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They definitely do move markets. What you need to know is that they are buying short-dated call options. These options expire in less than 2 weeks, and are usua
by ZitchDog 6y ago
They definitely do move markets. What you need to know is that they are buying short-dated call options. These options expire in less than 2 weeks, and are usually far out of the money. They require "dealer hedging" as the market makers providing these options do not want to be exposed to the massive amount of risk implied with the movement of price. The market makers are then required to buy massive amounts of the stock in order to hedge against any movement in the underlying stock, which can cause a "gamma squeeze" when market makers are unable to purchase enough of the underlying asset.
- acjohnson55 6y agoIIRC, a huge part of the discount brokerage business model is lending shares out of peoples' portfolios to meet this temporary demand. Is that right?
- blackrock 6y agoLottery tickets. Did anyone make money on GME calls? More often than not, the calls will expire worthless.
- chillacy 6y agoThey say selling call options is "picking up pennies in front of a steamroller": most of the time you collect premium, and then occasionally you get run over by a steamroller. This is the steamroller.
- blackrock 6y agoI think you misunderstood. It was meant for those who bought the GME calls, not for those who wrote the calls.
- chillacy 6y agoI was more pointing out that even though "More often than not, the calls will expire worthless." is true, the quote refers to the fact that buyers of calls have limited defined risk while sellers of naked call options have unlimited and undefined risk. That's the steamroller.
- rjbwork 6y agoI have personally made a bit of scratch on GME calls, yeah. /u/DeepFuckingValue made...millions.
- blackrock 6y agoHoly shit.. If this guy is legit, he spent $40,000 on OTM calls, at $0.40, and bought 1000 contracts. The contracts went up to $48.65, being worth $4.83 million. That is some serious YOLO.
- rob 6y agoHis total value was almost $50 million the other day. He posts end of day values every day. I believe initially it was $55k.