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Shorting and Indian capital markets

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Re: Shorting and Indian capital markets

#41

Post by Threeve303 »

This is a financial version of the social media effect we have seen spreading misinformation and causing people to act in real life.

All of the ingredients are there.

1) Use social media to organize motivated groups of people

2) Align the mob to a target that is inherently disliked. Hedge funds and wall street more generally.

3) Cause world wide market volatility. In this case, it's moving institutional investors out of the market, eventually causing a lack of liquidity that reveals structural problems. In other words, How many Lehman Brothers does it take to cause a 2008 type crash?

Re: Shorting and Indian capital markets

#42

Post by tikej »

ZephyrBlu wrote: post #36
PeterisP wrote: post #31

Earlier quoted context omitted.

"There is no way everyone can get out at the top" - this is the big issue here - as far as I understand, the position of WallStreetBets is that there are (were?) so many shorts of GME compared to the shares on market that they would be required to buy all that stock and everyone can get out at the top. I don't feel certain about this (especially since if any of the funds actually go bankrupt, they would default on th…

I'm pretty sure a mass buying of the stock would drive the price right into the floor. So the first few people will get an extremely high price because like you said, the shorts are forced to buy, but as the sell off begins the price will plummet.

But aren’t the shorts for like 140% of the GME stock? That means if everyone holds with prices, sooner or later the shorters will have to buy ALL that stock anyway at nearly any price to cover for the losses and give back shorted stock.

Re: Shorting and Indian capital markets

#43

Post by xadhominemx »

lovich wrote: post #27
ignoramous wrote: post #11

> While everyone is celebrating retail traders winning over a large hedge fund in this case, it rarely ever plays out this way. Most commonly, retail ends up losing money when there is excessive speculation. This is the only passage anyone with too much at stake (than they can afford) in this short needs to read. Other than that, I believe industry insiders / traders are missing the mark in that the current dynamic i…

>rejecting the fundamentals I think what is missing in many people's analysis is that there is a new fundamental value in this situation. Buying GME shares is now linked to destroying a hedge fund and ruining some billionaire's days. For many people, and I include myself in this group, that has a real tangible value that outweighs the actual dollar amount it costs to buy a few GME shares. When the leaders of these br…

Buying GME is in fact not linked to destroying a hedge fund as the funds with large concentrated short positions exited the investment several days ago. The situation now is a bonanza for billionaires, as many have gone long the stock or are providing highly lucrative retail options market making services. The entire narrative about gme now being some sort of populist uprising is a sham perpetuated by those who want to bring fresh bag holders into the name.

Re: Shorting and Indian capital markets

#44

Post by thargor »

teruakohatu wrote: post #19
kumarvvr wrote: post #17

Earlier quoted context omitted.

Its like you leasing your house. Your assets still show the house. The lease holders address is the house. If you just see the records, there are two houses. But if you actually count, thereis 1 physical house.

It's more like you lease a house from the owner and then lease it out again. There are two leases, but only one house. The house has been leased 200%.

No it's actually selling the leased house and needing to buy it back after your lease expires.

Selling leased stuff is not allowed for a reason.

Re: Shorting and Indian capital markets

#45

Post by newswasboring »

TeMPOraL wrote: post #23
RobertoG wrote: post #10

>>"In some of these stocks, the total quantity of stocks shorted (stocks borrowed and sold + using derivatives) is much more than the free float or the total number of shares held publicly. " So, they short more stocks that exist. OK, I will not ask why this is allowed, but how is this done?

Stock [purchased by] A [lends to] B [shorts to] C [lends to] D [shorts to] E ... There's one stock, but when people count shorts, they're counting the [shorts to] edges. That 140% ratio is essentially the (amount of [shorts to] edges) / (amount of stock in circulation).

This has been explained to me several times since last week. What nobody mentions is why is it done this way? It just feels unnecessarily obscure. What am I missing?

Re: Shorting and Indian capital markets

#46

Post by WJW »

tikej wrote: post #42
ZephyrBlu wrote: post #36

Earlier quoted context omitted.

