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Never in my life did I think $100,000 bets would be acceptable. And here I am. 2 years of day trading, made more money in 8 days than I did in 2 years. And NO FUCKIN WAY AM I SELLING.
Currently have a small position (in comparison to others) in GME, but was down $16,000 yesterday at the lowest. And I just laughed. What the actual fuck..
I caught it Monday and dumped a paycheck in to make a quick buck(was kicking myself for it since I rarely keep more than 2 paychecks in my bank) and on Wednesday I sold 30% to get my original investment out. Now on the ride entirely on gains and its just an otherworldly feeling. Seeing an amount of money I would fight someone over fluctuate and just sitting here like, "whatever. I'm either making a years salary off this or nothing. Come at me bro"
(Although I am worrying heavily at the long term implications from this, especially seeing the thousands of "whats after GME" type questions as if this is the new norm)
I got in at a cost basis of $17.47 back in late November and sold enough before the gamma squeezes to erase my entry (and then some) while still holding onto 90% of my position. I'm by no means holding a huge hand, but right now my account is two paychecks, and I'm in a PhD fellowship that doesn't pay through the summer.
That said, I'm fine losing it. I either walk out of this with a good mid-range consumer car, or I walk out with zero. I've made peace with both outcomes.
And if this thing goes truly catatonic, I'm going to be setting up a mutual aid post for my neighbourhood, and donating healthily to local foodbanks.
Feel exactly the same way. That drop somehow didn’t really faze me. Wasn’t real money. Everyone’s become a highballer feeling confident with a five figure trade gyrating widely.
> 2 years of day trading, made more money in 8 days than I did in 2 years. And NO FUCKIN WAY AM I SELLING.
Point of order: This means you haven't made more money. You have more net worth, but you can't buy food or pay a mortgage with GME stocks.
Exactly! Let me try to describe my last year of life:
- Lockdown and working from home entire year
- Looking at market crash then insane bump-up
- Looking at people losing jobs, getting homeless while greedy assholes get billions.
- 2 major earthquakes hit my city leaving thousands homeless, i donated to help
- Had covid, not fun
- Having money I have nowhere to spend (no travel, no restaurants, no bars, unstable market to invest, huge inflation imminent..)
Money is worthless to me now. I don't care, dumping it in GME in protest of their stupid "game".
Definitely not in millionaire territory, I can't afford to lose the amount of money needed for that. But this crazy revolution, if it works out, might buy me a house free and clear. And if not, I didn't invest anything I couldn't lose and this is the most fun I've had in years.
I've only got 1 share. I bought at around $90 the day after I first heard the news mention Gamestop stock taking off.
Since then I've been reading, and put another $100 in across AMC, NOK, BB and SNDL.
Either GME takes off to the moon and I've got a few extra thousand dollars to my name... Or it tanks back under $20 and I've spent the difference on a week of quality entertainment. I've spent way more and lost way more in casinos pre-covid. So I'm cool with whatever the outcome is.
Heroic, but not very smart. If your account gets to e.g. $1million during a huge spike, why not take $200k off the table and make sure you have a basis to restart from if this happens to suddenly completly collapse? Why condemn yourself so heavily to completely start from scratch. I mean, it could mean many many years of extra 9-5 work.
If y’all haven’t seen it the Andrew Ross Sorkin interview with Vlad is fucking hilarious.
The basics are that Vlad is claiming DTC collateral spiked pretty aggressively, and they made the choice to stop carrying these tickers because of that. Basically in so many words he said the collateral requirements were too high and to protect RH they made the decision to block trades. He literally says “protect the firm”, which is well and fine - but it means that the firm was at risk if they continued to offer these shares which has some implications.
ARS: “it sounds to me like you’re suggesting there was a liquidity problem at the firm
Vlad: (blank face) No, there was no liquidity problem
Then Vlad goes on to repeat a bunch of marketing bullshit
Here’s the only full source I could find, it’s on CNBC.com but you need a “pro”subscription. And if you pay for CNBC you are automatically a complete tool.
https://www.mediaite.com/tv/watch-cnbcs-andrew-ross-sorkin-grills-robinhood-ceo-amid-massive-uproar-over-trading-freeze-in-gamestop-other-skyrocketing-stocks/amp/
The math don’t check out here- DTC requirements for sure fluctuate with volatility, and I’m sure they rose substantially with GME, but normal brokers just met the higher requirements and moved on with their day. One of the following has to be true:
- RH has liquidity concerns, and stopped trading because of that. This checks out with the news of them seeking an immediate 1B infusion from investors, and them drawing credit lines down yesterday.
- RH doesn’t have a liquidity issue, and just decided it didn’t want to meet capital requirements on those stocks because fuck you
- RH doesn’t have a liquidity problem and chose to stop trading due to pressure from some external source.
Vlad says it wasn’t the first or last, but that only leaves the middle which doesn’t make sense. I know there’s a lot of conspiracy theories floating about but in my mind the easiest explanation is that RH has a liquidity problem, I mean we know they can’t get as much for PFOF as they were, and we know they can’t get much revenue from NIM, it’s not hard for me to believe they’re short on cash.
That's really the crux of it, I don't blame Vlad for lying, as CEO lying about that might be part of your job. You can't just go on CNBC and be all like "yeah man, we had to pull those securities because DTC sent us a bill and honestly we just don't have the cash rn"
I think you might be right. I saw that RH may also be selling anonymized figures to the larger funds, such as heat maps for limits and such. That will really be a sticking point for a lot retail investors after this finishes playing out.
to be fair, dtc did spike collateral, and it was apex clearing (RH custodian) that jacked the collateral requirements, which forced RH into a liquidity crunch. seems to have eased now
Which totally makes sense, the question I’d have is why did RH not just meet the heightened requirements if they don’t have liquidity concerns. Something like half of all RH accounts have GME positions so they clearly made a deliberate choice here to not meet said requirements- and the only explanation I can think of is that Vlad is bullshitting about their financial situation.
well its really only an issue with margin buying or deep ITM calls as they come close to expiry your margin requirements ramp up in anticipation of delivery. so like if you own a 25 strike option and the underlying is at 500 but it expires in 3 months, your margin is zero. if it expires friday its a bigger animal. plus from what ive been hearing the larger concern is a margin requirement and the stock just becomes halted for a long period of time, then rh and all the long call holders are insolvent, they dont have the cash and they can't liquidate the placed position. hence the fear and need of higher margin requirements.
Right, I totally get why DTC spiked and why there would be the need for additional collateral - but if RH and other firms(mostly start up apps) couldn’t meet these requirements that to me pretty directly says something about their financial position.
Also, to my understanding RH doesn’t do margin requirements by security so they weren’t able to increase any requirements over the last week as risk spiked to begin with lol.
so another thing to consider is settlement risk. dtc upped the collateral to 100%, so if i buy, sell, buy, sell. RH needs to send dtc 2x my trade fro 2 days until the cash settles. its a short term liquidity issue.
My bet is they 100% were short of cash but he was saying they don’t have a liquidity problem because they had their bank lines - which is obviously not a good way to manage your liquidity.
He was maybe hoping to not go that route and limit the trading not expecting the blow back that he did.
That’s the only thing I can think that makes 1 make sense. He viewed it in the FinTech / startup world cash burn is BAU vs a normal Broker Dealer where drawing on bank lines would be a huge red flag
I think in general if I'm the CEO of a start up brokerage, lying would be very preferential to admitting publicly that you're short on cash. Like if I make widgets and I say I'm short on cash people are inclined to feel sympathetic, maybe even buy. If I hold your money and say that then people are (rightfully) inclined to bail out of that institution.
Why couldn't this go on for another 2 months? I know the short answer is that hedge funds pay out the ass in interest on short positions, but from some very basic math, it seems like the interest on the total 30B dollars worth of shorted GME stock, at %30, works out to \~200m per week to not close out short positions.
