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  • My Not So Short Story on GME


    Eastwood

     

      

    On 1/25/2021 at 10:18 AM, Storm the Field said:

    GME at 9:10 $88.60

    9:50 $144.42

    10:10 $88.09

    What in the hell was that all about?

     

    On 1/25/2021 at 10:38 AM, Eastwood said:

    I'll post a recap of everything when the dust settles on this. It's been an interesting ride and it has caused me some concerns over contagion in the broader market.

    I'm not a financial advisor. This is not financial advise. I don't work in finance. I do not have a degree in finance. Actually, I have a BA and I'm bad at math past Cal I. I won't apologize for the length because this post is me spiking the football and other than banter about the moves GME makes in the future, this is the last time I ever dig into the fundamentals of the GME trade.

    What we saw today was covering either due to what is called a gamma squeeze or a short squeeze. Maybe a mix of both. We won't really know until later, possibly at the end of close Wednesday when brokerages like TD update their short interest. A gamma squeeze occurs as the price moves up, crossing the thresholds of strike prices of calls that will soon be expiring. Market Makers use the Delta of an option to determine how many shares of a stock they should purchase in preparation of possibly covering the calls when they are exercised, either by the buyer of the call or upon expiring in the money. As the share price goes up, combined with the days getting closer to expiry, up goes the Delta, up goes the amount of shares the MMs buy. Last Friday, every call on the board for GME was in the money at expiry. I'll repeat: EVERY CALL ON THE BOARD WAS ITM AT EXPIRY. I don't know if that's ever happened in the history of the market. That means that if every call was exercised, 11.7 million shares would need to be transferred over to the new owners today and tomorrow. Now, as the Delta on a lot of the lower strikes were already at 1 and the shares already (hopefully for the call seller) purchased, it shouldn't be a big deal. However, the big pop happened ON Friday, not before. That caused a mad scramble in the after hours Friday, today, and possibly tomorrow for those who are gambling on the price decreasing further before they fill those calls. So, that's a gamma squeeze. Price creeps up, MMs who sell calls end up buying shares to cover, causing the price to climb higher, and then creating essentially a feedback loop spiking the price when combined with buying from retail or pops on positive news.

    What is happening, and may continue to happen, is the result of hedge funds and possibly Bank of America rampantly shorting GME over the course of a year hoping that it goes zero and they then get to pocket everything and give nothing back. The short float on December 31st was 140% and the institutional ownership was 117%. But how is such a thing possible? They borrowed shares to either 1.) sell, never intending to buy them back and return them because they were hell bent on bankrupting GME, or 2.) lent out those already borrowed shares that they never intended to give back anyway to collect the premium, creating a borrowed share of a borrowed share. They would also buy dips incrementally, amassing large positions, sell calls and buy puts with a quick expiry, then dump all of the shares they accumulated at once while simultaneously shorting to tank the price and pocket the premiums on the options they bought and sold. Then, when that wasn't enough, they sold naked shorts. They sold shares they didn't even have or even exist. They injected "synthetic shares" into the market. Synthetic, fugazi, fogazi. It's a wazi, it's a woozi. They're fairy dust. They don't exist. They're not fucking real.

    ispWN9.gif

    But the people and institutional investors they sold them to bought the right to own the shares. And those banks and hedge funds are obligated to deliver them. But now there aren't enough shares to go around. There's an infinite demand for shares, but a finite supply. In a total share recall event, the lenders of the shorted shares could recall every share on borrow and still be 21 MILLION shares short of demand. The banks and hedge funds that created that SHOULD be on the hook. It SHOULD be illegal. Think of how depressed the price was because of it. Think of the loss of market cap, which led to lowered credit ratings, which led to higher interest rates and less borrowing power, and the layoffs and store closures that followed. Awful. The price should go to infinity because the demand the banks and hedge funds created will become infinity.

    Boomers can bitch and moan about RH and college kids dumping their stimmy into GME all they want, but the reality is that a bunch of boomer bankers and hedge funds created a situation that should be legally, economically, and financially impossible. Boomers want to call what retail investors are doing "market manipulation." However, anyone who dug into the situation enough saw the writing on the wall. Honest to goodness due diligence combined with simple supply/demand economics combined with paying attention to the new market trend of retail investors told anyone interested all they needed to know.

    This was me back in September:

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    I know for the bulk of you guys in here that it is too much of a leap of faith to go long on GME, but there is profit to be made on it in the last quarter, being console launch and holiday season. Especially if it hits $10 and the Robinhood millionaires show up. Even more so if another round of direct stimulus is announced.

