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can someone explain this GameStop

Cowboy1stn10

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Jan 10, 2021
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Sony accidently sent them last months entire production run of PS5's. They are now exclusively selling them at 300% of MSRP.


giphy.gif
 

Gump_Tiger

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Reddit investors caught a hedge fund with their pants down. The Reddit investors capitalized on that and are making them pay dearly. Quite a bit of folks on Reddit made serious bank.

I saw the dude who figured this out put in 50k in and is around 40+ million in profits (see pic above my post). Also never forget Stonks go up!
 

lucio

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Reddit investors caught a hedge fund with their pants down. The Reddit investors capitalized on that and are making them pay dearly. Quite a bit of folks on Reddit made serious bank.

I saw the dude who figured this out put in 50k in and is around 48 million in profits (see pic above my post). Also never forget Stonks go up!
That’s my BIL’a friend
 

CBradSmith

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It's currently at $327?

And in the past 3 years has never been above $17?

I'm not gonna lie, I'd like to short this.
 

lucio

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Reddit investors caught a hedge fund with their pants down. The Reddit investors capitalized on that and are making them pay dearly. Quite a bit of folks on Reddit made serious bank.

I saw the dude who figured this out put in 50k in and is around 40+ million in profits (see pic above my post). Also never forget Stonks go up!
The completely fucked the hedge fund with a short squeeze
 

ChicagoFats

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What part of "like I'm 5" did you guys not understand.
There was a hedge fund that was shorting a stock. For a 5 year old, that means they wanted the stock to go down. The hedge fund was shorting the stock because they thought Gamestop was an old, antiquated business model that operated out of strip malls and sold video games on disc drives like cd-rom.

However, the hedge funds kind of got ahead of themselves. They were short more shares than actually existed. Basically they were way over leveraged.

As it turns out, Gamestop ended up making a deal with microsoft to distribute games electronically (not 100% sure about this part). Additionally, video games have really taken off during Corona as people dont havet much else to do while at home. At the same time Microsoft and Sony have come out with new consoles which draws customers to the Gamestop stores. Turns out Gametsop wasn't dead afterall.

So, Reddit users got to conversing and determined that Gamestop was undervalued and people should buy the stock. They were in a thread with over 2 million people in it, and they all decided to throw money at the GME stock. The other side of the bet was a hedge fund. As the stock started to rise because of redditors, the hedge funds were forced to close their bets that the stock would go down. In order to do that they actually had to buy the stock which extenuated the circumstnaces. So a stock that was trading $10 a share is now trading $300 plus.

TLDR: reddit nerds beat hedge fund at their own game and hedge funds are crying.
 

CumAllahHerAss

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There was a hedge fund that was shorting a stock. For a 5 year old, that means they wanted the stock to go down. The hedge fund was shorting the stock because they thought Gamestop was an old, antiquated business model that operated out of strip malls and sold video games on disc drives like cd-rom.

However, the hedge funds kind of got ahead of themselves. They were short more shares than actually existed. Basically they were way over leveraged.

As it turns out, Gamestop ended up making a deal with microsoft to distribute games electronically (not 100% sure about this part). Additionally, video games have really taken off during Corona as people dont havet much else to do while at home. At the same time Microsoft and Sony have come out with new consoles which draws customers to the Gamestop stores. Turns out Gametsop wasn't dead afterall.

So, Reddit users got to conversing and determined that Gamestop was undervalued and people should buy the stock. They were in a thread with over 2 million people in it, and they all decided to throw money at the GME stock. The other side of the bet was a hedge fund. As the stock started to rise because of redditors, the hedge funds were forced to close their bets that the stock would go down. In order to do that they actually had to buy the stock which extenuated the circumstnaces. So a stock that was trading $10 a share is now trading $300 plus.

TLDR: reddit nerds beat hedge fund at their own game and hedge funds are crying.
To add to this, those calls are allegedly expiring on Friday. Meaning the hedge fund has to pay the difference between what they thought the share price would drop to, and what it is on Friday. I think I've read that 136% of the shares were shorted, meaning they fucked up bigly.
 

ShaolinNole

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It's currently at $327?

And in the past 3 years has never been above $17?

I'm not gonna lie, I'd like to short this.
Do it. DO IT. Haha. This is an infinite short squeeze. They are bidding it up and using call options to force higher prices. Basically they are DDOS attacking the stock up. It’s actually pretty ingenious. These short sellers are having to cover as they liquidate their funds.
 

RJ2kWJ

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There was a hedge fund that was shorting a stock. For a 5 year old, that means they wanted the stock to go down. The hedge fund was shorting the stock because they thought Gamestop was an old, antiquated business model that operated out of strip malls and sold video games on disc drives like cd-rom.

However, the hedge funds kind of got ahead of themselves. They were short more shares than actually existed. Basically they were way over leveraged.

As it turns out, Gamestop ended up making a deal with microsoft to distribute games electronically (not 100% sure about this part). Additionally, video games have really taken off during Corona as people dont havet much else to do while at home. At the same time Microsoft and Sony have come out with new consoles which draws customers to the Gamestop stores. Turns out Gametsop wasn't dead afterall.

So, Reddit users got to conversing and determined that Gamestop was undervalued and people should buy the stock. They were in a thread with over 2 million people in it, and they all decided to throw money at the GME stock. The other side of the bet was a hedge fund. As the stock started to rise because of redditors, the hedge funds were forced to close their bets that the stock would go down. In order to do that they actually had to buy the stock which extenuated the circumstnaces. So a stock that was trading $10 a share is now trading $300 plus.

TLDR: reddit nerds beat hedge fund at their own game and hedge funds are crying.

