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> The "little guy" refers to the Reddit traders that are making a killing right now, with the expectation that eventually the stock price will crash again. The

> The "little guy" refers to the Reddit traders that are making a killing right now, with the expectation that eventually the stock price will crash again. The reddit traders are only making a killing if they're selling these inflated positions. At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the party. There's no chance game stop is worth the its current price.

fredophile 6y ago
It's a short squeeze. The guys left holding the bag are people that are covering their short positions in the company. The average retail investor is not shorting stocks.. There will probably also be some people that try to jump on the trend too late but that isn't who is being hurt right now.
- Traster 6y ago
  The second that the shorts have covered the price isn't going to drop to $90, it's going to drop back to $20 and most of the WSBers who were holding out for $2000 will lose their shirts. The shorts are going to lose, no doubt. But once they've lost, the stock price is probably $20. A lot of WSBers are going to be holding stock at that point, and possibly on margin. And that stock is going to be a crappy retail stock. At which point it'll be a slow drift as they cut their losses and move onto the next meme stock. The stock price today is irrelevant if you're not going to sell, and that's what WSB Thto be saying. The price is going to drop much faster than it rose.
  - Aloha 6y ago
    I dont feel bad for the guy who loses two grand at the casino, why should I feel bad for them?
    - coryfklein 6y ago
      You should feel bad for the human being who loses two grand at the casino!
      - nicholasluimy 6y ago
        empathize yes. Sympathy? Probably not
  - freeone3000 6y ago
    It's also very hard to exit a falling position. It was hard to exit a rising position this morning -- the stock was on trading hold multiple times. By the time you notice it's falling, it's too late to sell
    - kevinsundar 6y ago
      You can manage risk with stop-loss. Its not really that hard. You can use this to "lock-in" profits without selling.
      - nullc 6y ago
        That isn't how a stop-loss actually works. You aren't guaranteed execution above a particular price. You could lock in gains using puts, but when you go and price out doing so you'll see exactly how much the market values the risk in the position.
        sokoloff 6y ago
        So, I was on the wrong direction of this trade, having bought puts on Monday and Tuesday. The stock rocketed up today and the puts rose about 20% as well (which is crazy and counter-intuitive). So, I was entirely wrong and made money anyway. Once I realized I couldn't account for what was happening, was totally wrong on the direction, and being offered a token gain to get out, I got out. Someone was bidding up $50 puts expiring in 3.5 weeks and buying contracts today, while the shares were in the mid-300s. That's insane implied volatility.
        kshacker 6y ago
        > Someone was bidding up $50 puts expiring in 3.5 weeks and buying contracts today, while the shares were in the mid-300s. That's insane implied volatility. Because the higher you are, the closer you are to a crash. Peaks take time to build, but crashes can happen overnight (or premarket).
        6y ago
  - silexia 6y ago
    I sold a GME call option with a strike price of $320 and expiration in July today for $200. A pump and dump by novices is easy money if you know how to play it. Everyone knows this is going to crash, the question is when?
    - solaxun 6y ago
      You got balls, yes the IVOL is insane and that's a nice premium, but if for some reason you have a repeat of today, you're out $20K plus. This thing will crater, yeah, but shorting it is insane and option volatility is ridiculous right now.
      - undefined1 6y ago
        > but if for some reason you have a repeat of today, you're out $20K plus Can you expand on this? Why would they be on the line for $20k+ (or anything) after selling the option?
        rgossiaux 6y ago
        The option seller needs to buy the stock to deliver the shares when the option expires, so if the price continues rising their losses are unbounded (by contrast, their gains are bounded by how much they originally sold the option for).
        ra7 6y ago
        > The option seller needs to buy the stock to deliver the shares when the option expires Not just when the option expires. You can be assigned anytime after you sell an option.
        undefined1 6y ago
        Oh, but that depends on how you sell it? Correct me if wrong, but my understanding with Robinhood is that you Sell to Close (by default anyway), which just goes back into the market. No further obligation?
  - mrkstu 6y ago
    They can cover their initial capital outlay pretty easily by selling a small number of shares on the way up.
    - bilbo0s 6y ago
      So mathematically, this is a pyramid scheme for the redditors. The people that buy at the inflated price fund the people who bought before them. The hope being that hedge funds will buy at the inflated price. I also had a horrible thought, what if someone came in and bought short positions at inflated prices with his lunchbox money instead? Then that person is trying to wait out the redditors. Wow. So many angles. Too rich for my blood.
  - swiley 6y ago
    They won't lose their shirts, just the beer money they spent on a meme. Plenty of them really don't care.
    - deleted 6y ago
      [deleted]
    - ahepp 6y ago
      you may be overestimating the responsibility of the people involved I remember reading about people mortgaging their house to get into bitcoin, etc. I don't know how the coming days will play out, but I'm quite confident when this is all over we'll be treated to stories in the NYT about how someone lost their life savings, alongside calls for regulation.
      - swiley 6y ago
        I used to hang out in that subreddit before I deleted my account. Most of them are a) lurking b) goofing around with maybe a few hundred dollars (I was in that category) c) people from hedge funds There was a tiny minority that did stupid things like buy $20k of options on credit cards but there's a minority of stupid people like that everywhere.
      - imtringued 6y ago
        That subreddit was built around losing money on bad trades.
    - xmprt 6y ago
      Things may have changed since you last used reddit but now I regularly see people playing with $1000s of dollars joking about buying weekly options and trading on leverage that they don't have and then not understanding the implications of that when things come crashing down.
      - nrmitchi 6y ago
        There's been a lot more of this in the last 8 months when it's been pretty difficult to actually lose in the stock market.
  - restingrobot 6y ago
    You're forgetting the stock is 125% over shorted. There literally isn't enough stock for shorts to cover their current positions. That's why there is potential for infinite, (huge) gains as long as everyone holds.