    The price hadn't even hit $10, yet, when I said that. The house of cards had already been built. A fan had been placed in front of it. And everyone told me that I was crazy for thinking the house of cards would fall over. It wasn't a secret. It was in plain fucking sight. And we are finding out it is everywhere. Wall Street and old guys in banking and finance can harumph all they want about how a bunch of dumb wage earners are gaming their system to make a buck, but I think the reality is that the curtain has started getting pulled back on Old Man Oz. Take me, for example. I've given a detailed breakdown and have proof in this very thread that I had produced this investment thesis MONTHS before it was mainstream and materialized. I gave my credentials above. Want to know how long I've been actively investing? Since March. Same as all the Robinhood punks. All it takes for a large chunk of the population to be competent in anything is 1. Time 2. Education/training, and 3. Financial resources. In March, there was the perfect storm of 1. COVID lockdowns, 2. The internet and educational resources on the various trading platforms, and 3. Stimulus - The ultimate Other People's Money. Millions of $3k hedge funds popped up all over the nation and had the time, education, and money to be just dangerous enough. I traded in a paper account on Think Or Swim for 30 days and was then off to the races. I developed a momentum trading strategy where I combined candlestick patterns, moving average patterns, the RSI, and the Elliot Wave. Not only that, I also voraciously consumed anything I could get my hands on about market history, valuations, and trends. I bought and sold stocks, bought options, and sold covered calls and generated a 10% return over the course of about a month. Then I stumbled on GME, halted all active trading, liquidated any outstanding options, sat on my KO, XOM, and PFE (which was my worst trade) shares and positioned myself into GME. My return is now over 1000%. Either I'm some kind of wonder boy who picked all this up quickly because I'm a high functioning autistic person...

    SparklingOfficialAtlasmoth-max-1mb.gif

    Or maybe this shit just ain't as hard as Wall Street wants us to think it is. And maybe Wall Street was so habitually comfortable with how little people knew about their industry in the past that they didn't even bother concealing their moves because they didn't think retail investors would know how to play the other side. Well, the secret's out. This new batch of retail investors spent the last decade learning how to min/max various economic systems in video games. They are accustomed to dumping hours of time learning how to maximize returns on digital assets. They went from watching hours of YouTube videos on how to mine diamonds and make a Fortune 3 pick axe in Minecraft to watching hours of how to turn a couple grand into 5 figures. In some cases, 6 or 7 figures.

    As I stated earlier, I sold half of my position in GME today, but I still firmly believe in the trade I executed. I am now concerned about two things, one being specific to GME. I think the invisible hand of the free market is about to get absolutely doomfisted by either the government or big banks. I think a lot of institutions out there are shook. When GME hit $150 and other short squeezes were popping, a huge market sell-off occurred. I think funds were liquidating to cover their losses because margin calls were going out. In GME alone today, short sellers lost $1.6 billion according to Business Insider. Melvin Capital, supposedly the biggest short seller of GME out there, is down a whopping 30% for 2021, so far. They manage billions. We learned in 2008 that these banks and funds actually interweave into a structural support for the entire financial system. If a multi-billion dollar part of that support structure fails, it increases the strain on the others, and then another fails, and then we have a cascade failure. I think GME and the big shorts come together and negotiate a share purchase of newly issued shares under the condition that they are immediately transferred to the rightful owners to get the short float below 100%. This is actually extremely bullish for GME. They erase their remaining debt, buy out of all of their bad leases, and increase their cash long enough for the turn around. That's why I only sold half of my position. I'm long GME. In Ryan Cohen I trust. But I also think the government steps in and does something to try to fix the rest of the market. As history has shown us, this doesn't mean punishing the banks who created the situation in the first place. No, they're going to increase the regulations on the retail investors. That could also have grave, unintended consequences when retail cashes out all at once.

    So, I feel really good about today, but there may be grave consequences in future. I'll end with the cringiest thing possible: be a retail trader who uses a scene from The Big Short in one of his posts.

     

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    It looks like the final outcome of this GME saga will be: hedge funds who were massively short got kicked in the balls but thanks to other hedge funds bailing them out, they were probably able to open new short positions when the stock was high, so at the end of the day they win. A few reddit warriors will probably be millionaires, while most will lose big. The few redditors who made money will be prosecuted and humiliated, and their money probably taken from them and returned to their rightful owners, the hedge funds, and let that serve them as a lesson to try and fuck with wall street. The end.

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    welp. i'm still holding gme, just for shits and giggles at this point. i've written off the money spent on it. what are the odds this thing ever surpasses even $100 again?

    i bought 2 shares at $252, so i've done worse in less time in las vegas. but at this point, looks like the hedge funds won, or at least lost less.

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    11 minutes ago, hayden_horn said:

    welp. i'm still holding gme, just for shits and giggles at this point. i've written off the money spent on it. what are the odds this thing ever surpasses even $100 again?

    i bought 2 shares at $252, so i've done worse in less time in las vegas. but at this point, looks like the hedge funds won, or at least lost less.