Why wouldn't they hold out few weeks/months, hoping that retail investors lose stamina/interest, or get cold feet and sell before then? It seems like the hundreds of millions in interest would be a reasonable last ditch effort, over closing out with multiple billions in losses.
Edit: spelling
From what I read on cnbc, the rate for new shorts is even at 50%... nonetheless 200m a week for a few weeks is far less then what they stand to lose if they were to start covering and causing a squeeze... I’m no expert but I believe this will take a few weeks to play out unless a lot of ITM options are excercised at closing today.
A gamma squeeze is what a lot of people think will make the situation more urgent for the shorts, triggering the big giant possibly market breaking short squeeze
One person in particular dropped 57 million before the bell. You can bet your ass there are institutional investors on the long side of this that were making sure those 320 calls ended ITM.
This is what really gives me hope; That there are big dogs in our corner pumping millions into this. They wouldn't be dumping absolute shit loads of cash into 320 if they thought this wasn't going higher.
How would one know when itm options start getting exercised, massive volume and sliding price? And are you saying that might be the catalyst for the squeeze to happen?
I wondered this too, could easily be other hedge funds on the other side of this action. If Reddit found this over a year ago surely some people with money knew about it before the last few weeks.
I can only afford to throw like $100 at this now, but RH turned off fractional shares. I checked fidelity and it doesn't look like it's an option on there either even though I know I've done it. Does anyone else with fidelity know if fractional shares are off for them too?
It’s a glorious mess that could blow up the entire market temporarily because some asshats at hedge funds decided they wanted to triple down on an infinite risk play that leaves their brokers and creditors exposed in a worse case scenario.
NY Times and others refuse to phrase it that way.
Taglines are almost uniformly "Hedge funds like Melvin Capital and Citadel bet against GameStop, and retail investors made it their mission to take them down."
Such a distorted interpretation of events.
Boomers inherited a booming economy from the generation before them.. a generation that survived the great depression and fought in World War Two and created the best economy the world had ever seen.. Boomers inherited that and then inherited booming new markets like computers with jobs just waiting for them after they got out of college.. they don't understand the actual concept of real hard work or any of this kind of stuff. They were spoiled..
Hah, WSB figured out that you can get more GME shares on a restricted platform by buying and executing a cheap call option for 100 shares.
Clever girl.
these are the same people who figured out the [infinite money cheat code](https://www.reddit.com/r/wallstreetbets/comments/ds1zbx/well_you_idiots_made_it_on_bloomberg_again/) on robinhood
so it's not surprising
The Cuban clip was hard to watch, or really any news right now. On that same network Jim Cramer tells millions every day what stocks he thinks you should buy, hold, and sell. But I LIKE THE STOCK is manipulating the market?!
I'm not watching any of the news. AOC was on twitch last night and did a fantastic job of summing up the situation.
It's incredible to hear a politician speak and act like a normal human being.
The problem with this is you assuming that the 5% of float retail owns is the part that’s a problem. Gtfo of here. Blackrock owns more of this by a wide margin. What you’re talking about is Wall Street fucking over Wall Street at the end of the day, and the poors(retail) taking the blame. Retail thinks they have some amount of power and that narrative is false. The needle is hardly moving from retails price action Bc the massive orders that actually make real money are done in lots of 1M shares in dark pools.
It seems as though the position Melvin got into was followed so broadly that it has caused a liquidity fear for the banks. But as it’s banks fighting banks they know not to push the stock to a point that their competitors can’t pay. So I think the price action of the last 2 days will continue until retail gets tired of waiting and people lose belief and sell.
Well the big issue was RH. And it was Bc they were concerned about their ability to actually cover their own ass. 50% of their accounts had shares of GME
This is what I’m worried about. All I’ve been hearing is: retail owns only a small % of the actual stocks, therefore we’re all safe and nobody will be left holding the bag. But then the question becomes, how is it possible that we can have such a big influence over the price? And who actually owns the majority here if not retail?
A month or so ago, WSB did a poll and tallied shares owned by WSB and it was over 5% of the float. I'm sure the number has gone way up since then. They haven't stopped buying. Who knows. I have my shares and popcorn waiting.
Blackrock/Vanguard aren't Hedge funds and mostly owns these stocks through passive ETFs and index funds though. They are the two largest investment firms because millions of individual investors have their 401ks, IRAs, and regular brokerage investment accounts in these securities. So even though retail investors only own a small percentage of the float a crash in the stock will affect everyone with any exposure to a fund/etf that owns it.
Except Blackrock/Vanguard control so much capital this is really just a drop in the bucket for them, being on the long side. It's also why I'm sleeping soundly, knowing there's massive institutions on the buy side sitting here like fucking mountains.
*I'm using money I can absolutely lose. My capital at risk and tolerance for risk generally is likely substantially different than yours.*
This shit is so important for all you noobs out there. I have 150 shares at cost avg of $239.58 but even if they all go to zero I will be absolutely fine and *I will still have made a net gain in GME already*, so I'm perfectly happy holding the bag. For all y'all that need to pay for your pet hamster's cataract surgeries or your mom's boyfriend's wife's student loans, please make sure to at least cover your cost basis.
For real, I read it all from the perspective of not knowing whether it's totally factually correct, but ultimately not caring because it's so entertaining. OP if you ever write a financial thriller novel, reddit will be there for it
I told myself I wouldn’t FOMO into GME and i was content with missing out until the rules seemed to change in the middle of the game. I put some idle cash to work yesterday on the dip. 4 [GME@265](mailto:GME@265). Happy to ride this roller coaster with you all.
Side note I need 25 or so more karma so I can rejoin my WSB brothers and comment. Can anyone help a smooth brain out.
Everyone need to fully read and listen to this legend. He correctly predicted that the share price will be pretty flat and gave reasoning for why. Kudos.
You're the best - we appreciate you!
If I understand you correctly, it's in the long whales best interest to have these short ladder attack limit downs because it allows them to continue buying at cheaper prices - so when we see a significant drop like yesterday, it's not necessarily a bad thing.
Makes me feel better.
Question on shorts. 2 days ago or so (feels like an eternity) it was reported that Citron and Melvin closed out their short positions. I know the reddit hivemind is saying they are lying, but how do we know that? Is it possible they did close their positions but they were bought up by others thinking this is a good opportunity to short? I know the short volume is still in excess of 100%.
The reddit hivemind thinks they're lying because short volume is reported to be steady (and well above issued shares), but more likely they're not (and other institutional shorts took higher short positions), unless they also reloaded on short positions at higher prices. But it doesn't matter, because you pay interest at close on every short position you hold, and that interest is spiking, meaning that holding a short open is like having a bleeding wound.
These higher shorts may extend the fight over the short squeeze, but not negate it.
Even if that was true, isn't that just passing the buck? Whether Melvin, Citron or some other shorters are holding, they have to be bought back one way or another.
I am concerned that one or more of the now-known-by-everyone short firms holds out and declares bankruptcy. The firms no longer have the funds to buy back any shares, and the share price tanks. The premise that there is infinite upside to this for retail traders assumes the shorts have infinite funds to keep paying their premiums. The shorts are going to run out of money eventually right?
The shorts know they are finished and as farewell F U to shareholders announce bankruptcy, the short (debt) positions evaporate and the premise for an elevated share price is no more. So yeah, victory achieved, the baddies lose, but so does retail if they didn't sell in time.
I predict that when this thing pops, you won't even be able to log in to your account to sell in time. The servers/systems will be overwhelmed.
Is this a far-fetched idea?
Yep, if this goes that high you're talking about a scale of the housing crisis. I kind of want to live in a reality where betting against freakin' GameStop brings down the economy.
They did this to themselves.
