[download2live]

GameStop short squeeze
https://en.wikipedia.org/wiki/GameStop_short_squeeze

In January 2021, a short squeeze of GameStop, a video-game retailer, and of numerous other securities traded on various stock exchanges took place. The short squeeze increased the GameStop's stock price almost 190 times from its record low, hitting a high of nearly $500 per share on January 28, 2021, and causing large losses for short sellers. Approximately 140% of GameStop shares had been sold short and the rush to buy shares to cover these positions only drove the price higher. The short squeeze was mainly triggered by users of the forum r/wallstreetbets on Reddit through commission-free trading apps such as Robinhood.

@Smartcat I think you owe us a separate thread for Melvin Capital and GME stock saga which is unfolding now. I wished to create one but I do not have that explaining superpowers like you have.

The story unfolding now is jaw dropping. Apparently someone has converted 50k investment into 11 million. There is a movie story in this somewhere.

[whitewing]

Originally Posted by download2live

@Smartcat I think you owe us a separate thread for Melvin Capital and GME stock saga which is unfolding now. I wished to create one but I do not have that explaining superpowers like you have.

+1 to that, looking forward to that Smartcat !

Originally Posted by download2live

The story unfolding now is jaw dropping. Apparently someone has converted 50k investment into 11 million. There is a movie story in this somewhere.

Its almost unreal that a big hedge fund is getting hit by a bunch of folks from a subreddit !.
Isn't there some rule to prevent people from forming cartels to fix the prices?

[SmartCat]

Originally Posted by whitewing

Isn't there some rule to prevent people from forming cartels to fix the prices?

I guess we can call WallStreetBets a 'social trading' platform. So such community bets on a stock are allowed by SEC.

However, this is a grey area in India. Zerodha was running a social trading platform called opentrade.in but they shut it down a couple of years back because of lack of clarity from SEBI

[download2live]

Guys if you want to see the real life enaction of movie 300, follow the GME saga.

Now big boys have entered the fray. Citadel and Point72 are putting money into Melvin Capital Management. And the manipulations going on are mind boggling. I am learning so much.

And another reason to stick with index tracking funds. It is impossible to beat big guys.

[McLaren Rulez]

Originally Posted by download2live

And another reason to stick with index tracking funds. It is impossible to beat big guys.

I don't know, it seems like quite the opposite has already happened!

The WSB guys have caught the big boys with their pants down and have already made them pay a very steep price for that. The short squeeze will end eventually but it's hilariously entertaining to watch average people make millions at the expense of the Melvin Capital.

Let me also add my request for a separate thread by SmartCat with this. It's a brilliant story, no matter what!!

[download2live]

Originally Posted by McLaren Rulez

I don't know, it seems like quite the opposite has already happened!

I am hoping for a happy ending. If I was there I would also bought 1 share of GME to put my weight behind the retail investors.

To put things in perspective, Citadel is a big player. I am not sure how it works but the Robinhood trades somehow go through its system. So they know what retail investors are doing and can react before orders reach markets. Also big players have indirectly forced margin calls on the people who were buying shares via that. And there are threads propping all over Reddit on Blackberry and Nokia being the next big thing. So as to divert the attention of retail investors there.

Take all this with a bag of salt. I know nothing and all this is from Reddit.

[McLaren Rulez]

Originally Posted by download2live

Take all this with a bag of salt. I know nothing and all this is from Reddit.

Oh I agree - my knowledge of this is also mostly from Reddit.

What is certainly true is that it did not play out the way Melvin Capital expected and some Redditors like DFV (profane username, hence shortened) have pocketed millions of dollars as a result. And that's real money, not paper value of the stock!

Until the bottom falls out, this is one hell of a game of chicken being played. I don't know who I'm more afraid of - hedge funds with vast resources and knowledge of the system or WSB with their sheer guts and strength in numbers!

[download2live]

Originally Posted by McLaren Rulez

Oh
Until the bottom falls out, this is one hell of a game of chicken being played.

Gets more and more interesting.
Papa Elon has spoken.


And GME after hours price briefly shot to 243.

For the uninitiated Elon Musk hates companies running shorts. Tesla has been heavily shorted company for a long time.

[carboy]

Originally Posted by download2live

For the uninitiated Elon Musk hates companies running shorts. Tesla has been heavily shorted company for a long time.

Going short is just the opposite of going long. I don't see why someone should be upset with shorting.

If you think a stock is going to go up, you go long. If you think a stock is going to go down, you go short. Two sides of the same coin.

[ashokrajagopal]

Originally Posted by carboy

Going short is just the opposite of going long. I don't see why someone should be upset with shorting.

If you think a stock is going to go up, you go long. If you think a stock is going to go down, you go short. Two sides of the same coin.

Well, Elon Musk hates shorts because he had been on receiving end for a long time. I don't think its on principle.

BTW, the Gamestop saga, amusing as it is, is not going to end well for "everyone" involved in WSB.
They pulled a "heist", flipped off the Finance establishment and so on. But I think most of the flows have happened already.
The guys who got in first would have made a killing by now.

But then, this is really not one entity, its a group. Any seasoned trader would have gotten out by now with the money, but its really not one entity.
As are other stories in 21st century finance, this will also look like one large pyramid.

[SmartCat]

Originally Posted by ashokrajagopal

BTW, the Gamestop saga, amusing as it is, is not going to end well for "everyone" involved in WSB.

Yes, this is going to end badly for majority of retail folks who are getting in now. Because they won't know when to get out. The hedge funds are cranking up the shorts (using complex derivatives, which limits losses now but gives large gains later) on GME.

GameStop jumps another 90% above $140, but short sellers aren’t backing down
https://www.cnbc.com/2021/01/26/game...king-down.html

If I was a betting guy (and I am), I would bet on institutional traders having the last laugh. They literally have unlimited ammo.

[hondafanboy]

I don't think this GME episode is now about gains and losses for retail /WSB investors. They have already won and laughing and will have a last laugh too. Its now the matter of how long the laugh lasts.

I cant wait to see the next season of Billions covering this episode.

[McLaren Rulez]

Originally Posted by SmartCat

I would bet on institutional traders having the last laugh. They literally have unlimited ammo.

https://markets.businessinsider.com/...1-1-1030006226

Even if they win in the end, the victory might be a bit pyrrhic after all that's happened.

[SmartCat]

Originally Posted by McLaren Rulez

https://markets.businessinsider.com/...1-1-1030006226
Even if they win in the end, the victory might be a bit pyrrhic after all that's happened.

Fly in the ointment is that the gains made by retail gang so far is NOT money in the bank. These are just mark-to-market gains.

Only very experienced retail participants will know when the music is about to stop playing, and when to bank the gains made.

[SilentEngine]

Originally Posted by SmartCat

Fly in the ointment is that the gains made by retail gang so far is NOT money in the bank. These are just mark-to-market gains.

Only very experienced retail participants will know when the music is about to stop playing, and when to bank the gains made.

What is stopping the retail traders from booking those gains? Couldn't they just square off those long positions (at least partially). Very likely that early ones have booked gains which are probably 5x, 10x compared to what they entered with.