    Ever? Pretty likely. Within the next couple weeks? Who knows. I'm with Eastwood. They're in a fast growing industry, and they seem to be making a serious effort to transition their business model. If successful, they will be a very big player in the game.

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    20 minutes ago, Chapo said:

    They need to announce an online platform to compete with Steam and Epic.

    $GME 🚀 

    Epic Cleveland Steamer, the next generation platform for game distribution

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    53 minutes ago, XYZ said:

    The few redditors who made money will be prosecuted and humiliated, and their money probably taken from them and returned to their rightful owners, the hedge funds, and let that serve them as a lesson to try and fuck with wall street. The end.

    Prosecuted for what?

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    23 minutes ago, EuroHorn said:

    I believe the most bullish opinion I read was GME could go as high as $60 per share if they are able to successfully implement their recovery strategy 

    And that's the happy path scenario.

    As I've said before, my opinion and analysis is that GME as a long term bull stock is not based on fundamentals and Ryan Cohen is not a magic silver bullet, though he might be a change agent (the jury is still out on this for me to be honest-- lots of one-hit wonders in this game).

    I understand guys like Eastwood think differently, and I don't mean to knock the Kool-Aid out of their hands because they did exploit a weakness and made some life-changing coin and that's awesome and I could be way wrong, but at the end of the day GameStop is a horribly ran company with a stupid business who hit the attention-based economy lottery with becoming a meme stonk and face of a populist uprising. 

    That is my opinion, obviously not financial advice (I am profiting heavily off my $65 put option trade) based off of my years as a global SI working with some of the GameStop C-suite and CEO (the same guy on two different occasions).

    Edited by DonkeyCigars
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    On 2/3/2021 at 10:01 AM, 52-80 said:

    13M @ 4% Safe Withdrawal Rate is 520k a year.  Dude doesn't have to work a day for the rest of his life without even touching the principal.  I wouldn't sell either, the public might haunt him down.

    Poor guy is going to have to pay tax as ordinary income since it is short term so he is going to net more like 7.5M. Hope he can live off 300k a year (doesn't even get to be surly 1%)

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    20 minutes ago, SquishMitten said:


    Some bullshit? Deepfuckingvalue is under investigation now

    For having a potential conflict of interest between his last job and the posts/videos he was making. I don't think it has anything to do with the positions themselves that he took. And he's just one actor. I'm guessing there are plenty more that made similar amounts - we'll see if they come under fire or not. 

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    Quote

    The Wall Street Journal came through in a big way with this story about Senvest Management LLC, a (now) $2.4 billion equity hedge fund that made almost $700 million on GameStop. Their process for deciding how to buy GameStop was sort of boring and normal and pre-nonsense: They got interested in the stock after hearing “a presentation from the new GameStop chief executive at a consumer investment conference in January 2020,” did research, “spoke with management, sussed out competitors and noted the involvement of activists in the stock.” It took them until September to start buying, and “by the end of October, Senvest owned more than 5% of the company, paying under $10 a share for the bulk of the stock.” 

    Their process for deciding how to sell GameStop, however, really rose to the weird occasion:

    After the market’s close on Jan. 26, Tesla Chief Executive Elon Musk tweeted “GameStonk!!” a rallying cry to users of Reddit’s WallStreetBets forum, who had put their support behind GameStop.

    Senvest, which had slowly been trimming its position, decided to get out completely.

    “Given what was going on, it was hard to imagine it getting crazier,” Mr. Mashaal said.

    That implies that they got out mostly on Jan. 27, when GameStop closed at its all-time high. They got into this stock based on fundamental research conducted over months; they called the top perfectly based on an Elon Musk tweet. 

    Honestly I am tearing up a little? These guys get it. What a great investment process. I hope someone is working on a revised edition of Graham & Dodd that incorporates the Did Elon Musk Tweet Yet metric. The best time to buy a stock is a few months before Elon Musk tweets about it; the best time to sell it is the day after he tweets. If Elon Musk just sold advance notice of his tweets to hedge funds, he could be the richest person in the world. 

     

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    Yep, after any Elon Musk tweet it will quickly spike and then usually come back down to Earth within a couple days. 

    My brother made some dough on Dogecoin just trading off Elon. Quickly in to ride the wave and then sell.  

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    1 hour ago, Loch Ness Monster said:

    Yep, after any Elon Musk tweet it will quickly spike and then usually come back down to Earth within a couple days. 

    My brother made some dough on Dogecoin just trading off Elon. Quickly in to ride the wave and then sell.  

    Did this just last night/this morning. Except I follow Crypto Cobain and wait for him to bitch about said Elon tweets.

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    78% as of 2/2 I think, self reported numbers where the fine for falsifying records is fractions of a penny on the dollar anyways.

