted context omitted.

nah you’re underestimating their power to move names in small cap stocks with high short interest.

That's absurd. People in WSB probably bought low and haven't sold at all or sold on the way up. Look at the volume. Who is shorting at these prices with this kind of activity? Who has the money to keep buying at $350 to propel the stock to $400? Definitely not WSB. I know plenty of people dipping their toes in and buying 10 or 20 shares for fun right now. But there's 55M shares trading at all time highs. That's not r…

> Who has the money to keep buying at $350 to propel the stock to $400

Delta hedging, potentially

> But there's 55M shares trading at all time highs

55M is the float but there's nowhere near that much actively available. Fidelity and Blackrock together own about 25M I think [0], along with other institutional investors as well as staff in stock incentives. Some of this will be liquidated as the price goes up but not all of it.

[0] https://news.gamestop.com/stock-information/institutional-ow...

Re: GameStop Is Rage Against the Financial Machine

#64

Post by VikingCoder »

dannyw wrote: post #52
VikingCoder wrote: post #38

Earlier quoted context omitted.

Dumb question - could the shorts actually negotiate with Gamestop directly to get them to issue new stocks? Wouldn't that be a win-win (and the retail loses, because a) the stock is diluted, and b) no one would be "forced" to buy from them)

Sounds like a great way for management to get into a fiduciary duty lawsuit.

If no one is selling GME, but someone is willing to buy GME, and GME actually gets to pocket the cash, that sounds like it would be in the long-term interest of GME shareholders to me. But like I've said elsewhere, I'm an idiot.

Re: GameStop Is Rage Against the Financial Machine

#65

Post by zinclozenge »

colllectorof wrote: post #37

If you want an entertaining explanation of what's going on with GameStop's stock, I highly recommend these videos from Louis Rossmann: https://lbry.tv/@rossmanngroup:a/wallstreetbets-vs-citron-re... https://lbry.tv/@rossmanngroup:a/why-mainstream-media-s-slan... https://lbry.tv/@rossmanngroup:a/gamestop-shorts-lose-billio... https://lbry.tv/@rossmanngroup:a/gamestop-shorts-are-full-of... (That's how I learned about t…

I didn't watch all the videos, but so far as I write this post, it does not appear that shorts have covered, or started covering (at least as of this morning). It seems like the price hike is due to big buyers and gamma squeezes. There's been systematic short attacks in an attempt to drive the stock down, but they keep getting neutralized by big buyers. It's been a wild ride.

Re: GameStop Is Rage Against the Financial Machine

#66

Post by ping_pong »

dannyw wrote: post #33
ping_pong wrote: post #4

It's really not. Because eventually retail is going to get destroyed. Yes, some hedge funds have lost their shirts, but those are the first ones who were in the short before the squeeze. The hedge funds and more importantly day trading shops making money right now are the ones who saw the activity and are goosing the stock price right now. I don't know if people realize that there are thousands of day trading shops w…

You underestimate just how much concentrated retail volume is. I have had more than ten people ask me how to buy GME. Its on the front page of everything. Bitcoin’s nearly $1T market cap is more or less all retail. Plenty of WSB posts with multi million positions. Disclosure: I long GME.

You don't understand. The original multi million dollar positions with WSB are static now. They're not trading anymore. They can't possibly boost the stock price any further.

The way the stock price goes up is by more volume coming in at the highs. But we are talking 57 M shares traded at noon today with outstanding float of 65M. Those are professional day traders propelling the stock. Buying high and selling higher. It's not WSB.

Re: GameStop Is Rage Against the Financial Machine

#68

Post by cwhiz »

I am loving every minute of this. The "professionals" gamble on the market all the time, front run, high frequency trade, and relentless tactics to get rich at the expense of the "retail" investors. Now they are upset that apps like Robinhood has provided unprecedented access to the markets. Their exclusive access to insane gambling nonsense is being torn down in real time.

If Wall St can gamble and cause a global financial crisis, I see no reason why "retail" traders can't fuck around on Robinhood and cause some meme stocks to explode.

I think what is really going on here is that the "professionals" are bothered that the "idiots on WSB" are making a mockery of the market. Make no mistake, the market is already a mockery, what's happening now is that the public is finding out.

Re: GameStop Is Rage Against the Financial Machine

#69

Post by blhack »

vmception wrote: post #60
blhack wrote: post #57

Okay a serious question: at what point does it make sense for these hedge fund guys to just purchase reddit and shut it down? To be clear: I don't think that would work, but I think we're at the point where stuff like that is going to be tried. These guys are losing BILLIONS of dollars. Billions. Can they spend $1B to prevent the loss of $2B? (Is reddit worth more than $1B?) Other stuff I won't be surprised if we see…

Gotta hit discord and telegram too Telegram has threads now on announcement channels that are unlinked from discussion channels

Discord and telegram are big, but there's no way they're as big as WSB. I can just go to reddit.com/r/wallstreetbets and watch the show, I don't even know how to begin finding the same thing on discord.

And to put into focus how many people are involved here: the GME discussion threads go to tens of thousands of replies within MINUTES of being posted.

Re: GameStop Is Rage Against the Financial Machine

#70

Post by k3oni »

throwaway63d2b wrote: post #10

The duplicity of the media here is funny! Melvin has not closed out of its short position.

There is a high chance that they started closing their position. Just look at other long positions Melvin had and what those started doing, i'll give you a hint : they started going down due to the possibility of them starting to liquidate other positions to raise more cash for covering their shorts. But this is also speculation, until they release their books on what they own nothing is 100% sure.
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