    - alexfoo 6y ago
      According to Ortex it's back under 100% float to loan.
      - delaaxe 6y ago
        Anything over 30% is considered heavily shorted and prone to short squeezes. Ortex says it's at 95%
    - oars 6y ago
      As someone who's new to this world of stock trading but now understands what a "short" is, could you elaborate on this? How is it possible for a stock to be 125% over shorted? What does this mean?
      - xenocratus 6y ago
        The broker who is actually holding your stock can lend them out and you can indeed end up buying your own stocks more than once. You can explicitly request the broker to not do it and, in this kind of situation where 125% of the stock is shorted and some *need* to buy it... well :) Have a read from Matt Levine's "Infinite Game" from yesterday: https://www.bloomberg.com/opinion/articles/2021-01-26/will-wallstreetbets-face-sec-scrutiny-after-gamestop-rally https://www.bloomberg.com/opinion/articles/2021-01-26/will-w... To quote: > Falcone owned some bonds of a company called MAAX Holdings Inc. “After hearing rumors that a Wall Street financial services firm was shorting the MAAX bonds and also encouraging its customers to do the same, Falcone decided to seek revenge.” So he bought all the MAAX bonds. Then he bought more: Short sellers would borrow MAAX bonds (presumably from him), and then sell them to him, so that he ended up with “22 million more bonds than MAAX had ever issued.” Then he stopped lending them out, forcing the short sellers to buy bonds to cover their shorts. But there were no bonds to be bought, since he owned them all (and more). > Falcone stated that the Wall Street firm should just keep bidding for the bonds. Falcone acknowledged that the Wall Street firm would suffer some losses doing so, but told the senior officer and the others that sometimes you are just on the wrong side of a trade.
  - 0000011111 6y ago
    $20 is about 10* the 52 wk low of the stock.
- superfrank 6y ago
  That's the idea, but there will also be a bunch of retail traders who get caught up in the frenzy and end up losing too much when the bubble pops. Maybe it's their own fault for being greedy, but they do still exist. It won't only be hedge funds left holding the bag. Also, there is a worry about multiple hedge funds going bankrupt and causing a cascading effect when they are forced to close out other positions which would hurt average people. I'm not blaming WSB for this, the hedge funds got caught being greedy and deserve everything they're getting, but we do need to try to prevent their failures from affecting the market as a whole.
  - GordonS 6y ago
    > Also, there is a worry about multiple hedge funds going bankrupt Like you, I struggle to feel sorry for them - surely a responsible hedge fund shouldn't be shorting a single stock with sums of money they can't afford to lose? If they really are behaving like that, they must think they can't lose...
    - caddemon 6y ago
      Isn't this complicated a bit by the way shorts work? Like when you buy $n of stock, it is impossible to lose more than $n. But with shorting you could lose unpredictable amounts if shit hits the fan. I agree it's not a good look for a hedge fund to have put themselves in this position, but I think it was more about believing they couldn't lose so extraordinarily badly, not that they couldn't lose at all.
      - nrmitchi 6y ago
        I know this has been discussed elsewhere, and it's kind of against the narrative, but my understanding is that typically if you're shorting like this, you would hedge your potential losses by buying calls. Ie, if you short at $20/share, and want to limit to 100% losses (excluding premium), you could buy calls at $40. If the price skyrocketed past here, you have the calls. There is obviously much more complex math to optimize this. I'm not entirely sure that I believe the story that a large fund like this didn't have some sort of protections in place (even if the WSB community couldn't find them). It's also possible that they did have protection in place, but instead of using it to exit their position earlier chose to sell the protection for a quick gain (thinking that the price was going to drop again after the first jump).
- hbosch 6y ago
  Many of those shorts are exiting their positions, or already have, and taken their losses. They're the ones who can afford their losses. Perhaps there are some funds still holding out their end of the short war, but by the time this is all over... like over over... it will be retail traders selling inflated positions to other retail traders.
  - codesnik 6y ago
    well, true, but people are still reporting very high amount of short positions.
  - fumar 6y ago
    Is this data available anywhere?
  - minor3 6y ago
    The short interest is still extremely high and likely a number of firms are already liquidating their positions to pay off GME. The squeeze should be on Friday when every option expires in the money.
  - delaaxe 6y ago
    No, the short float is still hight. Old short have covered but new ones have replaced them
    - bilbo0s 6y ago
      Wait? Wouldn't new ones be shorts against the inflated prices? It could easily be other retail investors shorting the reddit pump and dump. I suppose as long as no one innocent is hurt, it doesn't really matter if some redditors and hedge funds are cleaned out. But it seems more and more likely that the only thing that will have been done here in the end is to enrich the market makers.
      - delaaxe 6y ago
        This is being framed as retailers vs. institutional but in reality there's both on each side.
- adrr 6y ago
  They paid the price when the stock increased in price being forced to buy shares at higher price to cover. Stock is going to normalize and go back down. Retail investors bought the stock at $50+, they are posting screenshots to WSB. When people start liquidating their position, you need a buyer on the other end of the transaction. And you’ll end up with a collapse in the price as there are way more sellers than buyers. Someone is going to be holding the bag and it’s going to be anyone who purchased above $50. It’s going to be similar scenario of a failed merger and merger arbitrage guys trying unravel their positions.
- rtkwe 6y ago
  For the people with the stock now to make real money they'll have to sell eventually either to the people who've shorted or to a normal investor right? Then after the short position closes the stock price will fall at least some because the demand will fall. Unless the only person buying stocks near the end is the shorter and everyone unloads their shares to them someone's buying above the price $GME will fall to.
- SatvikBeri 6y ago
  There were 70MM shares of gamestop short around the beginning of the month: https://www.marketbeat.com/stocks/NYSE/GME/short-interest/ https://www.marketbeat.com/stocks/NYSE/GME/short-interest/ Around 1BB shares of gamestop have been bought/sold over the last two weeks. So shorts covering represent at most 7% of the volume.
  - hagy 6y ago