    Can't wait to see what does, or doesn't, happen the rest of the week. It's like a slow motion multi car accident. Is at almost over or is there a semi about to fly into frame at 75mph?!
    4b28a6b1a56c216c14c55f74f96ef646.jpg

    Sent from my SM-G973U using Tapatalk

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    I'll echo the same thing I've been echoing since December: do not short GME and do not sell naked calls.

    This thing is likely still coiled up and prone to launching on a catalyst. It's just that the barrier to entry on the trade is so expensive now that it is much more of a gamble than it was even in November when the price was $20. It's a gamble, at this point, that I'm more than happy to watch from the sidelines.

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    On 2/10/2021 at 10:14 AM, Eastwood said:

    I'll echo the same thing I've been echoing since December: do not short GME and do not sell naked calls.

    This thing is likely still coiled up and prone to launching on a catalyst. It's just that the barrier to entry on the trade is so expensive now that it is much more of a gamble than it was even in November when the price was $20. It's a gamble, at this point, that I'm more than happy to watch from the sidelines.

    just wait and watch reddit get stimmy checks and go for round two

    edit: i'm also out and won't be getting back in, but i'm watching closely.

    Edited by cam4mav
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    9 minutes ago, EuroHorn said:

    Rep David Scott sounds like Andrew Dice Clay 

    They have all sounded like they are reading from pre-written bullet points they have no understanding of. It would be nice if people that actually have a clue would run for office.

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    I've watched his Youtube channel and Roaring Kitty is an impossible not to like kind of hero, I can't believe he's under investigation. That's some bullshit. He was fully transparent in his GME theory.

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    26 minutes ago, Gourmand said:

    I've watched his Youtube channel and Roaring Kitty is an impossible not to like kind of hero, I can't believe he's under investigation. That's some bullshit. He was fully transparent in his GME theory.

    He made the big guys lose. That's cheating no matter the method.

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    This shitshow will go nowhere.

    I once got a meeting with my State Senator about some legislation I thought was a bad idea.  The fucking moron didn’t know the difference between cash accounting and accrual accounting.  Back when I was naive enough to hope an elected official was versed in the things they are managing.  Not a genius or policy wonk per se, but remotely informed.

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    The first half was a beating and some of those Congressfolk should be thrown in a wood chipper

    the second half was more tolerable, if at least for entertainment value, which the entire thing could only have been

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    18 hours ago, EuroHorn said:

    They should address Gill as Roaring Kitty. Lol. 

    Loved when he said "I'm not a cat" and "I like the stock" .. Glad he was able to have fun given the outrageous claim made agsinst him. 

    Also laughed when reddit CEO straight up denied the anti semitism card Melvin tried to play. Melvin is such a victim with his mom and pop hedge fund!

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    that guy just bought another 50,000 shares today at the absolute bottom of $38.5

     

    he's now in for 100,000 shares avg cost ~27, and holds a shit load of yugely profitable leap options. 

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    Do what you want but I'm probably going to get back in on Monday with some of my earlier profits...

    Had one CEO say price woulda went into the thousands if it wasn't shut down that day.

    Gabe(Melvin ceo) said the increase in price wasnt the shorts covering but a buying frenzy buy retail plus other institutions

    Reports surfacing about how ETFs that contain decent amounts of gme have been heavily shorted lately

    We will see what happens but 40$ is most likely the floor...????

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    Up 12.7% today....
    Dont know if it will surpass previous highs but I feel like we could break 100$ again

    Hopefully higher...so much vary info out about the SI%

    The up 3% in after hours feels like last time...but what do I know


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    Seen posted on reddit that fidelity has said gme Is hard to borrow and posted a phone number you have to call if you want to short....

    Also schwab has increased margins and selling naked calls is now prohibited

    Anybody that knows more than me chime in....???

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    Ok so just saw this...so earlier I posted about how reddit believes that shorts are hiding in ETF's by shorting the ETF and buying every stock in besides gme

    Well in xrt the one being shorted 200% the second highest holding is MGNI and is up 40% for a month with high of 61$ was 34$ on jan29

    Another ETF the second highest holding(BILI) went from 113 to 156.....

    Interesting to say the least

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    1 hour ago, Bone3421 said:

    Ok so just saw this...so earlier I posted about how reddit believes that shorts are hiding in ETF's by shorting the ETF and buying every stock in besides gme

    Well in xrt the one being shorted 200% the second highest holding is MGNI and is up 40% for a month with high of 61$ was 34$ on jan29

    Another ETF the second highest holding(BILI) went from 113 to 156.....

    Interesting to say the least

     I have a monkey brain, tell me how to make money on this.....

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    17 minutes ago, Chapo said:

     I have a monkey brain, tell me how to make money on this.....

    Step 1: Set up a RobinHood account

    Step 2: Stick your dick in a blender

     

    "Thank you so much for that question. When I was a boy in Bulgaria....."

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