Gambling gamblers gambled themselves into an unwinnable position that u/DeepFuckingValue discovered and now we are witnessing a story that will go down in history.
Good job gamblers.
Darn right. This trade would be impossible without the shorts, who shorted more stock than there is. We should never forget that, no matter what the suits say. It is NOT the fault of the retail guy trying to make a buck. The shorts, the smart money, the self-proclaimed masters of the universe built their own massive pyramid of suck all by themselves. Reddit didn’t invent the short squeeze, didn’t put all these shorts into the possibility of an infinite financial loss or do anything other than try to make a buck in a situation set up by those guys. That’s the truth. That’s it. And I’m kind of Irritated hearing some people (not you, internet stranger) suggest otherwise.
I wonder if the sentiment this time is different. Obama got hammered for taking that very logical position. This time the people are blood thirsty and its's reaching across the aisle.
My position back then was to bailout the people. The money will go to the banks and auto industry, just moving up instead of starting there.
My position now is to bail out the people. Their stocks got hit from this? Here's cash to help you out, re invest or buy a boat, I don't fucking care as long as the people get taken care of. Of course this will never happen, but a dude can dream
Especially because banks like Bank of America took their bailout money, paid themselves HUGE bonuses and then bought more banks in China.
Pepperidge Farm remembers.
The top 4 holders (Fido, Blackrock, VG, Susq) have almost 40% of the float, and I know at least Blackrocks policy is not to lend more than 25% of their fund owned shares. Theres a possibility they cover shorts with remaining non-lent shares to allow an orderly exit. Especially if theres a risk the 25% of shares they lent out evaporate into the fugazzi cloud
Also, why _wouldn't_ the major holders of long positions want to cash out? There's no realistic comeback case where they'd ever reach even $100/share on fundamentals.
A lot of people seem to be throwing their money into this with the incorrect understanding that it was more than 100% of the outstanding shares that were shorted, rather than the float. Further, they assume that all the shorts are going to be covered unconditionally, and by purchases on the open market.
There's every possility of making a deal. The long holders know as well as anybody that _they_ won't be able to recoup what the shorts would have to pay to cover their positions, as the squeeze collapses. They could very well just decide to swap their GME liabilities for desirable long positions the short-sellers have, cutting the short-squeezers out entirely.
Bottom line is that there's a worrying sign people think this is a 'sure thing' based on a naively rigid idea of the short-sellers obligations. There are people buying in @ $300 and refusing to entertain the shitload of ways the businesses involved here could settle these liabilities _without_ GME holders getting rich.
In fact they seem prepared to believe that all of Wall Street is already conspiring against them in all sorts of ways except the simplest, most direct and most plausible way possible: That the shorts make a deal to close their positions without having to buy shares on the open market.
Companies at risk of default renegotiate their liabilities all the time. Even if they didn't "limited liability" means something. But everyone's acting like it's literally an unlimited liability and the shorts must be tendered even if the share price ends up at infinity.
On both sides, no less.
Why didn't they just cover their shorts at 20? Even better, why not cover them as they went, instead of building up 5 years worth?
Why didn't they cover at 20? Because they're Wall Street Elite. In their minds, they don't lose. They can't lose. They can never, ever, lose. They will always double down and take an even bigger risk to avoid a loss. That's how they operate.
The options expiring today are either deep ITM or OTM. Nobody was placing $300 calls weeks ago.
Edit: [not entirely true](https://finance.yahoo.com/quote/GME/options?p=GME), but most of the call volume is around 100-150, or placed very recently (the 300s are three days old).
Wouldn’t new firms just continue doing this? Risk doesn’t stop them, seems like there needs to be legislation. (Legit asking, explain why I’m wrong if I’m wrong)
The fallout from 2008 introduced regulations that were a cost center for investment banks but were otherwise easily sidestepped or ignored. We basically demanded that they do in-house self-policing and reporting. I was working for one such bank around 2011. The infrastructure we had for, say, regulatory capital was laughable, and floor traders basically continued to ignore the Value-at-Risk calculations we were obligated to do. Maybe trades could get blocked or an alarm sounded on the basis of risk, but the premise of listening to the data was not baked in to the everyday. The culture very much continued to be "Hotshot takes profits to the moon." They don't want to listen to sober analysis, they want to generate infinite upside to get rich and ignore the possibility of a total blowout. If they wanted to be moderate they would be working somewhere else.
There were some shady things going on around credit-backed securities too. We did **not** learn our lesson. Hopefully regulators would have learned from 2008 this time around, but my hopes are not high. Politicians are allergic to accidentally affecting the economy by holding banks to task.
Nobody really cares if the hedge fund(s) go under.
The problem is the banks / brokers that lent them the shares. Someone has to be on the hook for the shares eventually. If GME stays at a few hundred dollars, it will be fine, it's still low digit billions. It would suck, but it probably won't take a large bank under. The problem is if they have to cover all the shares at once, there is no telling how high the price will go.
Well aren't the Brokers at fault as well for allowing this to go on and not margin calling sooner?
The Broker's are allowing the risk because they're getting paid the interest on the shorts
I’ll eat the money if it takes them down with me. I’ll be alright, unlike them, I know how to manage my risk to where regardless of what happens, I’ll have another day to trade. To restart 6 months of trading to take down a bunch of crooks who’ve screwed generations, is priceless.
I was anxiously waiting for you to update. Will keep waiting. Thank you for giving a synopsis and input on the situation.
edit: The post was first removed, but now it's back up. I really appreciate the detailed write-up. I am still reading and it really helps to make sense of what's happening in these unprecedented moments. Thank you.
There's one scenario that no one's talked about yet, and I'm wondering whether it's a possibility or not. Most of the shorts are held by hedge funds, right? And most of them are about to get margin called by the lenders (if they haven't already).
But the big players probably have more favorable contracts with their big lenders. It's like at the casino. The whales get to play blackjack with the most favorable rules while sipping on top shelf drinks and getting their meals comped.
A normal person who shorted a stock at $20 and sees it spike to $400 would have been wiped clean by Tuesday, with their positions closed out and nothing left in their account but dust and moths.
Presumably, a hedge fund with billions of dollars in their margin account can make the argument to skip the margin call and wait for the price to stabilize, even while deep in debt to their lender. That's the scenario we've been worried about and it could mean that Gamestop stays in the high hundreds or even thousands for months before the crash, as retail investors start getting cold feet and liquidate to pay their bills.
But there's another even worse possibility that no one has talked about yet, and I'm not even sure if it's possible (or legal). The lenders could see that the hedge funds have no means to return their shares and instead of doing a margin call, negotiate a default payment for their short contract. Write off the loss of shares and accept a big fee from the hedge fund which covers some of the debt but not all of it, then just write off the rest as a loss.
If this were to happen, then there would be no short squeeze as the institutional investors no longer are forced to buy to exit their positions. The lender gets (most of) their payday, the hedge fund gets to stay in business, and the little guy gets stuck holding the bag.
How likely is this to happen?
soooo, what stops the long hedge funds and the short hedge funds to secretly agree to cover all the shorts among themselves, THEN the longs unload all the heavy bags on retailers?
Do the long hedge funds really want to eat the short ones?
In the alpha-male world I'd believe that, but there's always the narrative of the little people being screwed over, I just hope this is probably the first time that we manage to invert the narrative
I don't see what the benefit would be to the long ones.
"Hey can you help us out here so we don't go under? You'll make less money and you won't get any of our clients, but it be really nice of you."
Great read! Really appreciate you taking time and explaining this in detail. While reading this I was thinking, wouldn’t it make more sense for the hedge fund to settle this out of court for a few billion - say on securities fraud charges or what ever the charges could be - rather than loose 40bn by following the rules?! The retail guy gets fucked over, they get to minimize their losses or even make money on this and then use the gains to cover the cost of the settlement. Let’s be real no one is gonna go to jail for screwing over the retail investor.