    I think it's disingenuous to compare those two numbers. The mass majority of that trading is alogos trading within short time spans, not entities entering or exiting long positions. This includes all the market makers that have to hedge options under the insane stock volatility by exiting and enter both short and long positions as the stock moves. It further includes every flavor of HFT that can potentially syphon some value from high volatility combined with momentum. This volume doesn't tell us anything about the actual change in stock held by various entities nor how easily 70MM shares could be obtained from entities.
- cma 6y ago
  > It's a short squeeze. The guys left holding the bag are people that are covering their short positions in the company. The average retail investor is not shorting stocks. If the hedge fund blows up, the brokerages that loaned them the stocks to short are left holding the bag, and if that blows up SIPC/brokerage insurance, many retail investors or taxpayers may be left holding the bag.
levesque 6y ago
That's not the point. This is a purely technical play, fundamental valuation methods have been thrown out the window a long time ago. Game stop is maybe worth 5-40$, but these reddit WSBers think the stock will keep rising due to the short squeeze, beyond 1000$ even. Just grab some popcorn and watch the show.
- Domenic_S 6y ago
  > Game stop is maybe worth 5-40$ What fundamentals make you think that? That's substantially discounted vs revenue.
  - 0000011111 6y ago
    Its worth what people will pay for it. This time last year that was ~$4 per share. The company is looses money to firms like AMZ. And then WallStreet bets came in and pumped it up. It's been really fun to watch.
  - pivoter 6y ago
    you don't seem to understand what's going on. gamestop itself is just stuck in the middle of a battle created because of financial investment tools. It doesn't really matter which company it is, it just matters that the company is shorted at >100% of total issued shares. if the gamestop is still shorted at 130-150% of total issued shares (finra report coming soon) that means the shorters are going to be paying interest and getting margin called as GME prices goes up. the fees for borrowing GME to short have been 30-60%. That is absolutely insane, if you can even find shares to short, which I haven't seen any for the past day.
    - Domenic_S 6y ago
      I understand very much what’s going on, I wasn’t asking why it isn’t worth today’s price, I was asking why it’s worth $5-$40. GameStop did 6 billion in revenue 2020. At $5 per share that’s a ~348mm valuation.
      - 6y ago
vincentmarle 6y ago
> At some point somebody will be left holding the bag The same applies to Bitcoin, though, for the past 10 years. Someone's holding the bag at $30K as we speak... Gamestop can (theoretically) go the same way.
- xur17 6y ago
  Bitcoin is a bit different though. Gamestop shares can't be traded freely / directly p2p. You can't self custody your Gamestop shares. Gamestop can issue new shares, majorly diluting the supply, etc.
- sjg007 6y ago
  Bitcoin is basically a universal hedge.
  - sjg007 6y ago
    Nobody can de-list bitcoin. Countries can outlaw it but that won't stop and can't stop it. It's exists in the dystopian end game.
- chillacy 6y ago
  I heard this comment at 12k and now I'm hearing it at 35k, I think it's worth being honest that nobody knows the future and if we did know where the top is, we'd short it (which you can with DeFi now from my understanding).
SomewhatLikely 6y ago
The daily volume is higher than the total number of shares for the company. Lots of people are locking in their gains. Of course someone else is taking their place at an even higher cost basis.
- minor3 6y ago
  > Of course someone else is taking their place at an even higher cost basis. It's probably mostly hedge funds closing their shorts
- admax88q 6y ago
  Thats exactly my point, somebody will be left holding the bag. Holding GME worth 20-40 that they bought for 400-1000.
- Uehreka 6y ago
  In the end I have a feeling it’ll be something like: the first 1% to invest will make a fortune, the first 10% to invest (who are selling now and maybe tomorrow) will be able to pay off student loans, credit card debt or maybe buy a car, but then the other 90% will either lose small or lose big. I’d guess that in the future if you run into someone who traded GME this week, you’re more likely to meet a loser than a winner.
  - deleted 6y ago
    [deleted]
xwdv 6y ago
This would be justice though. If you were in it from the beginning as a true believer you probably got tons of money. If you’re just chaser and bandwagoner coming in at the end you will be punished for your greed along with the short sellers.
- jrochkind1 6y ago
  Why do you think those in it from the beginning are less greedy than those coming in later?
  - xwdv 6y ago
    Because at the beginning there is no evidence the plan will work, and you could very well just be blowing a bunch of money. It’s like the people who mined Bitcoin very early and stashed them in their hard drives. Once the stock picks up steam though, it attracts people who purely just want to make a fast buck, and less true believers.
    - jrochkind1 6y ago
      Oh, anyone now could very well be blowing a bunch of money too, of course. But you think making a gamble that seems like less of a sure thing is less greedy than if you think it's a sure thing? The more of a sure thing you think it is the greedier you are? That's not really clear to me. But maybe it's really about the "true believer" thing. You think people in later were only there to make money, but those in earlier were "true believers" in something other than making money? What? They also planned to make money though?
      - xwdv 6y ago
        The plan was to choke the big hedge funds until they went bankrupt and died.
imtringued 6y ago
If anyone forgets to sell their shares that just means the short sellers will be left hanging even longer.
throw0101a 6y ago
> At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the party. So basically like almost every other trade? Every buyer needs a seller and vice versa. If you're active in the market, why do you think you're right on any particular trade and the person on the other end is wrong?† * If you're buying, why is the other person selling? What does he know that you don't? * If you're selling, why is the other person buying? What does he know that you don't? The 'safe bet' is to go with index funds (US: S&P 500, Russell 3000) and simply get market returns for the equity portion of your portfolio. † They could be selling for "correct" reasons: to rebalance their portfolio, to generate income (e.g., in retirement), etc. They may not think there's anything material to the company in the trade, they may simply need cash.
- delaaxe 6y ago
  Whenever a human places a trade, the counterparty is almost always an algorithm or some kind of automated market maker
  - eindiran 6y ago
    But behind the algorithm there is a human trader with motivations and market knowledge who is commanding it; the fact that the buyer is, in some technical sense, an algorithm doesn't seem very relevant to me.
    - throwaway0a5e 6y ago
