GameStop Is Rage Against the Financial Machine • Hacker News Board

Re: GameStop Is Rage Against the Financial Machine

#921

Post by Aperocky » Thu, Jan 28, 2021, 5:26 AM UTC

isatty wrote: post #763

jondwillis wrote: post #704

Earlier quoted context omitted.

didn’t Melvin already cover? https://www.msn.com/en-us/money/topstocks/gamestop-short-sel...

They released a story that said that Melvin Capital AND Citron both covered their massive short position (in a company with > 100% shared shorted), in one day, including AH? I don't buy it. AH volume was 4M in premarket, and even though there was ridiculous volume the day before, I'm willing to bet that most of it was fuelled by Blackrock, Chamath and Elon.

It's possible though, the volume today is 90M, that's actually more than their position.

Which means tomorrow the stock could crash.

Re: GameStop Is Rage Against the Financial Machine

#922

Post by pbalau » Thu, Jan 28, 2021, 5:27 AM UTC

bo1024 wrote: post #879

dcolkitt wrote: post #711

Earlier quoted context omitted.

> A Redditor notices this. She knows that in a month's time, the hedge-fund will have to buy 200 cows, and there are only 100 available. This is a common misconception, but fundamentally wrong. Every short sell has an equal but opposite buy. Therefore every share shorted creates a new synthetic long share. Alice owns 100 shares. Bob borrows 100 shares from Alice, then short sells them to Chuck. There are now 200 shar…

If all of Alice's 100 shares are out on loan, is it actually easy for her to sell them? Assume that her broker doesn't have a bunch of extra shares lying around, due to squeeze or bubble event. Sincere question, I don't know how this works in practice.

From [0] and [1] I don't think chaining shorts, as described in the parent comment, is possible. Alice cedes control over the shares in return of a fee. Therefore, when Bob borrows 100 shares from Alice and sells them to Chuck, there are still only 100 on the market, not 200.

> When a security is sold, the seller is contractually obliged to deliver it to the buyer. If a seller sells a security short without owning it first, the seller must borrow the security from a third party to fulfill its obligation.

To actually answer your question, is worth noting that Bob has to provide a collateral to Alice at 100% + some margin (from wiki) the value of the borrowed stock. So, in short (ha!), Alice sells Bob a bunch of shares with the idea that they will revert the transaction at a later date.

[0] https://en.wikipedia.org/wiki/Short_(finance)

[1] https://en.wikipedia.org/wiki/Securities_lending

Re: GameStop Is Rage Against the Financial Machine

#923

Post by jethro_tell » Thu, Jan 28, 2021, 5:32 AM UTC

tenpies wrote: post #869

dkrich wrote: post #857

Earlier quoted context omitted.

This is the exact thing I have been trying to convince people of since this began. It started with a kernel of truth and a case to be made for a potential short squeeze but at some point along the way transitioned from a squeeze to a bubble with more and more chasing gains out of fomo and some ridiculous concocted story about the little guy vs the big bad Wall Street. This is further evident from the spillover effect…

It's literally impossible for it all to be retail money. What I think people are missing is that in about a month we'll find that "Wallstreetbets" and "retail" were also other fund managers like Ackman. This is not the first time one fund manager messed up with their short and got absolutely eaten up by other fund managers (see, famously, Herbalife where Ackman and Icahn were direct adversaries). Melvin Capital clear…

Some guy makes 50mm (mostly unrealized at this point). Where do you think the rest of the 14 billion is owed? Probably institutional investors and HFT guys that have been playing market volitility, as they do.

There's a couple guys that are fucked, but most of that money is going back into the pockets of 'the big bad fund managers'

Same with Tesla, I don't think the institutions that profited handsomely in that run up think it's worth the price, but they think that the real gains are good for their funds.

Also note, retail guys are still probably pretty close to the one percent. Who else has 50k lying around for something like this. Sure he might not be a hedge fund, but he's probably not working a minimum wage job and fixing inequality with his trades.

Re: GameStop Is Rage Against the Financial Machine

#924

Post by user3939382 » Thu, Jan 28, 2021, 5:34 AM UTC

smabie wrote: post #898

user3939382 wrote: post #645

Earlier quoted context omitted.

> The question is, what will we do? IMHO the time to ask that question was when Congress reversed the rules allowing them to trade stocks. Or when it was decided it was okay for Wall St to spy on limits and front run the trades of retail investors by having their order flows sold to Wall St through the only accessible means of trading Or when you have the entire SEC staffed through a revolving door of Wall St insider…

HFT firms do not front run retail orders. This does not happen.

https://seekingalpha.com/article/4205379-robinhood-is-making...