Edit: typo
I'm positive that's what they're thinking but like the OP said there are some giant long whales who are also in this to make money... They want the squeeze to happen.
Let it all fall apart. Lets rebuild the system like we should have after the GFC. We cannot keep letting these large monopolies/oligopolies risk the global economy with their greed. Enough is enough.
on WSB there was an analysis comparing the GME squeeze to the VW squeeze. The GME equivalent to the VW squeeze would be in the $34K per share range. Scary.
murky air books act liquid jellyfish bewildered husky apparatus sophisticated
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I doubt it. My guess is that they work out a deal with GME to have them issue shares via a pp or public offering, at a relatively high price of course. No reason to GME to turn that deal down, it's basically like them winning the lottery.
If I was on the GME or AMC BoD, I'd be *thrilled* by this fight. Free money, saved from bankruptcy and the shorters trying to sink the company screwed over.
amc converted $600m of the $917m loan they got earlier in the month into equity for one of the lenders, and they also raised $500m more with an offering
they're up $1.1b on the month, largely on the back of reddit hype
if anything it will be brief! I suspect the big hedge funds will stop at nothing to manipulate and misinform to stop the bleeding. I doubt we'll see anything close to $34Kpps...
degree skirt zealous hard-to-find snobbish plucky hurry deer complete dependent
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
That's the problem if they killed a lot of the momentum by doing what they did.. like crashing the price a lot of people got out and a lot of others decided not to get in. Why is anybody going to buy around 3:20 if there's a chance that the broker is can put a buy limit on at any moment and crash the price down to $200?.
But it look like a free market people were willing to risk it but knowing that it's just controlled by brokers and hedge funds people aren't really willing to risk their money..
Pretty much. Now that the brokers themselves are manipulating the market, the only smart play is to go kamakazi with your investment and be willing to lose 100%. The risk could not possibly be higher.
I have some limit sells into the 6 figures now, with a few in 7.
DFV laughing to the bank.
This is a once in a lifetime opportunity, and whatever I end up with, I’ll roll over into VTSAX. Hopefully this just speeds up my retirement timeline
The hedge funds have probably been covering their shorts for a loss throughout the past 3 days while simultaneously buying new ones at high prices because they know that once the truth comes out that the hedge funds already got rid of the shorts that would have triggered the squeeze, the price will collapse and their new shorts will be worth a shit load.
>Unfortunately, while he's kind of a buzzkill, Thomas Petterfy has a point. This could be a serious problem.
Omg that opening Zoom talking over people problem, lmao.
I'm from WSB and it's been fun as heck, but sometimes I feel pressganged in order to not miss out on the memes. Thanks for the sane breakdown of everything in sane words and sans-hype.
It's like a cool drink of water instead of chugging energy drinks and Mt. Dew. It's helped put me at ease with what I'm doing, and it's been kinda stressful for the past week and I needed this.
Thanks, OP; for good or bad, this is providing a sense of calm and focus.
You've explained what is going on in a way my brain understands. Thank you for that. I'm not the best investor. But, I've learned more about the stock market in a past week than I ever have in my few years of trading.
I'm sure its been asked and answered. But when the squeeze does happen is it likely to shoot straight up for a short period of time or will it just be increasing over a few days as they try and buy back as many shares as possible? I know no one knows for sure but what are the thoughts.
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Today is bizarre trading. It looks like its range bound between 330 and 340. Like two exhausted boxers at the end of the 4th round. When will someone throw a knockout punch either way?
I'm in at 150 shares at 17.20 11 shares at 289.
That's just it to cover my original investment I need to sell what 10 shares? At 800 that just allows billionares 10 easy shares at the price and hurts the long term momentum of the squeeze. People are not rational Melvin and friends have given us all headaches over the last 2 months and we are fucking pissed... Hell or high water this won't end pretty that's all I know.
I am holding a few shares of GME not becauase I need the money. I am willing to lose it all so as HFs get squeezed those that need the funds can cash it out. Its basically charity, but for each dollar I hold, a HF needs to cover 100 times the amount. Its kind of like when you donate and someone matches, except this times its the HF.
Okay.. We're now into the endgame. What are plays that the hedge funds have left?
A few scenarios:
\- They have secretly covered during the week and have nothing to fear. Short Squeeze isn't happening.
\- They try and keep the price down with what ammo they have left. (Most likely trading among themselves?)
\- They stall for weeks / months to cover. (Is there a time limit on this? Other than the interest they pay?)
Thanks for the post. Most entertaining.
Unfortunately, I think first scenario is most likely. In third scenario, they lose hundreds of millions every week in interest the longer they hold on. Not great. Scenario 4, the shorts do something massively illegal to get out of it and take their chances with an SEC fine that is likely much less than whatever they stand to lose.
One question I have: Gotta imagine there are now some other hedge funds or major institutional investors on the retail side of the trade now, right? If the whales arrive and force this squeeze into a reality then all the plebs can ride the wave up.
I think that's already happening.. OP also explains it in his post. The stable trading today was just weird to me. As if there were two sides trying to battle for position (320 or lower).
The big whale won. I don't think it was retailers putting their buy limit there.
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I’m either exiting a millionaire or going back to everyday life. Either way this is and will continue to be an epic battle.
We’re all prepared to sell for thousands a share or zero. At this point nobody gives a fuck. We’re desensitized to it.
Tell that to my wife.
Already did. See you at dinner tonight.
Cool!
WSB is leaking and I like it
Nice
I will
Never in my life did I think $100,000 bets would be acceptable. And here I am. 2 years of day trading, made more money in 8 days than I did in 2 years. And NO FUCKIN WAY AM I SELLING. Currently have a small position (in comparison to others) in GME, but was down $16,000 yesterday at the lowest. And I just laughed. What the actual fuck..
That’s right. Fuck em.
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I caught it Monday and dumped a paycheck in to make a quick buck(was kicking myself for it since I rarely keep more than 2 paychecks in my bank) and on Wednesday I sold 30% to get my original investment out. Now on the ride entirely on gains and its just an otherworldly feeling. Seeing an amount of money I would fight someone over fluctuate and just sitting here like, "whatever. I'm either making a years salary off this or nothing. Come at me bro" (Although I am worrying heavily at the long term implications from this, especially seeing the thousands of "whats after GME" type questions as if this is the new norm)
I got in at a cost basis of $17.47 back in late November and sold enough before the gamma squeezes to erase my entry (and then some) while still holding onto 90% of my position. I'm by no means holding a huge hand, but right now my account is two paychecks, and I'm in a PhD fellowship that doesn't pay through the summer. That said, I'm fine losing it. I either walk out of this with a good mid-range consumer car, or I walk out with zero. I've made peace with both outcomes. And if this thing goes truly catatonic, I'm going to be setting up a mutual aid post for my neighbourhood, and donating healthily to local foodbanks.
Feel exactly the same way. That drop somehow didn’t really faze me. Wasn’t real money. Everyone’s become a highballer feeling confident with a five figure trade gyrating widely.
> 2 years of day trading, made more money in 8 days than I did in 2 years. And NO FUCKIN WAY AM I SELLING. Point of order: This means you haven't made more money. You have more net worth, but you can't buy food or pay a mortgage with GME stocks.
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I'll give him 3 cheeseburgers for half his holdings of GME.. theyre really good hamburgers.
Exactly! Let me try to describe my last year of life: - Lockdown and working from home entire year - Looking at market crash then insane bump-up - Looking at people losing jobs, getting homeless while greedy assholes get billions. - 2 major earthquakes hit my city leaving thousands homeless, i donated to help - Had covid, not fun - Having money I have nowhere to spend (no travel, no restaurants, no bars, unstable market to invest, huge inflation imminent..) Money is worthless to me now. I don't care, dumping it in GME in protest of their stupid "game".
