Some smart person explain the GME (gamestop) thing

[LeeLau]

This won't end till lenders call Melvin ey al on their shorts and they have to liquidate. What that means for GameStop and their stock, idk, but it means serious losses, lawsuits, and fines. Hopefully too many average people with average people retirement funds don't get hurt.
I'd be pulling out right now if I was a fund manager. Fuck Melvin. Fuck Citadel. Fuck Robinhood. And fuck Business As Usual.

For GME it means the price goes to Uranus [emoji573] [emoji573] [emoji573] [emoji573]

[4matic]

Here’s how you get more than 100% shares. I borrow a share to short sell to someone else. Now two people “own” one share. It’s not that unusual or illegal. It’s just risky.

[4matic]

Quick question, broad market volatility has been ummmm interesting the past 3 days.

Any relation to that and this?

Vol is measured with option pricing. GME and the others are driven largely by option speculation.

[DeathRaven]

The biggest thing Robinhood has going for it right now I s most of their clients have no clue what kind of risk they are facing. Bigger more institutional clients would be running for the hills right now.

That's the thing. The 'hedge' on this is that the risk is so massively distributed that it is basically negated. The short selling bag holders have virtually unlimited risk/exposure while the reddit/robinhood crowd threw $250 in a trading account, and most people would be willing to lose that for the lulz alone. Some dude who bought a single share (or even a fraction of one) for $100 doesn't lose his shirt on this kind of market movement - his exposure is what he put in. As opposed to a fund short half a million shares that they have borrowed, sold and need to buy back. They were hoping to be able to buy it back for $5/share and they could end up having to pay $500 a share. Too bad, so sad.

[4matic]

RH is just another broker dealer and a small one at that. The outrage is amusing. If you want to play high stakes game you should be with a BD that can back you up. A BD has no obligation to make a market for anyone. They can suspend any account they want.

RH had no moral high ground. Their only goal was to activate millennial traders.

[stuckathuntermtn]

Here’s how you get more than 100% shares. I borrow a share to short sell to someone else. Now two people “own” one share. It’s not that unusual or illegal. It’s just risky.

Wow, it is indeed legal. https://www.fool.com/investing/2021/...ver-100-heres/
It's still royally fucked.
Also seems like incredible risk given the information is publicly available. In the Information Age it seems like walking around with a sticky note that says "mug me".

[4matic]

Option trading is just as or more responsible for this type conundrum.

[Cono Este]

I would argue short selling and options trades all add liquidity to a market.


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[old goat]

People who short stocks and do other kinds of questionable financial transactions--remember credit default swaps?- like to trot out the same arguments about liquidity, about driving bad companies out of the markets, about protecting little investors--without ever quite explaining how that works. It's all just naked greed--figuring out ways to take other people's money without doing anything useful. When you're tied up in that world it's hard to appreciate what it is you're doing, but those of us on the outside see.

[Benny Profane]

In the short term this is creating crazy instability. In the long term? Hopefully people learn a lesson and stop doing illegal shit and that contributes to stability. That's a big question though. Learn their lesson? Stop doing illegal shit? Yeah right.

What "illegal shit" do you speak of?

[Benny Profane]

Somewhat, probably. If enough people/funds have to liquidate positions to cover other positions, that means some crazy ups and down for securities' values. If people are selling blue chips and big tech stocks to buy meme stonks, that's gonna depress the former and lift the latter. That's just basic supply/demand. And supply of $GME is running low.

I'm not convinced this won't end in bailouts and consolidations, maybe a few fines, 1 or 2 fall guys. Just business as usual. Partly BECAUSE of the volitility it would cause for Melvin, Robinhood, middlemen, etc to go under and other funds to post such huDge losses (like Citadel and other funds who lent/gave Melvin $2.75B. Citadel also does the actual trades for RH, pays RH for info on their customers, and has close ties with Janet Yelen).

Pretty sure short interest over 100% is illegal. It's basically the plot of The Producers: they sold more than 100% of something they not only wanted to fail, but actively tried to make fail. Sold might not quite be the right word here, but you get what I mean.

