5 ms·
It's quite simple really: 1. Big hedge fund bet against GameStop stock (shorted up to 140% of the stock, it's called naked short and everybody thought it was i
by joss82 6y ago
It's quite simple really:
1. Big hedge fund bet against GameStop stock (shorted up to 140% of the stock, it's called naked short and everybody thought it was illegal since 2008 but that's another story)
2. Lot of small-to-medium investors coordinated over Reddit to take the opposite "bet" en masse (basically buying a lot of GameStop shares) so that the price will go up and "big hedge fund" lose a lot of money.
=> The plan worked. It's a first. Hence the news coverage.
Edit: Typos and formatting
- UncleMeat 6y agoThis isn't a naked short. A naked short is when you short a stock without first borrowing it. It is not the same thing as having shorts past 100% of outstanding shares, since a single share can be lent multiple times.
- joss82 6y agoThanks for the precision. Which one is more insane?
- jonplackett 6y agoWas/is there a risk of the redditors losing all their money / just as much money a the hedge fund? Or is it like the hedge fund were betting with worse odds so have more to lose (excuse my ignorance of how shorting works!)