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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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    Maybe this has been discussed, I haven’t read this entire thread, but convince me that Roaring Kitty and Robinhood’s CEO aren’t the same guy.
     
     
     
     
    Cant do it.... no one has seen them in the same room

    Only argument against is one fucked his customers out of 100 of thousands of dollars and one isnt a cat and made(if he sells) millions
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    I said a few days back that the math pretty much showed that there was no way for the short interest to fully unwind. I got out and stayed out because I was no longer confident that the powers that be would allow this stock to trade in a free market. The plug will be pulled on this faster, this time around, in my opinion. The market shuddered under the weight of the last squeeze and they'll do everything they can to keep it from happening again.

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    4 minutes ago, Bone3421 said:

    I dont know if this is the squeeze but I sure hope so... personal price target is 1k per share

    If it gets there with no fuckery might really fly like a few redditors have said

    $40 to $1k isn't really flying? In.

     

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    $40 to $1k isn't really flying? In.
     
    Oh it is but a decent chunk per the math on reddit say 5k+ Is possible

    Dont know if I would have the balls to wait for it to get that high without shit collapsing
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    13 minutes ago, Eastwood said:

    I said a few days back that the math pretty much showed that there was no way for the short interest to fully unwind. I got out and stayed out because I was no longer confident that the powers that be would allow this stock to trade in a free market. The plug will be pulled on this faster, this time around, in my opinion. The market shuddered under the weight of the last squeeze and they'll do everything they can to keep it from happening again.

    This. I am convinced until I see something to change my mind that large parts of the market are fraudulent and that if we get to close to the edges we'll find out once again exactly what length the financial powers that be will go to box us in. The reaction to Gamestop has soured me even harder than 2008 for summer reason. There I figured they were hustling us and we got beat. They definitely lured us into a false game but at least it seemed that if you could outplay the big guys you could still win. Here it seems that once the big guys realized they were outplayed that they flipped the table over and shot us. I'll hold the GME shares I was willing to run into the ground but I'm extremely reticent to buy into it again. My faith in US capital markets has been severely shaken and I'm not quite sure what it would take to recover it.

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    Those halts were absolute fuckery. Up 10% in 10 minutes? SHUT THAT SHIT DOWN. Down 10% in 15 seconds. We good, let it ride. The last halt being 14 minutes, and being lifted 12 seconds into aftermarket is unbelievable horseshit.

    Still thinking it finds its way back up afterhours and hopefully continues tomorrow. If it drops overnight, I'll never believe the system will work right again.

     

    ETA: LOL. In the time it took me to write this, it's up over 30% from close. This shit is cray. I'm officially in the green on this position.

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    I'm thinking they let it run up today because the si% comes out today...ofcourse lots think the number is false and hedges are hiding shorts in ETF's so when its reported low they will hope everyone sells

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    29 minutes ago, Eastwood said:

    I said a few days back that the math pretty much showed that there was no way for the short interest to fully unwind. I got out and stayed out because I was no longer confident that the powers that be would allow this stock to trade in a free market. The plug will be pulled on this faster, this time around, in my opinion. The market shuddered under the weight of the last squeeze and they'll do everything they can to keep it from happening again.

    You're at least right about part of this. So far, this afternoon's fuckery doesn't seem to have worked. Genuinely interested to see how many times they will pull this shit and whether they'll get away with it or if the guys at WSB keep stepping up their game and buying more.

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    big secret: i sold off my shares today at $50 while trimming position

     

    salvation: at the close i caught some friday 200-strike calls for 9.50 and sold them literally in <20 seconds for 12.25

     

    and then i bought some more shares after-hours (post-halt) for 86$ cuz im retarded

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    You're at least right about part of this. So far, this afternoon's fuckery doesn't seem to have worked. Genuinely interested to see how many times they will pull this shit and whether they'll get away with it or if the guys at WSB keep stepping up their game and buying more.
    It's not WSB. All of the "meme" stocks popped along with the weed stocks. Not to the level of GME, but 10+% across the board. WSB doesn't control that much total volume in the market. This is a big fish move.
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    2 minutes ago, Bone3421 said:

    I'm thinking they let it run up today because the si% comes out today...ofcourse lots think the number is false and hedges are hiding shorts in ETF's so when its reported low they will hope everyone sells

    I think that's absolutely their hope, and it will work on some folks. I don't think they particularly wanted it to run up like it did today. It's got to drop a lot farther now. Also, a lot of new shorts were opened today (well 1.35 million borrowed today, but I assume they put em to work) so those are all in a bad spot now.

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    big secret: i sold off my shares today at $50 while trimming position
     
    salvation: at the close i caught some friday 200-strike calls for 9.50 and sold them literally in  
    and then i bought some more shares after-hours (post-halt) for 86$ cuz im retarded
    Bruh...

    Isold first go around for profit then got back in Monday at 44$
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    3 minutes ago, Bone3421 said:

    Bruh...emoji184.pngemoji870.png

    Isold first go around for profit then got back in Monday at 44$

    i'd been taking small gains selling calls against the shares, but last 2 days i wanted to ensure i had more cash reserves so had to cut the rope :(~

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    28 minutes ago, 52-80 said:

    and then i bought some more shares after-hours (post-halt) for 86$ cuz im retarded

    paper handed again.

     

    cuz i like getting sleep this time.

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    3 minutes ago, Bone3421 said:

    Gamma squeeze possibly in motion

    Call chain set up starting at 50$ by some institution/whale...explains why 50$ was a battleground today and once it broke gme took off into orbit

    yeah, volumes started picking up at around 2:30, but at 3:15 is when the big boy moves started spiking. then 3:45 was the real big boy move. somebody moved a lot of volume at that point.

    super interesting, and i missed it all working. haha.

    still have a lot of ground to get back to the $252/share i stupidly spent, but maybe we'll all get to the moon.

     

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    My entry is $295 and I own a handful of shares, so honestly this isn't about getting rich. I assume I should just wait to see how high it can go, been holding on in the red for so long I don't really care to try and get my money out at break even.

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    If reddit is right...price should come back up to yall in the 300$ range plus some

    I'm going to aim for 1k but I won't be ashamed to sell if I see trouble coming.

    Was well on the way to 1k last time before that bs happened

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    They're getting wound up over at reddit again. Guys promising to tattoo rockets on their taint if GME hits $1000. You know.... the usual high brow investment chatter. 

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    They're getting wound up over at reddit again. Guys promising to tattoo rockets on their taint if GME hits $1000. You know.... the usual high brow investment chatter. 
    They can say what ever they want long as it goes
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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.

     

    Could make a decent steady income selling covered calls against those shares.

    4% is way to high a withdrawal rate for someone his age (if he were to completely quit working) 

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    3 hours ago, Trey3216 said:

    4% is way to high a withdrawal rate for someone his age (if he were to completely quit working) 

    400k from 3% , excluding additional income from covered calls, future dividends, and public appearances cosplaying as a cat, isnt too shabby.

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    Tried like hell to break thru the support at 135$ twice...reddit thinks it needs to close over 150 to keep pressure up

    Got thru it the 3rd time....see what tomorrow brings (and after hours)

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