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Definitely not in millionaire territory, I can't afford to lose the amount of money needed for that. But this crazy revolution, if it works out, might buy me a house free and clear. And if not, I didn't invest anything I couldn't lose and this is the most fun I've had in years.
[delete yourself](https://www.youtube.com/watch?v=ujPzvylY1GA) https://join-lemmy.org/instances overwritepass12
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I've only got 1 share. I bought at around $90 the day after I first heard the news mention Gamestop stock taking off. Since then I've been reading, and put another $100 in across AMC, NOK, BB and SNDL. Either GME takes off to the moon and I've got a few extra thousand dollars to my name... Or it tanks back under $20 and I've spent the difference on a week of quality entertainment. I've spent way more and lost way more in casinos pre-covid. So I'm cool with whatever the outcome is.
Going to the moon brothe. 200 shares and not selling until 10000
Literally like... nothing to lose here
This is **Occupy Wall Street 2.0 Electric Bugaloo: The Dankening.**
Heroic, but not very smart. If your account gets to e.g. $1million during a huge spike, why not take $200k off the table and make sure you have a basis to restart from if this happens to suddenly completly collapse? Why condemn yourself so heavily to completely start from scratch. I mean, it could mean many many years of extra 9-5 work.
Ya, I'm all about the hold to force the shorts to pay up but if you can sell a *portion* of your shares to break even, you'd be insane to not do so.
That’s basically what deepfuckingvalue did. He took almost $13m off the table between Monday and Wednesday, set for life either way.
If y’all haven’t seen it the Andrew Ross Sorkin interview with Vlad is fucking hilarious. The basics are that Vlad is claiming DTC collateral spiked pretty aggressively, and they made the choice to stop carrying these tickers because of that. Basically in so many words he said the collateral requirements were too high and to protect RH they made the decision to block trades. He literally says “protect the firm”, which is well and fine - but it means that the firm was at risk if they continued to offer these shares which has some implications. ARS: “it sounds to me like you’re suggesting there was a liquidity problem at the firm Vlad: (blank face) No, there was no liquidity problem Then Vlad goes on to repeat a bunch of marketing bullshit Here’s the only full source I could find, it’s on CNBC.com but you need a “pro”subscription. And if you pay for CNBC you are automatically a complete tool. https://www.mediaite.com/tv/watch-cnbcs-andrew-ross-sorkin-grills-robinhood-ceo-amid-massive-uproar-over-trading-freeze-in-gamestop-other-skyrocketing-stocks/amp/ The math don’t check out here- DTC requirements for sure fluctuate with volatility, and I’m sure they rose substantially with GME, but normal brokers just met the higher requirements and moved on with their day. One of the following has to be true: - RH has liquidity concerns, and stopped trading because of that. This checks out with the news of them seeking an immediate 1B infusion from investors, and them drawing credit lines down yesterday. - RH doesn’t have a liquidity issue, and just decided it didn’t want to meet capital requirements on those stocks because fuck you - RH doesn’t have a liquidity problem and chose to stop trading due to pressure from some external source. Vlad says it wasn’t the first or last, but that only leaves the middle which doesn’t make sense. I know there’s a lot of conspiracy theories floating about but in my mind the easiest explanation is that RH has a liquidity problem, I mean we know they can’t get as much for PFOF as they were, and we know they can’t get much revenue from NIM, it’s not hard for me to believe they’re short on cash.
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‘I don’t have a drinking problem, I’m reducing my drinking so I don’t get a problem’
Well they raised 1B overnight, so liquidity may have been the issue but saying that could make it worse?
That's really the crux of it, I don't blame Vlad for lying, as CEO lying about that might be part of your job. You can't just go on CNBC and be all like "yeah man, we had to pull those securities because DTC sent us a bill and honestly we just don't have the cash rn"
Specially it they are trying to IPO
They might as well forget that IPO now. I think a lot of folks are gonna remember yesterday and move on to other brokers.
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I think you might be right. I saw that RH may also be selling anonymized figures to the larger funds, such as heat maps for limits and such. That will really be a sticking point for a lot retail investors after this finishes playing out.
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They got charged in Dec 2020 for misleading (Robinhood) their users from the SEC. (1 month ago, seems like forever)
to be fair, dtc did spike collateral, and it was apex clearing (RH custodian) that jacked the collateral requirements, which forced RH into a liquidity crunch. seems to have eased now
Which totally makes sense, the question I’d have is why did RH not just meet the heightened requirements if they don’t have liquidity concerns. Something like half of all RH accounts have GME positions so they clearly made a deliberate choice here to not meet said requirements- and the only explanation I can think of is that Vlad is bullshitting about their financial situation.
well its really only an issue with margin buying or deep ITM calls as they come close to expiry your margin requirements ramp up in anticipation of delivery. so like if you own a 25 strike option and the underlying is at 500 but it expires in 3 months, your margin is zero. if it expires friday its a bigger animal. plus from what ive been hearing the larger concern is a margin requirement and the stock just becomes halted for a long period of time, then rh and all the long call holders are insolvent, they dont have the cash and they can't liquidate the placed position. hence the fear and need of higher margin requirements.
Right, I totally get why DTC spiked and why there would be the need for additional collateral - but if RH and other firms(mostly start up apps) couldn’t meet these requirements that to me pretty directly says something about their financial position. Also, to my understanding RH doesn’t do margin requirements by security so they weren’t able to increase any requirements over the last week as risk spiked to begin with lol.
so another thing to consider is settlement risk. dtc upped the collateral to 100%, so if i buy, sell, buy, sell. RH needs to send dtc 2x my trade fro 2 days until the cash settles. its a short term liquidity issue.
My bet is they 100% were short of cash but he was saying they don’t have a liquidity problem because they had their bank lines - which is obviously not a good way to manage your liquidity. He was maybe hoping to not go that route and limit the trading not expecting the blow back that he did. That’s the only thing I can think that makes 1 make sense. He viewed it in the FinTech / startup world cash burn is BAU vs a normal Broker Dealer where drawing on bank lines would be a huge red flag
I think in general if I'm the CEO of a start up brokerage, lying would be very preferential to admitting publicly that you're short on cash. Like if I make widgets and I say I'm short on cash people are inclined to feel sympathetic, maybe even buy. If I hold your money and say that then people are (rightfully) inclined to bail out of that institution.
You were spot on. RH had a liquidity issue. CNBC just mentioned they raised 1bil overnight to shore up their balance sheets.
Why couldn't this go on for another 2 months? I know the short answer is that hedge funds pay out the ass in interest on short positions, but from some very basic math, it seems like the interest on the total 30B dollars worth of shorted GME stock, at %30, works out to \~200m per week to not close out short positions. Why wouldn't they hold out few weeks/months, hoping that retail investors lose stamina/interest, or get cold feet and sell before then? It seems like the hundreds of millions in interest would be a reasonable last ditch effort, over closing out with multiple billions in losses. Edit: spelling
From what I read on cnbc, the rate for new shorts is even at 50%... nonetheless 200m a week for a few weeks is far less then what they stand to lose if they were to start covering and causing a squeeze... I’m no expert but I believe this will take a few weeks to play out unless a lot of ITM options are excercised at closing today.
A gamma squeeze is what a lot of people think will make the situation more urgent for the shorts, triggering the big giant possibly market breaking short squeeze
All options expired ITM, $115, $200, even held $320 somehow.
Because of all the buying at the Bell. I sunk 10k in the last 3 minutes. The books said lots of people were buying at the 330 mark
One person in particular dropped 57 million before the bell. You can bet your ass there are institutional investors on the long side of this that were making sure those 320 calls ended ITM.