      Sure there are some closely managed algorithms but I think you underestimate how many algorithmic traders are ML shops that don't do anything other than "whatever makes the number biggest at the end of the day"
    - cratermoon 6y ago
      You'd think that, but even simple algorithms exhibit complex emergent behavior when exposed to the real world. How A Book About Flies Came To Be Priced $24 Million On Amazon: https://www.wired.com/2011/04/amazon-flies-24-million/ https://www.wired.com/2011/04/amazon-flies-24-million/
rodgerd 6y ago
> At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets A large part of the culture at WSB is to self-mock as "retards", "autists" and so on; fuckups and losses are celebrated alongside gains. Someone who loses thousands on a bad bet on this will be as celebrated (and mocked) as someone making thousands.
onetimeusename 6y ago
It also was not worth what the institutional firms had valued it at earlier last year at $2. The short percentage of the float was 140% on 12/31. The institutional guys are not the rational ones here.
deleted 6y ago
[deleted]
nico_h 6y ago
Can someone explain how we're supposed to believe WSB can move the market that much? I mean, it's up against hedge funds etc with literal billions and we're supposed to believe a bunch of people on Robinhood can go against those higher power and cause them some inconvenience? The volume for GME today was like 89,734,235 vs an average of 24M . How does "retail" traders can keep the stock up 100% from the previous day for the second or third day running? And the stock went up 100% from close during after hours yesterday, and that is not retail traders.
- svachalek 6y ago
  No one is buying this stock because they want this junk company, it's all manipulation. They have an army of buyers and use some calculated techniques with options to gain leverage. They're not all college students in for $100. I know of people who have borrowed 6-digit sums to get in on this bet. Potentially there are also pros on the WSB side of this game but I think they would potentially face legal risks that the individuals don't have to worry about.
- quantumElevator 6y ago
  This is, I think, at the heart of the problem, and vastly unreported by mainstream media. In short I encourage you to look up the “nasdaq whale” trade from this past summer 2020, of soft bank fame. Butchering the premise, algorithms (algos) front run Robinhood options. This is how Robinhood makes money, selling this access to investment firms. These algos cause a compounding effect with those Robinhood trades. When combined with the compounding effect of a “melt up” in a short squeeze (described elsewhere in this thread), the effects are enormous. I believe WSB redditors stumbled upon this unintentionally, but the market effects are demonstrated at scale with the Nasdaq Whale trade (and the Essex boys crude oil crash before it). Whether you believe this is “right” perhaps should be informed by whether you believe a market where the majority (>50%) of trades are executed by computer algorithms reacting to preceding market moves most likely executed by computer algorithms. If ever more algorithms compound each other ad infinitum, can’t the market be manipulated by an ever smaller number of market participants, their motivations however perverse?
pjanoman 6y ago
This seems to be a little bit different than other financial crashes where the "little guys" lost out -- in previous situations, most went in trusting that they wouldn't be gambling their savings away because of some financial trust. Now, however, most people are purchasing GME not because they've looked at the underlying value of GameStop and realized it's value, but because they're guessing the price will go up, but deep down know that someone will be left buying high and selling really low. Not sure exactly what to call it, but it seems to be a difference in consent to gamble $$, if that makes sense.
User23 6y ago
The short sellers are the ones holding the bag. Granted the last wave of fools to join the party won’t do so well either, but this is a wealth transfer from institutional to retail investors.
adolph 6y ago
Maybe GameStop could leverage its position and “acquire” something with actual value, something private looking to go public. Afterwards the result would be worth more than GME did when this started? https://www.usatoday.com/story/tech/news/2018/01/29/vmware-could-buy-dell-what-could-techs-biggest-deal-ever/1074945001/ https://www.usatoday.com/story/tech/news/2018/01/29/vmware-c...
- nrmitchi 6y ago
  Why would anyone accept Gamestop stock as compensation for anything right now? Especially when they almost-definitely wouldn't be able to turn around and sell it right away.
  - adolph 6y ago
    Because they want to be listed in the exchange without going the traditional way. That is the concept floated for Dell using VMWare in the linked article.
    - nrmitchi 6y ago
      As opposed to just going some SPAC route that isn't a meme stock that could very well lose 95% of it's value in the next week/month? The approach may have been suggested for Dell/VMWare, but at the moment GME is a totally different beast.
      - adolph 6y ago
        Some say bubble, others say “frothy.” [0] If you think its valuation will reduce, are you shorting it? Getting acqui-listed thru GameStop would probably be less expensive than paying some phoney like the former speaker of the house [1] and you get a bunch of retail locations to boot. The existing management of GameStop cashes out a year later as they step aside a la Apple-Next. 0 https://www.nytimes.com/2005/12/25/weekinreview/2005-in-a-word-frothy.html https://www.nytimes.com/2005/12/25/weekinreview/2005-in-a-wo... 1 https://www.reuters.com/article/us-enpc-ipo-idUSKBN25K26O https://www.reuters.com/article/us-enpc-ipo-idUSKBN25K26O *This post is random Internet BS and does not represent financial advice. If you or anyone you know feels a need to “buy” an equity, stock or other advanced financial product please consult with a board certified psychologist.
neilwilson 6y ago
"At some point somebody will be left holding the bag" Which while the short interest is greater than the float is the guy with the excess short interest. They are patsy in the market at present. You can always offload onto them because their loans come due. You don't have a loan so can wait as long as required.
recny 6y ago
> The reddit traders are only making a killing if they're selling these inflated positions. At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the party. This isn't your typical pump and dump. The plan is to bleed Melvin of every last cent, and transfer it to WSB. Melvin is forced to buy, no matter the price. While some individual redditors might lose money, as a group they'll make a huge profit.
mox1 6y ago
Just another point here. The original (aka prior to Jan 15ths ish) reddit traders had a fair market value of $80-$150 on this stock. Looking at the current options prices, if / when this is all over GME will probably land within that range. Yes, there is a lot of crazy new money going in here at super high prices, but all of the regular WSB users going in on this stock weren't planning on bag-holding, etc. It was a value play.