Damn this is crazy. Unbelievable.
 

tiderollsonu

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There was a hedge fund that was shorting a stock. For a 5 year old, that means they wanted the stock to go down. The hedge fund was shorting the stock because they thought Gamestop was an old, antiquated business model that operated out of strip malls and sold video games on disc drives like cd-rom.

However, the hedge funds kind of got ahead of themselves. They were short more shares than actually existed. Basically they were way over leveraged.

As it turns out, Gamestop ended up making a deal with microsoft to distribute games electronically (not 100% sure about this part). Additionally, video games have really taken off during Corona as people dont havet much else to do while at home. At the same time Microsoft and Sony have come out with new consoles which draws customers to the Gamestop stores. Turns out Gametsop wasn't dead afterall.

So, Reddit users got to conversing and determined that Gamestop was undervalued and people should buy the stock. They were in a thread with over 2 million people in it, and they all decided to throw money at the GME stock. The other side of the bet was a hedge fund. As the stock started to rise because of redditors, the hedge funds were forced to close their bets that the stock would go down. In order to do that they actually had to buy the stock which extenuated the circumstnaces. So a stock that was trading $10 a share is now trading $300 plus.

TLDR: reddit nerds beat hedge fund at their own game and hedge funds are crying.

Don't really understand the whole short sell dynamic but think I am following mostly now. Basically these two fucked up again

strickly business.gif
 

CBradSmith

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Do it. DO IT. Haha. This is an infinite short squeeze. They are bidding it up and using call options to force higher prices. Basically they are DDOS attacking the stock up. It’s actually pretty ingenious. These short sellers are having to cover as they liquidate their funds.
How do call options drive prices higher? I understand shorts needing to cover due to being overextended.
 

ChicagoFats

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Don't really understand the whole short sell dynamic but think I am following mostly now. Basically these two fucked up again

View attachment 4376

Short sell means you sell something you don't have.

The technicalities of it ..... If you don't own a stock but think it is going down, you can borrow the stock from your broker. For instance, TD Ameritrade. If you have an account there and think that Gamestop is going to go bankrupt but is still trading $10 a share ... you borrow the stock at $10 a share from TD ameritrade. When you go to return the stock that you borrowed you hope it is trading less than $10/ share and you reap the difference in profit.

In this case, people borrowed the shares and when they went to return it, it was trading much higher. Say $65/ a share. So you would have to pay the difference between $65 a share and the $10 a share at which price you borrowed it. Thus losing money.
 

ChicagoFats

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How do call options drive prices higher? I understand shorts needing to cover due to being overextended.

When you buy calls ... someone (like myself) sells them to you. 1 options gives you control over 100 shares. So when i sell you an option I almost immediately buy some fraction of that 100 shares, say 30 shares, in order to hedge the trade aka limit my exposure. As the stock goes higher, i may have to buy 10 more shares for a total of 40 shares. IF it goes higher than that i may have to buy 10 more shares for a total of 50. So forth and so on until I have to buy the full 100 shares.

SO in essense, it became a self fullfilling prophecy. As the market got higher, the people that sold the calls must buy more stock, causing the stock price to go higher.
 

CBradSmith

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When you buy calls ... someone (like myself) sells them to you. 1 options gives you control over 100 shares. So when i sell you an option I almost immediately buy some fraction of that 100 shares, say 30 shares, in order to hedge the trade aka limit my exposure. As the stock goes higher, i may have to buy 10 more shares for a total of 40 shares. IF it goes higher than that i may have to buy 10 more shares for a total of 50. So forth and so on until I have to buy the full 100 shares.

SO in essense, it became a self fullfilling prophecy. As the market got higher, the people that sold the calls must buy more stock, causing the stock price to go higher.
Why would someone short a call option in a situation like this?

Edit: I'm guessing it's a simple speculative play to keep the premium. But the short then gets booty blasted into covering.
 

tiderollsonu

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Short sell means you sell something you don't have.

The technicalities of it ..... If you don't own a stock but think it is going down, you can borrow the stock from your broker. For instance, TD Ameritrade. If you have an account there and think that Gamestop is going to go bankrupt but is still trading $10 a share ... you borrow the stock at $10 a share from TD ameritrade. When you go to return the stock that you borrowed you hope it is trading less than $10/ share and you reap the difference in profit.

In this case, people borrowed the shares and when they went to return it, it was trading much higher. Say $65/ a share. So you would have to pay the difference between $65 a share and the $10 a share at which price you borrowed it. Thus losing money.

I won't even let someone borrow my car why would I loan them stonks, this is why I leave my investments to my broker.
 

ChicagoFats

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Why would someone short a call option in a situation like this?

Edit: I'm guessing it's a simple speculative play to keep the premium. But the short then gets booty blasted into covering.
You can short call options to collect the premium, or the hedge funds short them and become short volatility. It is obviously a bad trade in this situation, but bad trades do happen. The more a stock moves, or the more volatile it is, the more the options cost.
 

CBradSmith

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You can short call options to collect the premium, or the hedge funds short them and become short volatility. It is obviously a bad trade in this situation, but bad trades do happen. The more a stock moves, or the more volatile it is, the more the options cost.
I've made money by watching countless hours of Tastytrade and spending time behind the screen. Nothing large but certainly consistent.

Hindsight is 20/20, so I see why some may try to pick a top or sell a call they feel is comfortably OTM with premium selling for a premium. The movement of that stock the last 48-72 hours is pretty unprecedented.

I wouldn't have touched this just as I didn't touch the pot stocks a year or so ago.
 

Npklee

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How many hedge funds are involved? I prob need to dig into the details more.

I can’t fuckin wait to hear that Congress is gonna bail out these hedge funds because of The Big GameStop Short

they may actually need troops in DC should they do this and it be before people get stimulus checks. And they won’t need the troops for the right wing trump voters. It’ll be Biden voters storming the Capitol
 

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