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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:

    Quote

    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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    I know last time every single option was ITM. Has anyone on Reddit said What number would it need to close tomorrow for that to happen? 
     

    Also I think I’m going to have to keep like 100 shares of GME in my 401k at all times just to balance out the havoc it wreaks on the market. Today was not a good day for my long holds. 

    Edited by Burt Macklin
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    53 minutes ago, Burt Macklin said:

    I know last time every single option was ITM. Has anyone on Reddit said What number would it need to close tomorrow for that to happen? 
     

    Also I think I’m going to have to keep like 100 shares of GME in my 401k at all times just to balance out the havoc it wreaks on the market. Today was not a good day for my long holds. 

    It would have to close over $800 for every option to close ITM tomorrow. They pushed it way out. Interestingly enough, there are no strikes lower than 20 for 3/5.

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    4 minutes ago, hayden_horn said:

    official fucking congressional testimony

    giphy.gif?cid=ecf05e472v7imp1khq01pm9zo9

    and i know i'm a week to this party, but i never saw this earlier, so i thought some of yall might not have seen it.

    "I am not a cat"

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    Reminds me of the scene in the big short...its like 2+2= fish

    Every broker has it listed as hard to borrow, yet they can maneuver the price down 100$ in 2 days with no shares supposedly available???

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    2 minutes ago, Bone3421 said:

    Reminds me of the scene in the big short...its like 2+2= fish

    Every broker has it listed as hard to borrow, yet they can maneuver the price down 100$ in 2 days with no shares supposedly available???
     

    It's GME, trying to make sense of any of it is a waste of brain effort 

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    13 minutes ago, Bone3421 said:

    Reminds me of the scene in the big short...its like 2+2= fish

    Every broker has it listed as hard to borrow, yet they can maneuver the price down 100$ in 2 days with no shares supposedly available???
     

    You and I aren't dealing with the same side of brokerage as the titans are.  Retail Brokerage and Prime Brokerage are two completely different animals.  

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    10 minutes ago, Bone3421 said:

    Reminds me of the scene in the big short...its like 2+2= fish

    Every broker has it listed as hard to borrow, yet they can maneuver the price down 100$ in 2 days with no shares supposedly available???
     

    One way to explain the mechanics is this:

    On Wednesday, a whale starts buying up a shitload of calls along the Friday options chain.  Say, at 200C, 300C, 400C strikes, and so on.

    The market maker sells it to them, and buys up the stock as a hedge.  The stock price rises because of the massive buying (and the other people short the stock getting squeezed, etc).  The stock price rises increase the value of those 200C 300C 400C options.

    The whale(s) flips those options onto WSB who are jumping along to hoping to get a leveraged return.  The whales pocket lots of profit.

    On Friday, because those options are closer to expiration AND because it doesn't look like 300C and 400C will get breached, the risk to the market makers (who are SHORT the option) decreases, so now they start to sell away the stocks they bought as hedge.

     

    Because they are selling away these stocks, the stock price decrease.  And it reduces their risk on the 200C and so on, so they start selling away even MORE stock that was hedging those.  It's a domino effect.

     

    If the market maker managed their risk properly, they were completely neutral to the stock price, and they made money pocketing millions of pennies from the market-making activity (their bread and butter).  Aforementioned whales made money flipping options and/or shares.  Some other institution that shorted the shares on the other side of this trade surely got fucked.  Retailed mostly held the bag.

     

    It's hedge fund on hedge fund violence.  Retail just went along and caught collateral damage.

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    One way to explain the mechanics is this:
    On Wednesday, a whale starts buying up a shitload of calls along the Friday options chain.  Say, at 200C, 300C, 400C strikes, and so on.
    The market maker sells it to them, and buys up the stock as a hedge.  The stock price rises because of the massive buying (and the other people short the stock getting squeezed, etc).  The stock price rises increase the value of those 200C 300C 400C options.
    The whale(s) flips those options onto WSB who are jumping along to hoping to get a leveraged return.  The whales pocket lots of profit.
    On Friday, because those options are closer to expiration AND because it doesn't look like 300C and 400C will get breached, the risk to the market makers (who are SHORT the option) decreases, so now they start to sell away the stocks they bought as hedge.
     
    Because they are selling away these stocks, the stock price decrease.  And it reduces their risk on the 200C and so on, so they start selling away even MORE stock that was hedging those.  It's a domino effect.
     
    If the market maker managed their risk properly, they were completely neutral to the stock price, and they made money pocketing millions of pennies from the market-making activity (their bread and butter).  Aforementioned whales made money flipping options and/or shares.  Some other institution that shorted the shares on the other side of this trade surely got fucked.  Retailed mostly held the bag.
     
    It's hedge fund on hedge fund violence.  Retail just went along and caught collateral damage.
    Yeah I know all that....which is why I asked where is the hedge fund on our side right above that post

    I have never thought reddit had the power to swing price like reported...so it doesnt make sense that there is this much downward pressure for hedge vs hedge
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    1 minute ago, Bone3421 said:

    Yeah I know all that....which is why I asked where is the hedge fund on our side right above that post

    I have never thought reddit had the power to swing price like reported...so it doesnt make sense that there is this much downward pressure for hedge vs hedge

    whichever hedge fund aligned with he long side of the trade didnt necessarily have to "fight" for GME by buying the shares

    they did it by buying up the call options, which sparked the run-up, and then they flipped the options profitably, after which point they did not have to care about the share price.