fredophile 6y ago

It's a short squeeze. The guys left holding the bag are people that are covering their short positions in the company. The average retail investor is not shorting stocks.. There will probably also be some people that try to jump on the trend too late but that isn't who is being hurt right now.

Traster 6y ago
The second that the shorts have covered the price isn't going to drop to $90, it's going to drop back to $20 and most of the WSBers who were holding out for $2000 will lose their shirts. The shorts are going to lose, no doubt. But once they've lost, the stock price is probably $20. A lot of WSBers are going to be holding stock at that point, and possibly on margin. And that stock is going to be a crappy retail stock. At which point it'll be a slow drift as they cut their losses and move onto the next meme stock. The stock price today is irrelevant if you're not going to sell, and that's what WSB Thto be saying. The price is going to drop much faster than it rose.
- Aloha 6y ago
  I dont feel bad for the guy who loses two grand at the casino, why should I feel bad for them?
  - coryfklein 6y ago
    You should feel bad for the human being who loses two grand at the casino!
    - nicholasluimy 6y ago
      empathize yes. Sympathy? Probably not
- freeone3000 6y ago
  It's also very hard to exit a falling position. It was hard to exit a rising position this morning -- the stock was on trading hold multiple times. By the time you notice it's falling, it's too late to sell
  - kevinsundar 6y ago
    You can manage risk with stop-loss. Its not really that hard. You can use this to "lock-in" profits without selling.
    - nullc 6y ago
      That isn't how a stop-loss actually works. You aren't guaranteed execution above a particular price. You could lock in gains using puts, but when you go and price out doing so you'll see exactly how much the market values the risk in the position.
      - sokoloff 6y ago
        So, I was on the wrong direction of this trade, having bought puts on Monday and Tuesday. The stock rocketed up today and the puts rose about 20% as well (which is crazy and counter-intuitive). So, I was entirely wrong and made money anyway. Once I realized I couldn't account for what was happening, was totally wrong on the direction, and being offered a token gain to get out, I got out. Someone was bidding up $50 puts expiring in 3.5 weeks and buying contracts today, while the shares were in the mid-300s. That's insane implied volatility.
        kshacker 6y ago
        > Someone was bidding up $50 puts expiring in 3.5 weeks and buying contracts today, while the shares were in the mid-300s. That's insane implied volatility. Because the higher you are, the closer you are to a crash. Peaks take time to build, but crashes can happen overnight (or premarket).
        6y ago
- silexia 6y ago
  I sold a GME call option with a strike price of $320 and expiration in July today for $200. A pump and dump by novices is easy money if you know how to play it. Everyone knows this is going to crash, the question is when?
  - solaxun 6y ago
    You got balls, yes the IVOL is insane and that's a nice premium, but if for some reason you have a repeat of today, you're out $20K plus. This thing will crater, yeah, but shorting it is insane and option volatility is ridiculous right now.
    - undefined1 6y ago
      > but if for some reason you have a repeat of today, you're out $20K plus Can you expand on this? Why would they be on the line for $20k+ (or anything) after selling the option?
      - rgossiaux 6y ago
        The option seller needs to buy the stock to deliver the shares when the option expires, so if the price continues rising their losses are unbounded (by contrast, their gains are bounded by how much they originally sold the option for).
        ra7 6y ago
        > The option seller needs to buy the stock to deliver the shares when the option expires Not just when the option expires. You can be assigned anytime after you sell an option.
        undefined1 6y ago
        Oh, but that depends on how you sell it? Correct me if wrong, but my understanding with Robinhood is that you Sell to Close (by default anyway), which just goes back into the market. No further obligation?
- mrkstu 6y ago
  They can cover their initial capital outlay pretty easily by selling a small number of shares on the way up.
  - bilbo0s 6y ago
    So mathematically, this is a pyramid scheme for the redditors. The people that buy at the inflated price fund the people who bought before them. The hope being that hedge funds will buy at the inflated price. I also had a horrible thought, what if someone came in and bought short positions at inflated prices with his lunchbox money instead? Then that person is trying to wait out the redditors. Wow. So many angles. Too rich for my blood.
- swiley 6y ago
  They won't lose their shirts, just the beer money they spent on a meme. Plenty of them really don't care.
  - deleted 6y ago
    [deleted]
  - ahepp 6y ago
    you may be overestimating the responsibility of the people involved I remember reading about people mortgaging their house to get into bitcoin, etc. I don't know how the coming days will play out, but I'm quite confident when this is all over we'll be treated to stories in the NYT about how someone lost their life savings, alongside calls for regulation.
    - swiley 6y ago
      I used to hang out in that subreddit before I deleted my account. Most of them are a) lurking b) goofing around with maybe a few hundred dollars (I was in that category) c) people from hedge funds There was a tiny minority that did stupid things like buy $20k of options on credit cards but there's a minority of stupid people like that everywhere.
    - imtringued 6y ago
      That subreddit was built around losing money on bad trades.
  - xmprt 6y ago
    Things may have changed since you last used reddit but now I regularly see people playing with $1000s of dollars joking about buying weekly options and trading on leverage that they don't have and then not understanding the implications of that when things come crashing down.
    - nrmitchi 6y ago
      There's been a lot more of this in the last 8 months when it's been pretty difficult to actually lose in the stock market.
- restingrobot 6y ago
  You're forgetting the stock is 125% over shorted. There literally isn't enough stock for shorts to cover their current positions. That's why there is potential for infinite, (huge) gains as long as everyone holds.
  - alexfoo 6y ago
    According to Ortex it's back under 100% float to loan.
    - delaaxe 6y ago
      Anything over 30% is considered heavily shorted and prone to short squeezes. Ortex says it's at 95%
  - oars 6y ago
    As someone who's new to this world of stock trading but now understands what a "short" is, could you elaborate on this? How is it possible for a stock to be 125% over shorted? What does this mean?
    - xenocratus 6y ago