How that was allowed to happen or who let it happen I don't really understand, but it probably isn't the first time someone somehow shorted more than the available float if they already have a term for it. I don't understand how they even cash in on that.

The Producers was, I guess, fraud, but, damn hard to find an actual crime there.

[Benny Profane]

This won't end till lenders call Melvin ey al on their shorts and they have to liquidate. What that means for GameStop and their stock, idk, but it means serious losses, lawsuits, and fines. Hopefully too many average people with average people retirement funds don't get hurt.
I'd be pulling out right now if I was a fund manager. Fuck Melvin. Fuck Citadel. Fuck Robinhood. And fuck Business As Usual.

If you're an "average" person playing in this particular game, you deserve to die poor.

[4matic]

I would argue short selling and options trades all add liquidity to

Yes, for the most part. Things like GME are a necessary evil. Capitalism has victims.

[4matic]

People who short stocks and do other kinds of questionable financial transactions--remember credit default swaps?- like to trot out the same arguments about liquidity, about driving bad companies out of the markets, about protecting little investors--without ever quite explaining how that works. It's all just naked greed--figuring out ways to take other people's money without doing anything useful. When you're tied up in that world it's hard to appreciate what it is you're doing, but those of us on the outside see.

China banned short selling. Their market is a mess of fraud and illiquidity.

[bennymac]

[nickwm21]

The original r/WSB people in on this thing from the beginning are likely smart enough to be already out and quadrupled their money.

All the people who read the national news and jumped in during the last two/three days are going to be left holding the bag when the price normalizes.


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[4matic]

All it will take is for the funds that hold GME to sell. Fidelity owns 10mm shares. a lot of that has to be in discretionary funds.

Top 10 Owners of GameStop Corp
Stockholder Stake Shares owned
Fidelity Management & Research Co... 13.67% 9,534,090
BlackRock Fund Advisors 11.32% 7,897,907
The Vanguard Group, Inc. 7.43% 5,185,112
Susquehanna Financial Group LLLP 6.27% 4,376,045

[CovertM]

The original r/WSB people in on this thing from the beginning are likely smart enough to be already out and quadrupled their money.

All the people who read the national news and jumped in during the last two/three days are going to be left holding the bag when the price normalizes.


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You clearly haven’t been following along. The OG DeepFuckingValue is still way in, took 13ish million in profits but still riding on 30+million. WSJ got the exclusive interview today [emoji23]


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[4matic]

This quagmire can also be correlated to indexing. If the major holders of stock can't sell due to index fund requirements. If all equity is indexed there is no mechanism for price discovery.

[stuckathuntermtn]

Also fuck Leon Cooperman or whatever the fuck his name is.

How dare the peons take us on in our own game where we destroyed the middle class?!

Fuck that old wind bag.

[LeeLau]

The original r/WSB people in on this thing from the beginning are likely smart enough to be already out and quadrupled their money.

All the people who read the national news and jumped in during the last two/three days are going to be left holding the bag when the price normalizes.


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I'm at 3200% and still in 25% of my position. There's a few from single digits

[CovertM]

I'm at 3200% and still in 25% of my position. There's a few from single digits

Do you care to share avg. cost basis and lowest buy? Thought you mentioned 12ish avg. before.


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[LeeLau]

Do you care to share avg. cost basis and lowest buy? Thought you mentioned 12ish avg. before.


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Sure. 12.84. Lowest buy was 10.50. Calculated factoring in premiums received so far on covered calls and cash secured puts per accounting standard.

[sfotex]

When I worked at the 'O' our bat shit crazy CEO always bitched about naked short selling. Guess he was right.

[MakersTeleMark]

Sure. 12.84. Lowest buy was 10.50. Calculated factoring in premiums received so far on covered calls and cash secured puts per accounting standard.

At what point do you just walk away and say I won the game and I don't want the mental stress of playing anymore. Or is it a form of addiction? Straight question.