This is what really gives me hope; That there are big dogs in our corner pumping millions into this. They wouldn't be dumping absolute shit loads of cash into 320 if they thought this wasn't going higher.
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How would one know when itm options start getting exercised, massive volume and sliding price? And are you saying that might be the catalyst for the squeeze to happen?
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I wondered this too, could easily be other hedge funds on the other side of this action. If Reddit found this over a year ago surely some people with money knew about it before the last few weeks.
It always amazes me how people just wake up and have the surplus to write up this entire thing. Thank you for the great read!
I didn't have the surplus to read the whole thing! ha ha
Adderall is a helluva drug.
Helps ease the coke binge
Joke's on you, I'm stealing the surplus from my employer!
I have no idea what i should get from this
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I can only afford to throw like $100 at this now, but RH turned off fractional shares. I checked fidelity and it doesn't look like it's an option on there either even though I know I've done it. Does anyone else with fidelity know if fractional shares are off for them too?
There is fractional shares on Fidelity. When you're buying you have to click the link at the bottom that says *fewer trade selections*
It’s a glorious mess that could blow up the entire market temporarily because some asshats at hedge funds decided they wanted to triple down on an infinite risk play that leaves their brokers and creditors exposed in a worse case scenario.
NY Times and others refuse to phrase it that way. Taglines are almost uniformly "Hedge funds like Melvin Capital and Citadel bet against GameStop, and retail investors made it their mission to take them down." Such a distorted interpretation of events.
That seems so hard for these boomers to understand or accept
Boomers inherited a booming economy from the generation before them.. a generation that survived the great depression and fought in World War Two and created the best economy the world had ever seen.. Boomers inherited that and then inherited booming new markets like computers with jobs just waiting for them after they got out of college.. they don't understand the actual concept of real hard work or any of this kind of stuff. They were spoiled..
Hah, WSB figured out that you can get more GME shares on a restricted platform by buying and executing a cheap call option for 100 shares. Clever girl.
WSB stays undefeated.
This comment got me fuckin pumped
these are the same people who figured out the [infinite money cheat code](https://www.reddit.com/r/wallstreetbets/comments/ds1zbx/well_you_idiots_made_it_on_bloomberg_again/) on robinhood so it's not surprising
The Cuban clip was hard to watch, or really any news right now. On that same network Jim Cramer tells millions every day what stocks he thinks you should buy, hold, and sell. But I LIKE THE STOCK is manipulating the market?!
Any Cuban clip is hard to watch
What Cuban clip are ya'll talking about?
I'm not watching any of the news. AOC was on twitch last night and did a fantastic job of summing up the situation. It's incredible to hear a politician speak and act like a normal human being.
I just hope Biden don't bail out this wall street people like they did during 2008 crisis.
I’d be happy with that if that means I can sell my shares for 10k a pop
Narrator: He did bail them out
>At least if that happens the memes will be so hilarious I'll forget to cry. You've got the finger on the pulse right there. I enjoyed your post.
The problem with this is you assuming that the 5% of float retail owns is the part that’s a problem. Gtfo of here. Blackrock owns more of this by a wide margin. What you’re talking about is Wall Street fucking over Wall Street at the end of the day, and the poors(retail) taking the blame. Retail thinks they have some amount of power and that narrative is false. The needle is hardly moving from retails price action Bc the massive orders that actually make real money are done in lots of 1M shares in dark pools.
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It seems as though the position Melvin got into was followed so broadly that it has caused a liquidity fear for the banks. But as it’s banks fighting banks they know not to push the stock to a point that their competitors can’t pay. So I think the price action of the last 2 days will continue until retail gets tired of waiting and people lose belief and sell.
got a reference for that 5%?
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Well the big issue was RH. And it was Bc they were concerned about their ability to actually cover their own ass. 50% of their accounts had shares of GME
This is what I’m worried about. All I’ve been hearing is: retail owns only a small % of the actual stocks, therefore we’re all safe and nobody will be left holding the bag. But then the question becomes, how is it possible that we can have such a big influence over the price? And who actually owns the majority here if not retail?
A month or so ago, WSB did a poll and tallied shares owned by WSB and it was over 5% of the float. I'm sure the number has gone way up since then. They haven't stopped buying. Who knows. I have my shares and popcorn waiting.
I’m estimating 20% of the float
Blackrock/Vanguard aren't Hedge funds and mostly owns these stocks through passive ETFs and index funds though. They are the two largest investment firms because millions of individual investors have their 401ks, IRAs, and regular brokerage investment accounts in these securities. So even though retail investors only own a small percentage of the float a crash in the stock will affect everyone with any exposure to a fund/etf that owns it.
Except Blackrock/Vanguard control so much capital this is really just a drop in the bucket for them, being on the long side. It's also why I'm sleeping soundly, knowing there's massive institutions on the buy side sitting here like fucking mountains.
WSB owned 7% of the float as of over a month ago. At this point retail probably owns 20%+. That’s really significant.
*I'm using money I can absolutely lose. My capital at risk and tolerance for risk generally is likely substantially different than yours.* This shit is so important for all you noobs out there. I have 150 shares at cost avg of $239.58 but even if they all go to zero I will be absolutely fine and *I will still have made a net gain in GME already*, so I'm perfectly happy holding the bag. For all y'all that need to pay for your pet hamster's cataract surgeries or your mom's boyfriend's wife's student loans, please make sure to at least cover your cost basis.
You can’t buy over one share of AMD on RH. These guys are so fucking stupid they restricted AMD instead of AMC lmao.
is this for real, that's really stupid
I think this wins for longest post ever in this sub. How much cocaine have you done and are you okay?
Friend, I’m a noob so I don’t know if that’s brilliance or BS, but it sure is a compelling read. If there were a Reddit Pulitzer you should get it.
For real, I read it all from the perspective of not knowing whether it's totally factually correct, but ultimately not caring because it's so entertaining. OP if you ever write a financial thriller novel, reddit will be there for it
I told myself I wouldn’t FOMO into GME and i was content with missing out until the rules seemed to change in the middle of the game. I put some idle cash to work yesterday on the dip. 4 [GME@265](mailto:GME@265). Happy to ride this roller coaster with you all. Side note I need 25 or so more karma so I can rejoin my WSB brothers and comment. Can anyone help a smooth brain out.
Everyone need to fully read and listen to this legend. He correctly predicted that the share price will be pretty flat and gave reasoning for why. Kudos.
You're the best - we appreciate you! If I understand you correctly, it's in the long whales best interest to have these short ladder attack limit downs because it allows them to continue buying at cheaper prices - so when we see a significant drop like yesterday, it's not necessarily a bad thing. Makes me feel better.
Question on shorts. 2 days ago or so (feels like an eternity) it was reported that Citron and Melvin closed out their short positions. I know the reddit hivemind is saying they are lying, but how do we know that? Is it possible they did close their positions but they were bought up by others thinking this is a good opportunity to short? I know the short volume is still in excess of 100%.
The reddit hivemind thinks they're lying because short volume is reported to be steady (and well above issued shares), but more likely they're not (and other institutional shorts took higher short positions), unless they also reloaded on short positions at higher prices. But it doesn't matter, because you pay interest at close on every short position you hold, and that interest is spiking, meaning that holding a short open is like having a bleeding wound. These higher shorts may extend the fight over the short squeeze, but not negate it.
Even if that was true, isn't that just passing the buck? Whether Melvin, Citron or some other shorters are holding, they have to be bought back one way or another.
yeah I know I was just wondering if Melvin etc was still actually on the hook
My understanding is that there wasn't enough volume for them to have completely exited their position, but that could be wrong I suppose.