      The broker who is actually holding your stock can lend them out and you can indeed end up buying your own stocks more than once. You can explicitly request the broker to not do it and, in this kind of situation where 125% of the stock is shorted and some *need* to buy it... well :) Have a read from Matt Levine's "Infinite Game" from yesterday: https://www.bloomberg.com/opinion/articles/2021-01-26/will-wallstreetbets-face-sec-scrutiny-after-gamestop-rally https://www.bloomberg.com/opinion/articles/2021-01-26/will-w... To quote: > Falcone owned some bonds of a company called MAAX Holdings Inc. “After hearing rumors that a Wall Street financial services firm was shorting the MAAX bonds and also encouraging its customers to do the same, Falcone decided to seek revenge.” So he bought all the MAAX bonds. Then he bought more: Short sellers would borrow MAAX bonds (presumably from him), and then sell them to him, so that he ended up with “22 million more bonds than MAAX had ever issued.” Then he stopped lending them out, forcing the short sellers to buy bonds to cover their shorts. But there were no bonds to be bought, since he owned them all (and more). > Falcone stated that the Wall Street firm should just keep bidding for the bonds. Falcone acknowledged that the Wall Street firm would suffer some losses doing so, but told the senior officer and the others that sometimes you are just on the wrong side of a trade.
- 0000011111 6y ago
  $20 is about 10* the 52 wk low of the stock.
superfrank 6y ago
That's the idea, but there will also be a bunch of retail traders who get caught up in the frenzy and end up losing too much when the bubble pops. Maybe it's their own fault for being greedy, but they do still exist. It won't only be hedge funds left holding the bag. Also, there is a worry about multiple hedge funds going bankrupt and causing a cascading effect when they are forced to close out other positions which would hurt average people. I'm not blaming WSB for this, the hedge funds got caught being greedy and deserve everything they're getting, but we do need to try to prevent their failures from affecting the market as a whole.
- GordonS 6y ago
  > Also, there is a worry about multiple hedge funds going bankrupt Like you, I struggle to feel sorry for them - surely a responsible hedge fund shouldn't be shorting a single stock with sums of money they can't afford to lose? If they really are behaving like that, they must think they can't lose...
  - caddemon 6y ago
    Isn't this complicated a bit by the way shorts work? Like when you buy $n of stock, it is impossible to lose more than $n. But with shorting you could lose unpredictable amounts if shit hits the fan. I agree it's not a good look for a hedge fund to have put themselves in this position, but I think it was more about believing they couldn't lose so extraordinarily badly, not that they couldn't lose at all.
    - nrmitchi 6y ago
      I know this has been discussed elsewhere, and it's kind of against the narrative, but my understanding is that typically if you're shorting like this, you would hedge your potential losses by buying calls. Ie, if you short at $20/share, and want to limit to 100% losses (excluding premium), you could buy calls at $40. If the price skyrocketed past here, you have the calls. There is obviously much more complex math to optimize this. I'm not entirely sure that I believe the story that a large fund like this didn't have some sort of protections in place (even if the WSB community couldn't find them). It's also possible that they did have protection in place, but instead of using it to exit their position earlier chose to sell the protection for a quick gain (thinking that the price was going to drop again after the first jump).
hbosch 6y ago
Many of those shorts are exiting their positions, or already have, and taken their losses. They're the ones who can afford their losses. Perhaps there are some funds still holding out their end of the short war, but by the time this is all over... like over over... it will be retail traders selling inflated positions to other retail traders.
- codesnik 6y ago
  well, true, but people are still reporting very high amount of short positions.
- fumar 6y ago
  Is this data available anywhere?
- minor3 6y ago
  The short interest is still extremely high and likely a number of firms are already liquidating their positions to pay off GME. The squeeze should be on Friday when every option expires in the money.
- delaaxe 6y ago
  No, the short float is still hight. Old short have covered but new ones have replaced them
  - bilbo0s 6y ago
    Wait? Wouldn't new ones be shorts against the inflated prices? It could easily be other retail investors shorting the reddit pump and dump. I suppose as long as no one innocent is hurt, it doesn't really matter if some redditors and hedge funds are cleaned out. But it seems more and more likely that the only thing that will have been done here in the end is to enrich the market makers.
    - delaaxe 6y ago
      This is being framed as retailers vs. institutional but in reality there's both on each side.
adrr 6y ago
They paid the price when the stock increased in price being forced to buy shares at higher price to cover. Stock is going to normalize and go back down. Retail investors bought the stock at $50+, they are posting screenshots to WSB. When people start liquidating their position, you need a buyer on the other end of the transaction. And you’ll end up with a collapse in the price as there are way more sellers than buyers. Someone is going to be holding the bag and it’s going to be anyone who purchased above $50. It’s going to be similar scenario of a failed merger and merger arbitrage guys trying unravel their positions.
rtkwe 6y ago
For the people with the stock now to make real money they'll have to sell eventually either to the people who've shorted or to a normal investor right? Then after the short position closes the stock price will fall at least some because the demand will fall. Unless the only person buying stocks near the end is the shorter and everyone unloads their shares to them someone's buying above the price $GME will fall to.
SatvikBeri 6y ago
There were 70MM shares of gamestop short around the beginning of the month: https://www.marketbeat.com/stocks/NYSE/GME/short-interest/ https://www.marketbeat.com/stocks/NYSE/GME/short-interest/ Around 1BB shares of gamestop have been bought/sold over the last two weeks. So shorts covering represent at most 7% of the volume.
- hagy 6y ago
  I think it's disingenuous to compare those two numbers. The mass majority of that trading is alogos trading within short time spans, not entities entering or exiting long positions. This includes all the market makers that have to hedge options under the insane stock volatility by exiting and enter both short and long positions as the stock moves. It further includes every flavor of HFT that can potentially syphon some value from high volatility combined with momentum. This volume doesn't tell us anything about the actual change in stock held by various entities nor how easily 70MM shares could be obtained from entities.
cma 6y ago
> It's a short squeeze. The guys left holding the bag are people that are covering their short positions in the company. The average retail investor is not shorting stocks. If the hedge fund blows up, the brokerages that loaned them the stocks to short are left holding the bag, and if that blows up SIPC/brokerage insurance, many retail investors or taxpayers may be left holding the bag.

