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GameStop Is Rage Against the Financial Machine

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Re: GameStop Is Rage Against the Financial Machine

#581

Post by dash2 »

jodrellblank wrote: post #538
restingrobot wrote: post #440

Earlier quoted context omitted.

You're forgetting the stock is 125% over shorted. There literally isn't enough stock for shorts to cover their current positions. That's why there is potential for infinite, (huge) gains as long as everyone holds.

What I've been wondering is, why do people think the 125% over-shorted has to expire all at the same time and imminently? While there isn't 125% available to buy in one go, there is trading happening, HedgeFund2 can be buying and returning their loaned shares this week, HedgeFund3 can be buying and returning theirs next week, HedgeFund4 the week after, and at no point does any group need to buy 125% of available shar…

I don't think there's an exogenous time limit. If the price goes up enough, your broker starts worrying that you won't be able to buy the stock in future. They then might force you to buy now, which pushes the price up further. Hence the squeeze. (Source: learning about this for about a week, completely ignorant, correct me if I'm wrong.)

Re: GameStop Is Rage Against the Financial Machine

#582

Post by alfl »

alfl wrote: post #213
mdoms wrote: post #166

Earlier quoted context omitted.

> One individual sitting at $31M currently on a $50k investment. What happens when one tries to cash out this kind of position? Does he or she actually walk away with $31M?

In this case (/u/DeepF*ckingValue) it's a rolling options positions so: yes, less the fees they've accumulated over the 2+ year history of the position.

u/DFV has closed $13 million of the position (ie sold for cash, cash in their account). Total position including cash was almost $50 million at close. Incredible.

Re: GameStop Is Rage Against the Financial Machine

#583

Post by rhodozelia »

throwaway4good wrote: post #484
TuringNYC wrote: post #344

Earlier quoted context omitted.

This Reddit Post is very revealing: https://twitter.com/inactivist_/status/1354537152445521923/p...

As if a few hundreds worth of GME stock would matter to a billion dollar hedge fund. You can also go to 4chan where you can find selfproclaimed nazis who thinks they are fighting the jews on wall street. It is all very idiotic. As someone noticed elsewhere here on hn; regardless if it is a pump and dump manipulation or a short squeeze, GME will eventually come down. Maybe not in a week but surely in a year.

Would you like to wager when GME will decline by selling short?

Re: GameStop Is Rage Against the Financial Machine

#584

Post by gaha »

I think if you really want to understand what is going on you actually have to read the DD "due diligence" and not just look at the funny memes. I found [1] might be a good starting point.

I'm not that into finance stuff, but the idea of a short squeeze still happening at the end of this week definetly seems interesting. It could be triggered by all the call options expiring on Friday, which will have to be covered by then. If that increases the price even more, I guess the short sellers will have to cut there losses and buy back stock, which supposably still might be sold short over 100%.

That's at least how I understood it and I have no clue if that might actually work. Of course there is a huge amount of people buying into GME just beacuse it is fun, memes, or whatever. But the idea behind all that definelty seems like an interesting bet.

[1] https://www.reddit.com/r/wallstreetbets/comments/l528pz/gme_...

Re: GameStop Is Rage Against the Financial Machine

#585

Post by cwkoss »

AdmiralAsshat wrote: post #20

> These points doubtless make me appear to be a complacent shill for the financial industry, talking down to the rubes. For the record, I’m still angry about the way workers were ripped off in Britain more than three decades ago, and about the way the little guy ended up bearing the brunt for the financial implosions of 2000 and 2008. But it looks horribly to me as though the same thing is going to happen again — and…

> As best I can figure, most of the /r/ guys are doing this as a form of trolling and aren't expecting to get rich off it or pour their live-savings into it.

There are certainly a lot of people talking about "sell your house, put it all into Gamestop". I hope the majority of people reading it recognize it as a joke, but I'm sure some people are heavily overinvested in gamestop right now, to the extent that losses will hurt.