I'm pretty sure a mass buying of the stock would drive the price right into the floor. So the first few people will get an extremely high price because like you said, the shorts are forced to buy, but as the sell off begins the price will plummet.

But aren’t the shorts for like 140% of the GME stock? That means if everyone holds with prices, sooner or later the shorters will have to buy ALL that stock anyway at nearly any price to cover for the losses and give back shorted stock.

There is a more likely alternative than paying "nearly any price", which is that the funds in question go bankrupt and default on any obligations remaining. At that point, anyone who hasn't sold yet will be left holding (call options on) stock worth maybe a tenth of its current price.

Re: Shorting and Indian capital markets

#47

Post by HexDecOctBin »

WJW wrote: post #33
lovich wrote: post #27

Earlier quoted context omitted.

>rejecting the fundamentals I think what is missing in many people's analysis is that there is a new fundamental value in this situation. Buying GME shares is now linked to destroying a hedge fund and ruining some billionaire's days. For many people, and I include myself in this group, that has a real tangible value that outweighs the actual dollar amount it costs to buy a few GME shares. When the leaders of these br…

While some billionaires are having a terrible week, market makers and prop trading desks have been making an absolute fortune. I'm sure the billionaires owning the market makers are more than happy to sell "financial uprising points" to WSB readers if they so desperately wish to purchase them. It's a mistake to see "the billionaires" or "Wall Street" as a single homogenous group. 99% of them don't mind Melvin capital…

In the modern world, most people live in a state of learned helplessness, because they have been told that the societal systems around them are very complex and they don't have a hope of comprehending them.

An event like this, while not being a be-all-and-end-all, can give commoners a taste of blood -- that maybe they are just as smart as those elites, that maybe they can use the systems for their own benefit too, that maybe they don't HAVE to live under the boot.

It's the hope that matters, because there are always more opportunities.

Re: Shorting and Indian capital markets

#48

Post by thargor »

kumarvvr wrote: post #17
RobertoG wrote: post #10

>>"In some of these stocks, the total quantity of stocks shorted (stocks borrowed and sold + using derivatives) is much more than the free float or the total number of shares held publicly. " So, they short more stocks that exist. OK, I will not ask why this is allowed, but how is this done?

Its like you leasing your house. Your assets still show the house. The lease holders address is the house. If you just see the records, there are two houses. But if you actually count, thereis 1 physical house.

No it's like you leasing your house. Selling the house to a third party. One party (your buyer) owns the house. The original owner also owns the same house, since he only leased it to you.

But houses are non- distinguishable. You don't need to give him back exactly that house, just an identical one.

Re: Shorting and Indian capital markets

#49

Post by dualthro »

xadhominemx wrote: post #43
lovich wrote: post #27

Earlier quoted context omitted.

>rejecting the fundamentals I think what is missing in many people's analysis is that there is a new fundamental value in this situation. Buying GME shares is now linked to destroying a hedge fund and ruining some billionaire's days. For many people, and I include myself in this group, that has a real tangible value that outweighs the actual dollar amount it costs to buy a few GME shares. When the leaders of these br…

Buying GME is in fact not linked to destroying a hedge fund as the funds with large concentrated short positions exited the investment several days ago. The situation now is a bonanza for billionaires, as many have gone long the stock or are providing highly lucrative retail options market making services. The entire narrative about gme now being some sort of populist uprising is a sham perpetuated by those who want…

How come I continue to see posts talking about the short float for GME being in excess of 100%?

disclosure: I have no investment in GME, but am hoping to see some hedge funds suffer

Re: Shorting and Indian capital markets

#50

Post by thargor »

mmmateo wrote: post #12
RobertoG wrote: post #10

>>"In some of these stocks, the total quantity of stocks shorted (stocks borrowed and sold + using derivatives) is much more than the free float or the total number of shares held publicly. " So, they short more stocks that exist. OK, I will not ask why this is allowed, but how is this done?

When you lend someone a stock you borrowed, it’s considered an additional ‘stock shorted’

No. Shorting is selling a stock you borrowed. Multiple borrows does not make a short.
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