levesque 6y ago

That's not the point. This is a purely technical play, fundamental valuation methods have been thrown out the window a long time ago. Game stop is maybe worth 5-40$, but these reddit WSBers think the stock will keep rising due to the short squeeze, beyond 1000$ even. Just grab some popcorn and watch the show.

Domenic_S 6y ago
> Game stop is maybe worth 5-40$ What fundamentals make you think that? That's substantially discounted vs revenue.
- 0000011111 6y ago
  Its worth what people will pay for it. This time last year that was ~$4 per share. The company is looses money to firms like AMZ. And then WallStreet bets came in and pumped it up. It's been really fun to watch.
- pivoter 6y ago
  you don't seem to understand what's going on. gamestop itself is just stuck in the middle of a battle created because of financial investment tools. It doesn't really matter which company it is, it just matters that the company is shorted at >100% of total issued shares. if the gamestop is still shorted at 130-150% of total issued shares (finra report coming soon) that means the shorters are going to be paying interest and getting margin called as GME prices goes up. the fees for borrowing GME to short have been 30-60%. That is absolutely insane, if you can even find shares to short, which I haven't seen any for the past day.
  - Domenic_S 6y ago
    I understand very much what’s going on, I wasn’t asking why it isn’t worth today’s price, I was asking why it’s worth $5-$40. GameStop did 6 billion in revenue 2020. At $5 per share that’s a ~348mm valuation.
    - 6y ago

vincentmarle 6y ago

> At some point somebody will be left holding the bag The same applies to Bitcoin, though, for the past 10 years. Someone's holding the bag at $30K as we speak... Gamestop can (theoretically) go the same way.

xur17 6y ago
Bitcoin is a bit different though. Gamestop shares can't be traded freely / directly p2p. You can't self custody your Gamestop shares. Gamestop can issue new shares, majorly diluting the supply, etc.
sjg007 6y ago
Bitcoin is basically a universal hedge.
- sjg007 6y ago
  Nobody can de-list bitcoin. Countries can outlaw it but that won't stop and can't stop it. It's exists in the dystopian end game.
chillacy 6y ago
I heard this comment at 12k and now I'm hearing it at 35k, I think it's worth being honest that nobody knows the future and if we did know where the top is, we'd short it (which you can with DeFi now from my understanding).

SomewhatLikely 6y ago

The daily volume is higher than the total number of shares for the company. Lots of people are locking in their gains. Of course someone else is taking their place at an even higher cost basis.

minor3 6y ago
> Of course someone else is taking their place at an even higher cost basis. It's probably mostly hedge funds closing their shorts
admax88q 6y ago
Thats exactly my point, somebody will be left holding the bag. Holding GME worth 20-40 that they bought for 400-1000.
Uehreka 6y ago
In the end I have a feeling it’ll be something like: the first 1% to invest will make a fortune, the first 10% to invest (who are selling now and maybe tomorrow) will be able to pay off student loans, credit card debt or maybe buy a car, but then the other 90% will either lose small or lose big. I’d guess that in the future if you run into someone who traded GME this week, you’re more likely to meet a loser than a winner.
- deleted 6y ago
  [deleted]

xwdv 6y ago

This would be justice though. If you were in it from the beginning as a true believer you probably got tons of money. If you’re just chaser and bandwagoner coming in at the end you will be punished for your greed along with the short sellers.

jrochkind1 6y ago
Why do you think those in it from the beginning are less greedy than those coming in later?
- xwdv 6y ago
  Because at the beginning there is no evidence the plan will work, and you could very well just be blowing a bunch of money. It’s like the people who mined Bitcoin very early and stashed them in their hard drives. Once the stock picks up steam though, it attracts people who purely just want to make a fast buck, and less true believers.
  - jrochkind1 6y ago
    Oh, anyone now could very well be blowing a bunch of money too, of course. But you think making a gamble that seems like less of a sure thing is less greedy than if you think it's a sure thing? The more of a sure thing you think it is the greedier you are? That's not really clear to me. But maybe it's really about the "true believer" thing. You think people in later were only there to make money, but those in earlier were "true believers" in something other than making money? What? They also planned to make money though?
    - xwdv 6y ago
      The plan was to choke the big hedge funds until they went bankrupt and died.

imtringued 6y ago

If anyone forgets to sell their shares that just means the short sellers will be left hanging even longer.

throw0101a 6y ago

> At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the party. So basically like almost every other trade? Every buyer needs a seller and vice versa. If you're active in the market, why do you think you're right on any particular trade and the person on the other end is wrong?† * If you're buying, why is the other person selling? What does he know that you don't? * If you're selling, why is the other person buying? What does he know that you don't? The 'safe bet' is to go with index funds (US: S&P 500, Russell 3000) and simply get market returns for the equity portion of your portfolio. † They could be selling for "correct" reasons: to rebalance their portfolio, to generate income (e.g., in retirement), etc. They may not think there's anything material to the company in the trade, they may simply need cash.

