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Economy
A complicated but seemingly complete explication of the Game Stop stock case
2021-01-30
[ISTHESQUEEZESQUOZE] GME shorts have not begun to close their positions in substantial numbers.

THE SITUATION (1/29 10 AM ET):

  • short interest: 75.54% of float by Ortex, 113.31% of float by S3 Shortsight

  • short share public availability: 0

  • Shorts are exiting their positions, but an amount of shares equal or almost equal to float is still shorted.

  • robinhood and other brokerages didn't have the capital to place buy orders at times yesterday. Robinhood is apparently going so far as to liquidate GME shares in accounts that are not using margin trading(!) If you're still on robinhood, you should find a new broker ASAP. Retail brokers who didn't blow up completely yesterday include:

    • o vanguard
    o td ameritrade
    o fidelity
OK, listen up, you late-to-the-party, crayon-eating homunculus, here's what's going on:

Over the past year, hedge fund supervillains have made money by selling shares of Gamestop they don't actually own - they've just borrowed them. Short selling. If they sell enough they can drive the price down so far that when they eventually need to return the shares they borrowed, they can get them cheap. It's free money. They throw a couple hundred mil at this, chill in their offices watching live video feeds of homeless people being exsanguinated on the hoods of their vintage sports cars, write up an investor report, and call it a fiscal year.

They borrowed and sold a record amount - they sold more shares, in fact, than are actually traded, far more than Gamestop's float. This shouldn't have been allowed to happen and probably means they were selling shares they never even bothered to borrow - naked shorts. (Where were you on that one, SEC?) Essentially, they were simultaneously betting on Gamestop going bankrupt and doing their best to drive them into bankruptcy. It's a good tactic when you need to find a way to pay for your old wife's alimony and your new wife's poolboy.

But it presents an opportunity for the savvy degenerate gambler. Because these shares eventually need to be returned - after all, it does cost these funds money to borrow a share. And the higher the price goes, the more unstable it becomes, the more it costs to borrow. This means that at some point, they need to buy back those borrowed shares they sold.

All 140% of them.
More at the link
Posted by:badanov

#1  they were simultaneously betting on Gamestop going bankrupt and doing their best to drive them into bankruptcy

Just like Bill Ackman's stunt in March 2020. He took a huge short position and then flooded the zone with media appearances and interviews in which he spread panic and fear. He made a cool billion fir himself in a couple of days. Then he went back in and scooped up shares at a steep discount.
Posted by: Unaviper Grumble3955   2021-01-30 05:54  

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