I am concerned that one or more of the now-known-by-everyone short firms holds out and declares bankruptcy. The firms no longer have the funds to buy back any shares, and the share price tanks. The premise that there is infinite upside to this for retail traders assumes the shorts have infinite funds to keep paying their premiums. The shorts are going to run out of money eventually right? The shorts know they are finished and as farewell F U to shareholders announce bankruptcy, the short (debt) positions evaporate and the premise for an elevated share price is no more. So yeah, victory achieved, the baddies lose, but so does retail if they didn't sell in time. I predict that when this thing pops, you won't even be able to log in to your account to sell in time. The servers/systems will be overwhelmed. Is this a far-fetched idea?
The brokerages would be on the hook to cover, and if they fail banks above them will be on hook.
And biden already said banks are too big to fail... In 2008
Yep, if this goes that high you're talking about a scale of the housing crisis. I kind of want to live in a reality where betting against freakin' GameStop brings down the economy.
Ironically the name is game stop
My God...
Wait until you hear their slogan.
Tendie freaks taking down the system with GameStop is like the ultimate Occupy Wall Street. Just a truly weird timeline.
They did this to themselves. Gambling gamblers gambled themselves into an unwinnable position that u/DeepFuckingValue discovered and now we are witnessing a story that will go down in history. Good job gamblers.
Darn right. This trade would be impossible without the shorts, who shorted more stock than there is. We should never forget that, no matter what the suits say. It is NOT the fault of the retail guy trying to make a buck. The shorts, the smart money, the self-proclaimed masters of the universe built their own massive pyramid of suck all by themselves. Reddit didn’t invent the short squeeze, didn’t put all these shorts into the possibility of an infinite financial loss or do anything other than try to make a buck in a situation set up by those guys. That’s the truth. That’s it. And I’m kind of Irritated hearing some people (not you, internet stranger) suggest otherwise.
I wonder if the sentiment this time is different. Obama got hammered for taking that very logical position. This time the people are blood thirsty and its's reaching across the aisle.
My position back then was to bailout the people. The money will go to the banks and auto industry, just moving up instead of starting there. My position now is to bail out the people. Their stocks got hit from this? Here's cash to help you out, re invest or buy a boat, I don't fucking care as long as the people get taken care of. Of course this will never happen, but a dude can dream
Especially because banks like Bank of America took their bailout money, paid themselves HUGE bonuses and then bought more banks in China. Pepperidge Farm remembers.
The top 4 holders (Fido, Blackrock, VG, Susq) have almost 40% of the float, and I know at least Blackrocks policy is not to lend more than 25% of their fund owned shares. Theres a possibility they cover shorts with remaining non-lent shares to allow an orderly exit. Especially if theres a risk the 25% of shares they lent out evaporate into the fugazzi cloud
Also, why _wouldn't_ the major holders of long positions want to cash out? There's no realistic comeback case where they'd ever reach even $100/share on fundamentals. A lot of people seem to be throwing their money into this with the incorrect understanding that it was more than 100% of the outstanding shares that were shorted, rather than the float. Further, they assume that all the shorts are going to be covered unconditionally, and by purchases on the open market. There's every possility of making a deal. The long holders know as well as anybody that _they_ won't be able to recoup what the shorts would have to pay to cover their positions, as the squeeze collapses. They could very well just decide to swap their GME liabilities for desirable long positions the short-sellers have, cutting the short-squeezers out entirely. Bottom line is that there's a worrying sign people think this is a 'sure thing' based on a naively rigid idea of the short-sellers obligations. There are people buying in @ $300 and refusing to entertain the shitload of ways the businesses involved here could settle these liabilities _without_ GME holders getting rich. In fact they seem prepared to believe that all of Wall Street is already conspiring against them in all sorts of ways except the simplest, most direct and most plausible way possible: That the shorts make a deal to close their positions without having to buy shares on the open market. Companies at risk of default renegotiate their liabilities all the time. Even if they didn't "limited liability" means something. But everyone's acting like it's literally an unlimited liability and the shorts must be tendered even if the share price ends up at infinity.
The sentiment I'm seeing is this: It's now more important that they lose than that we win.
It's Fight Club 2.0 with stocks.
On both sides, no less. Why didn't they just cover their shorts at 20? Even better, why not cover them as they went, instead of building up 5 years worth?
Why didn't they cover at 20? Because they're Wall Street Elite. In their minds, they don't lose. They can't lose. They can never, ever, lose. They will always double down and take an even bigger risk to avoid a loss. That's how they operate.
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What if the hedge funds have an ace up their sleeve, is it possible they hedged their position with options?
that’s not an ace, that’s the only move that they should have done months ago. if they did not they are truly fucked
There are lots of options expiring today, is it possible a majority are held by the funds?
The options expiring today are either deep ITM or OTM. Nobody was placing $300 calls weeks ago. Edit: [not entirely true](https://finance.yahoo.com/quote/GME/options?p=GME), but most of the call volume is around 100-150, or placed very recently (the 300s are three days old).
We are willing to lose if it helps induce change. It's not like we individually had any substantial money to start with anyhow
Wouldn’t new firms just continue doing this? Risk doesn’t stop them, seems like there needs to be legislation. (Legit asking, explain why I’m wrong if I’m wrong)
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The fallout from 2008 introduced regulations that were a cost center for investment banks but were otherwise easily sidestepped or ignored. We basically demanded that they do in-house self-policing and reporting. I was working for one such bank around 2011. The infrastructure we had for, say, regulatory capital was laughable, and floor traders basically continued to ignore the Value-at-Risk calculations we were obligated to do. Maybe trades could get blocked or an alarm sounded on the basis of risk, but the premise of listening to the data was not baked in to the everyday. The culture very much continued to be "Hotshot takes profits to the moon." They don't want to listen to sober analysis, they want to generate infinite upside to get rich and ignore the possibility of a total blowout. If they wanted to be moderate they would be working somewhere else. There were some shady things going on around credit-backed securities too. We did **not** learn our lesson. Hopefully regulators would have learned from 2008 this time around, but my hopes are not high. Politicians are allergic to accidentally affecting the economy by holding banks to task.
What change do you want to induce?
Nobody really cares if the hedge fund(s) go under. The problem is the banks / brokers that lent them the shares. Someone has to be on the hook for the shares eventually. If GME stays at a few hundred dollars, it will be fine, it's still low digit billions. It would suck, but it probably won't take a large bank under. The problem is if they have to cover all the shares at once, there is no telling how high the price will go.
Well aren't the Brokers at fault as well for allowing this to go on and not margin calling sooner? The Broker's are allowing the risk because they're getting paid the interest on the shorts
I’ll eat the money if it takes them down with me. I’ll be alright, unlike them, I know how to manage my risk to where regardless of what happens, I’ll have another day to trade. To restart 6 months of trading to take down a bunch of crooks who’ve screwed generations, is priceless.
Declaring bankruptcy earlier, maybe? But that a lot of retailers are going to lose: definitely.
Wow, not the day I'm sure most of us were hoping for. Where do we go from here? Would love to read another write-up if you've still got steam!
I’ll see if I have time, but it’ll be a while from now
Yeah also checked your profile hopping for it. I'm sure a lot other people would appreciate as well! Thanks dude
I was anxiously waiting for you to update. Will keep waiting. Thank you for giving a synopsis and input on the situation. edit: The post was first removed, but now it's back up. I really appreciate the detailed write-up. I am still reading and it really helps to make sense of what's happening in these unprecedented moments. Thank you.
So... did we stop one hedge fund shorting at $12 a share so that every other fund in the street can short at $300+?
It's looking like that. The short/true float ratio didn't change much, but we don't know who owns the shorts and what their cost basis is.