delaaxe 6y ago
Whenever a human places a trade, the counterparty is almost always an algorithm or some kind of automated market maker
- eindiran 6y ago
  But behind the algorithm there is a human trader with motivations and market knowledge who is commanding it; the fact that the buyer is, in some technical sense, an algorithm doesn't seem very relevant to me.
  - throwaway0a5e 6y ago
    Sure there are some closely managed algorithms but I think you underestimate how many algorithmic traders are ML shops that don't do anything other than "whatever makes the number biggest at the end of the day"
  - cratermoon 6y ago
    You'd think that, but even simple algorithms exhibit complex emergent behavior when exposed to the real world. How A Book About Flies Came To Be Priced $24 Million On Amazon: https://www.wired.com/2011/04/amazon-flies-24-million/ https://www.wired.com/2011/04/amazon-flies-24-million/

rodgerd 6y ago

> At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets A large part of the culture at WSB is to self-mock as "retards", "autists" and so on; fuckups and losses are celebrated alongside gains. Someone who loses thousands on a bad bet on this will be as celebrated (and mocked) as someone making thousands.

onetimeusename 6y ago

It also was not worth what the institutional firms had valued it at earlier last year at $2. The short percentage of the float was 140% on 12/31. The institutional guys are not the rational ones here.

deleted 6y ago

[deleted]

nico_h 6y ago

Can someone explain how we're supposed to believe WSB can move the market that much? I mean, it's up against hedge funds etc with literal billions and we're supposed to believe a bunch of people on Robinhood can go against those higher power and cause them some inconvenience? The volume for GME today was like 89,734,235 vs an average of 24M . How does "retail" traders can keep the stock up 100% from the previous day for the second or third day running? And the stock went up 100% from close during after hours yesterday, and that is not retail traders.

svachalek 6y ago
No one is buying this stock because they want this junk company, it's all manipulation. They have an army of buyers and use some calculated techniques with options to gain leverage. They're not all college students in for $100. I know of people who have borrowed 6-digit sums to get in on this bet. Potentially there are also pros on the WSB side of this game but I think they would potentially face legal risks that the individuals don't have to worry about.
quantumElevator 6y ago
This is, I think, at the heart of the problem, and vastly unreported by mainstream media. In short I encourage you to look up the “nasdaq whale” trade from this past summer 2020, of soft bank fame. Butchering the premise, algorithms (algos) front run Robinhood options. This is how Robinhood makes money, selling this access to investment firms. These algos cause a compounding effect with those Robinhood trades. When combined with the compounding effect of a “melt up” in a short squeeze (described elsewhere in this thread), the effects are enormous. I believe WSB redditors stumbled upon this unintentionally, but the market effects are demonstrated at scale with the Nasdaq Whale trade (and the Essex boys crude oil crash before it). Whether you believe this is “right” perhaps should be informed by whether you believe a market where the majority (>50%) of trades are executed by computer algorithms reacting to preceding market moves most likely executed by computer algorithms. If ever more algorithms compound each other ad infinitum, can’t the market be manipulated by an ever smaller number of market participants, their motivations however perverse?

pjanoman 6y ago

This seems to be a little bit different than other financial crashes where the "little guys" lost out -- in previous situations, most went in trusting that they wouldn't be gambling their savings away because of some financial trust. Now, however, most people are purchasing GME not because they've looked at the underlying value of GameStop and realized it's value, but because they're guessing the price will go up, but deep down know that someone will be left buying high and selling really low. Not sure exactly what to call it, but it seems to be a difference in consent to gamble $$, if that makes sense.

User23 6y ago

The short sellers are the ones holding the bag. Granted the last wave of fools to join the party won’t do so well either, but this is a wealth transfer from institutional to retail investors.

adolph 6y ago

Maybe GameStop could leverage its position and “acquire” something with actual value, something private looking to go public. Afterwards the result would be worth more than GME did when this started? https://www.usatoday.com/story/tech/news/2018/01/29/vmware-could-buy-dell-what-could-techs-biggest-deal-ever/1074945001/ https://www.usatoday.com/story/tech/news/2018/01/29/vmware-c...

nrmitchi 6y ago
Why would anyone accept Gamestop stock as compensation for anything right now? Especially when they almost-definitely wouldn't be able to turn around and sell it right away.
- adolph 6y ago
  Because they want to be listed in the exchange without going the traditional way. That is the concept floated for Dell using VMWare in the linked article.
  - nrmitchi 6y ago
    As opposed to just going some SPAC route that isn't a meme stock that could very well lose 95% of it's value in the next week/month? The approach may have been suggested for Dell/VMWare, but at the moment GME is a totally different beast.
    - adolph 6y ago
      Some say bubble, others say “frothy.” [0] If you think its valuation will reduce, are you shorting it? Getting acqui-listed thru GameStop would probably be less expensive than paying some phoney like the former speaker of the house [1] and you get a bunch of retail locations to boot. The existing management of GameStop cashes out a year later as they step aside a la Apple-Next. 0 https://www.nytimes.com/2005/12/25/weekinreview/2005-in-a-word-frothy.html https://www.nytimes.com/2005/12/25/weekinreview/2005-in-a-wo... 1 https://www.reuters.com/article/us-enpc-ipo-idUSKBN25K26O https://www.reuters.com/article/us-enpc-ipo-idUSKBN25K26O *This post is random Internet BS and does not represent financial advice. If you or anyone you know feels a need to “buy” an equity, stock or other advanced financial product please consult with a board certified psychologist.

neilwilson 6y ago

"At some point somebody will be left holding the bag" Which while the short interest is greater than the float is the guy with the excess short interest. They are patsy in the market at present. You can always offload onto them because their loans come due. You don't have a loan so can wait as long as required.

recny 6y ago

> The reddit traders are only making a killing if they're selling these inflated positions. At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the party. This isn't your typical pump and dump. The plan is to bleed Melvin of every last cent, and transfer it to WSB. Melvin is forced to buy, no matter the price. While some individual redditors might lose money, as a group they'll make a huge profit.

mox1 6y ago

Just another point here. The original (aka prior to Jan 15ths ish) reddit traders had a fair market value of $80-$150 on this stock. Looking at the current options prices, if / when this is all over GME will probably land within that range. Yes, there is a lot of crazy new money going in here at super high prices, but all of the regular WSB users going in on this stock weren't planning on bag-holding, etc. It was a value play.