12 ms·

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 $20

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).
        FabHK 6y ago
        The put is just another instrument that trades. What will under normal circumstances keep a put close to the "correct" price? Well, if the price goes too high, people will start writing puts, driving the price down. If you write a put, you're long the stock. To hedge yourself, you'll need to short it. To the extent that that is difficult right now, nobody will be willing to write puts. (Strictly speaking, the put is so out of the money right now, that one would not have to short much today. But as soon as the stock price falls and approaches the strike, the writer of the put would need to start shorting. "Hey, anyone got some shares I could borrow?") On the other hand, if you want to take a negative view on the company, buying a put is sensible thing to do. That'll drive the price of the puts up.
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.

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).
      - FabHK 6y ago
        The put is just another instrument that trades. What will under normal circumstances keep a put close to the "correct" price? Well, if the price goes too high, people will start writing puts, driving the price down. If you write a put, you're long the stock. To hedge yourself, you'll need to short it. To the extent that that is difficult right now, nobody will be willing to write puts. (Strictly speaking, the put is so out of the money right now, that one would not have to short much today. But as soon as the stock price falls and approaches the strike, the writer of the put would need to start shorting. "Hey, anyone got some shares I could borrow?") On the other hand, if you want to take a negative view on the company, buying a put is sensible thing to do. That'll drive the price of the puts up.

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.