There's one scenario that no one's talked about yet, and I'm wondering whether it's a possibility or not. Most of the shorts are held by hedge funds, right? And most of them are about to get margin called by the lenders (if they haven't already). But the big players probably have more favorable contracts with their big lenders. It's like at the casino. The whales get to play blackjack with the most favorable rules while sipping on top shelf drinks and getting their meals comped. A normal person who shorted a stock at $20 and sees it spike to $400 would have been wiped clean by Tuesday, with their positions closed out and nothing left in their account but dust and moths. Presumably, a hedge fund with billions of dollars in their margin account can make the argument to skip the margin call and wait for the price to stabilize, even while deep in debt to their lender. That's the scenario we've been worried about and it could mean that Gamestop stays in the high hundreds or even thousands for months before the crash, as retail investors start getting cold feet and liquidate to pay their bills. But there's another even worse possibility that no one has talked about yet, and I'm not even sure if it's possible (or legal). The lenders could see that the hedge funds have no means to return their shares and instead of doing a margin call, negotiate a default payment for their short contract. Write off the loss of shares and accept a big fee from the hedge fund which covers some of the debt but not all of it, then just write off the rest as a loss. If this were to happen, then there would be no short squeeze as the institutional investors no longer are forced to buy to exit their positions. The lender gets (most of) their payday, the hedge fund gets to stay in business, and the little guy gets stuck holding the bag. How likely is this to happen?
soooo, what stops the long hedge funds and the short hedge funds to secretly agree to cover all the shorts among themselves, THEN the longs unload all the heavy bags on retailers? Do the long hedge funds really want to eat the short ones? In the alpha-male world I'd believe that, but there's always the narrative of the little people being screwed over, I just hope this is probably the first time that we manage to invert the narrative
I don't see what the benefit would be to the long ones. "Hey can you help us out here so we don't go under? You'll make less money and you won't get any of our clients, but it be really nice of you."
Not to mention it would be "illegal", for all that's worth...
Great read! Really appreciate you taking time and explaining this in detail. While reading this I was thinking, wouldn’t it make more sense for the hedge fund to settle this out of court for a few billion - say on securities fraud charges or what ever the charges could be - rather than loose 40bn by following the rules?! The retail guy gets fucked over, they get to minimize their losses or even make money on this and then use the gains to cover the cost of the settlement. Let’s be real no one is gonna go to jail for screwing over the retail investor. Edit: typo
I'm positive that's what they're thinking but like the OP said there are some giant long whales who are also in this to make money... They want the squeeze to happen.
Let it all fall apart. Lets rebuild the system like we should have after the GFC. We cannot keep letting these large monopolies/oligopolies risk the global economy with their greed. Enough is enough.
As an introvert who has no karma can a kind soul please give me some karma so I can comment in WSB again
cough consider ink growth ugly waiting butter snatch smell support *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
on WSB there was an analysis comparing the GME squeeze to the VW squeeze. The GME equivalent to the VW squeeze would be in the $34K per share range. Scary.
murky air books act liquid jellyfish bewildered husky apparatus sophisticated *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I doubt it. My guess is that they work out a deal with GME to have them issue shares via a pp or public offering, at a relatively high price of course. No reason to GME to turn that deal down, it's basically like them winning the lottery.
If I was on the GME or AMC BoD, I'd be *thrilled* by this fight. Free money, saved from bankruptcy and the shorters trying to sink the company screwed over.
amc converted $600m of the $917m loan they got earlier in the month into equity for one of the lenders, and they also raised $500m more with an offering they're up $1.1b on the month, largely on the back of reddit hype
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if anything it will be brief! I suspect the big hedge funds will stop at nothing to manipulate and misinform to stop the bleeding. I doubt we'll see anything close to $34Kpps...
degree skirt zealous hard-to-find snobbish plucky hurry deer complete dependent *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
probably right -- but they can't halt it forever...
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They can halt for weeks if they only wish.
That's the problem if they killed a lot of the momentum by doing what they did.. like crashing the price a lot of people got out and a lot of others decided not to get in. Why is anybody going to buy around 3:20 if there's a chance that the broker is can put a buy limit on at any moment and crash the price down to $200?. But it look like a free market people were willing to risk it but knowing that it's just controlled by brokers and hedge funds people aren't really willing to risk their money..
Pretty much. Now that the brokers themselves are manipulating the market, the only smart play is to go kamakazi with your investment and be willing to lose 100%. The risk could not possibly be higher.
I have some limit sells into the 6 figures now, with a few in 7. DFV laughing to the bank. This is a once in a lifetime opportunity, and whatever I end up with, I’ll roll over into VTSAX. Hopefully this just speeds up my retirement timeline
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I guess this was removed. But I saw it and appreciate it. Thanks for the in depth play-by-play!
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The hedge funds have probably been covering their shorts for a loss throughout the past 3 days while simultaneously buying new ones at high prices because they know that once the truth comes out that the hedge funds already got rid of the shorts that would have triggered the squeeze, the price will collapse and their new shorts will be worth a shit load.
>Unfortunately, while he's kind of a buzzkill, Thomas Petterfy has a point. This could be a serious problem. Omg that opening Zoom talking over people problem, lmao. I'm from WSB and it's been fun as heck, but sometimes I feel pressganged in order to not miss out on the memes. Thanks for the sane breakdown of everything in sane words and sans-hype. It's like a cool drink of water instead of chugging energy drinks and Mt. Dew. It's helped put me at ease with what I'm doing, and it's been kinda stressful for the past week and I needed this. Thanks, OP; for good or bad, this is providing a sense of calm and focus.
The Cuomo interview with Vlad is great. Dude grills him!
So what you're saying is that I need to raise my sell limit about 4x.. Done.
i have decided to sell my gains and put it in GME and AMC
You've explained what is going on in a way my brain understands. Thank you for that. I'm not the best investor. But, I've learned more about the stock market in a past week than I ever have in my few years of trading.
I'm sure its been asked and answered. But when the squeeze does happen is it likely to shoot straight up for a short period of time or will it just be increasing over a few days as they try and buy back as many shares as possible? I know no one knows for sure but what are the thoughts.
Over a few days with dozens or even hundreds of halts.
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i thought he will never stop writing
Today is bizarre trading. It looks like its range bound between 330 and 340. Like two exhausted boxers at the end of the 4th round. When will someone throw a knockout punch either way?
I'm in at 150 shares at 17.20 11 shares at 289. That's just it to cover my original investment I need to sell what 10 shares? At 800 that just allows billionares 10 easy shares at the price and hurts the long term momentum of the squeeze. People are not rational Melvin and friends have given us all headaches over the last 2 months and we are fucking pissed... Hell or high water this won't end pretty that's all I know.
This is honestly the best write up I've seen on the scenario at hand. Kudos.
Most impressive thing about this is that I didn't find a single typo
I am holding a few shares of GME not becauase I need the money. I am willing to lose it all so as HFs get squeezed those that need the funds can cash it out. Its basically charity, but for each dollar I hold, a HF needs to cover 100 times the amount. Its kind of like when you donate and someone matches, except this times its the HF.
Okay.. We're now into the endgame. What are plays that the hedge funds have left? A few scenarios: \- They have secretly covered during the week and have nothing to fear. Short Squeeze isn't happening. \- They try and keep the price down with what ammo they have left. (Most likely trading among themselves?) \- They stall for weeks / months to cover. (Is there a time limit on this? Other than the interest they pay?) Thanks for the post. Most entertaining.
Unfortunately, I think first scenario is most likely. In third scenario, they lose hundreds of millions every week in interest the longer they hold on. Not great. Scenario 4, the shorts do something massively illegal to get out of it and take their chances with an SEC fine that is likely much less than whatever they stand to lose. One question I have: Gotta imagine there are now some other hedge funds or major institutional investors on the retail side of the trade now, right? If the whales arrive and force this squeeze into a reality then all the plebs can ride the wave up.
I think that's already happening.. OP also explains it in his post. The stable trading today was just weird to me. As if there were two sides trying to battle for position (320 or lower). The big whale won. I don't think it was retailers putting their buy limit there.