Re: GameStop Is Rage Against the Financial Machine

#586

Post by dragonwriter »

admax88q wrote: post #322
maigret wrote: post #308

Earlier quoted context omitted.

Shorts are often (usually) a legit way to reduce risk - if the stock falls, you’re not losing everything. But that’s less entertaining to report about, so you rarely read about this in the non-technical news.

And if it doesn't fall you lose money. You can't just reduce risk without also reducing gains.

> You can't just reduce risk without also reducing gains.

You can (assuming you haven’t exhausted all available independent investment opportunities with equivalent risk/reward profile) reduce risk without reducing expected gains.

Doing so (assuming you were investing suboptimally for your the prior risk level and expected returns) involves reducing in the part of the distribution above the mean offsetting the increase in the part below the mean.

Buying a 10% interest in each of 10 lottery tickets (ignoring practical risks associated with deals to split winnings) doesn't reduce your gains compared to buying one lottery ticket, it just reduces your risk.

This is the whole point of diversification.

Re: GameStop Is Rage Against the Financial Machine

#587

Post by 0000011111 »

Traster wrote: post #347
fredophile wrote: post #330

Earlier quoted context omitted.

It's a short squeeze. The guys left holding the bag are people that are covering their short positions in the company. The average retail investor is not shorting stocks.. There will probably also be some people that try to jump on the trend too late but that isn't who is being hurt right now.

The second that the shorts have covered the price isn't going to drop to $90, it's going to drop back to $20 and most of the WSBers who were holding out for $2000 will lose their shirts. The shorts are going to lose, no doubt. But once they've lost, the stock price is probably $20. A lot of WSBers are going to be holding stock at that point, and possibly on margin. And that stock is going to be a crappy retail stock.…

$20 is about 10* the 52 wk low of the stock.

Re: GameStop Is Rage Against the Financial Machine

#588

Post by nradov »

drited wrote: post #495
restingrobot wrote: post #440

Earlier quoted context omitted.

You're forgetting the stock is 125% over shorted. There literally isn't enough stock for shorts to cover their current positions. That's why there is potential for infinite, (huge) gains as long as everyone holds.

The company could issue new stock (to get a lifeline of cash from inflated price) I know someone who tried to convince VW management to do that during the Porche/VW squeeze. They didn't but I see no reason why another management team wouldn't act differently.

It takes time to put a secondary stock offering together. Unless they already had it primed and ready to go the bubble will probably pop first.

Re: GameStop Is Rage Against the Financial Machine

#589

Post by qeternity »

JumpCrisscross wrote: post #556
fredliu wrote: post #98

Earlier quoted context omitted.

Great explanation. IMO the GameStop phenomenon is the result of the combination of democratization of trading through software (Robinhood no fee trading, doing it on your cellphone) + social media enabled mass scale online community building (around some previously fringe niche). Any area that is subject to this kind of combination of change could face similar situation where the old institutions guarding the area wo…

There is a third factor: a generation of investors who have never really lost money in the market.

So much this. I cut my teeth in commods which are still very much two way markets.

But the equity crowd hasn't seen any real volatility until March of last year and the Fed promptly stepped up to backstop the entire regime.

I have friends who own TQQQ like it's dumb not to...and they're right.

Re: GameStop Is Rage Against the Financial Machine

#590

Post by onetimeusename »

admax88q wrote: post #315
AdmiralAsshat wrote: post #20

> These points doubtless make me appear to be a complacent shill for the financial industry, talking down to the rubes. For the record, I’m still angry about the way workers were ripped off in Britain more than three decades ago, and about the way the little guy ended up bearing the brunt for the financial implosions of 2000 and 2008. But it looks horribly to me as though the same thing is going to happen again — and…

> The "little guy" refers to the Reddit traders that are making a killing right now, with the expectation that eventually the stock price will crash again. The reddit traders are only making a killing if they're selling these inflated positions. At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the party. There's…

It also was not worth what the institutional firms had valued it at earlier last year at $2.

The short percentage of the float was 140% on 12/31. The institutional guys are not the rational ones here.

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