Re: GameStop Is Rage Against the Financial Machine

#925

Post by GizmoSwan » Thu, Jan 28, 2021, 5:39 AM UTC

There is one thing not being discussed anywhere that I would like to see discussed.

Sometime in Sept 2020 GME had purchased sum of shares that had in effecting had reduced the number of shares outstanding or the float and that purchase likely to have created the imbalance where the are more short shares than existing shares in my opinion.

I can not believe that the whole scheme has not been by design. I recall seeing GME pump starting right about then in Sept. I am also convinced that the shorting hedge funds could have been playing it on the up side via options. They could have sold puts; bought calls. There are a lot of dark pools that are not transparent to know who is doing what. It is pretty naive to believe that all these hedge funds dabbling in these type of games are the sheep and not the wolves.

Both the new shareholders who are now the insiders and the hedge funds are likely to be aware of the small float that would kick started the short covering pyramiding scheme and reddit would have provided the pawns to spawn it really fast.

Don't be naive. They fundies have been hitting all the high volatility stocks with small floats/ high short ratios.

Re: GameStop Is Rage Against the Financial Machine

#926

Post by numpad0 » Thu, Jan 28, 2021, 5:40 AM UTC

Thorrez wrote: post #868

anonymouse008 wrote: post #782

Earlier quoted context omitted.

I'm really confused because wouldn't that require a filing with the SEC to authorize shares? Wouldn't that number become part of the float? I looked into "fails" data, and I'm a bit lost [0]. Is Alice's IOU sellable as a security with voting rights? Who gets to vote on those 100 shares? There are now 200 votes? That's very strange. I've heard of synthetic longs before but in options [1] [0] https://www.sec.gov/data/f…

I can't answer most of your questions, but I think I can answer the voting part. There are 100 shares, Alice owns all of them, but loans them all to Bob so Bob can short them. Bob sells all of them to Charlie. So Alice owns 100 shares and Charlie owns 100 shares even though only 100 real shares exist. (Bob owns -100 shares.) But Alice can't use her shares for voting because she loaned them out, only Charlie can vote.

Sounds like a linked list! I wonder if stock market is or could be made Turing complete.

Re: GameStop Is Rage Against the Financial Machine

#927

Post by silexia » Thu, Jan 28, 2021, 5:43 AM UTC

conanbatt wrote: post #834

silexia wrote: post #366

Earlier quoted context omitted.

I sold a GME call option with a strike price of $320 and expiration in July today for $200. A pump and dump by novices is easy money if you know how to play it. Everyone knows this is going to crash, the question is when?

--- My friend Andrew Left of Citron Capital, who was up 155% last year, was publicly short GameStop, so I called him last night to ask for his thoughts. He had plenty – and gave me permission to share them: The market has come to its lowest form. This is even crazier than Tilray (TLRY) [see below] and Tesla (TSLA). The Reddit crowd apparently said, "Let's find a company that's completely dead – and because everyone k…

He wrote naked calls with a strike price of $90 and now the price is $350... Shouldn't he be wiped out if anyone exercised their call options?

Re: GameStop Is Rage Against the Financial Machine

#928

Post by nrmitchi » Thu, Jan 28, 2021, 5:43 AM UTC

adolph wrote: post #895

nrmitchi wrote: post #861

Earlier quoted context omitted.

Why would anyone accept Gamestop stock as compensation for anything right now? Especially when they almost-definitely wouldn't be able to turn around and sell it right away.

Because they want to be listed in the exchange without going the traditional way. That is the concept floated for Dell using VMWare in the linked article.

As opposed to just going some SPAC route that isn't a meme stock that could very well lose 95% of it's value in the next week/month?

The approach may have been suggested for Dell/VMWare, but at the moment GME is a totally different beast.

Re: GameStop Is Rage Against the Financial Machine

#929

Post by neilwilson » Thu, Jan 28, 2021, 5:46 AM UTC

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…

"At some point somebody will be left holding the bag"

Which while the short interest is greater than the float is the guy with the excess short interest.

They are patsy in the market at present. You can always offload onto them because their loans come due. You don't have a loan so can wait as long as required.

Re: GameStop Is Rage Against the Financial Machine

#930

Post by fnord77 » Thu, Jan 28, 2021, 5:48 AM UTC

I think a lot of people commenting here have not read the comments on WSB.

People there know it will crash. They're buying call options to force the market makers to buy to delta hedge, thus driving up the price and making actual shares scarce.

The point is to screw over the hedge fund shorting gamestop. nothing more, nothing less