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    whichever hedge fund aligned with he long side of the trade didnt necessarily have to "fight" for GME by buying the shares
    they did it by buying up the call options, which sparked the run-up, and then they flipped the options profitably, after which point they did not have to care about the share price.
    The higher the price the more calls itm the higher the price goes...start gamma squeeze, if they bailed sounds like a paper handed hedge lol

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    19 minutes ago, Bone3421 said:

    The higher the price the more calls itm the higher the price goes...start gamma squeeze, if they bailed sounds like a paper handed hedge lol
     

    if someone has access to all the flow data they could do forensics and unpack the story.  the first run up there was a legitimate squeeze due to the higher SI and more people (short side) being caught offguard.

     

    its possible that whoever triggered this run did it in a more calculated manner.

     

    or its a complete crap shoot cuz whales lose money all the time to.  see: the ones on the other side of this trade

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    if someone has access to all the flow data they could do forensics and unpack the story.  the first run up there was a legitimate squeeze due to the higher SI and more people (short side) being caught offguard.
     
    its possible that whoever triggered this run did it in a more calculated manner.
     
    or its a complete crap shoot cuz whales lose money all the time to.  see: the ones on the other side of this trade
    Yeah the other day was a gamma squeeze buy someone that set up a call chain...figured it would still domino like last time, still might. I plan on holding over the weekend and seeing what next week brings
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    4 minutes ago, Bone3421 said:
    29 minutes ago, 52-80 said:
    if someone has access to all the flow data they could do forensics and unpack the story.  the first run up there was a legitimate squeeze due to the higher SI and more people (short side) being caught offguard.
     
    its possible that whoever triggered this run did it in a more calculated manner.
     
    or its a complete crap shoot cuz whales lose money all the time to.  see: the ones on the other side of this trade

    Yeah the other day was a gamma squeeze buy someone that set up a call chain...figured it would still domino like last time, still might. I plan on holding over the weekend and seeing what next week brings

    if some dumb whale saw this as an opportunity to short the stock, maybe some other smart whale will orchestrate another run up yet again

    6H3M.gif

     

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    Lol...I just try to go with makes sense and not into conspiracies. I could join the crazies that think it was the fed wire going down that pushed it up

    It really is interesting so I'm just trying to pay attention with my little skin in the game and if I have to I'll just take my dbl up with the profits I took earlier

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    Finra has 57% of volume over the last 3 days as short.... cant wait to see how this all ends

    Do we have anybody here that does technical analysis so we can compare with reddit...like what is the macd and is it a good indicator because apparently it is looking good per reddit

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    thats probably television "off season".  whatever detective tv shes on thats always playing on the tv, she looks pretty good from the waist up. 

     

    whole body be looking like a pepsi bottle but again, face and tits cant be denied

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    thats probably television "off season".  whatever detective tv shes on thats always playing on the tv, she looks pretty good from the waist up. 
     
    whole body be looking like a pepsi bottle but again, face and tits cant be denied
    Interesting take....so
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    interest late spurt GME at the last hour of the day.  i didn watch the option chain develop, so i dont know how it was triggered, but there was definitely massive volume at the 200, 250, 300 call levels , some with volume exceeding (previous day) open interest. 

    i tried to hitch a ride but was too late and lost out a bit.  did sell some more puts on it which should turn out good

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    interest late spurt GME at the last hour of the day.  i didn watch the option chain develop, so i dont know how it was triggered, but there was definitely massive volume at the 200, 250, 300 call levels , some with volume exceeding (previous day) open interest. 
    i tried to hitch a ride but was too late and lost out a bit.  did sell some more puts on it which should turn out good
    Probably a combo of renewed faith/hype and it being on the short restriction list today...see how much the shorters can get/keep it down tomorrow

    I'm a noob....when you sell a put are you wanting price to go up to profit correct??? Dont think it would be like a regular put since you sold it to someone else...
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    Anyone playing the Rocket squeeze? I know, insert mom joke here, but seriously. 
     
    The irony of going to the moon on Rocket...
    I have a small position but by the time I got in it was almost $29. Still, the company has good fundamentals so I don't mind even if there is no squeeze.
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    2 hours ago, Coelenterate Fuccboi said:

    Anyone playing the Rocket squeeze? I know, insert mom joke here, but seriously. 
     

    The irony of going to the moon on Rocket...

    I missed it - sort of.  Made money selling the puts , closed after earnings.

    Last night I saw the heavy option order flow and put in order for calls at 37$ each.  I was only able to fill for a single call - price went to 41$ and i didnt want to chase the fill.

    This morning those calls are $250 each.  6.7x overnight :(:(:(

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    11 hours ago, Bone3421 said:

    Probably a combo of renewed faith/hype and it being on the short restriction list today...see how much the shorters can get/keep it down tomorrow

    I'm a noob....when you sell a put are you wanting price to go up to profit correct??? Dont think it would be like a regular put since you sold it to someone else...

    yes.  you sell a put to open up a position on a stock.  (short position = -1 put).  when stock goes up, the puts become less valuable.  then you buy the puts back to close position.  (-1 put  +1put = 0)

     

    the difference between this and buying a call long, or buying the stock long, is if the stock doenst move substantially your way, youre still theoretically "earning" money from the time-value of the option decaying

     

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    3 hours ago, Coelenterate Fuccboi said:

    Anyone playing the Rocket squeeze? I know, insert mom joke here, but seriously. 
     

    The irony of going to the moon on Rocket...

    Fuck it.  Just bought 10 March 12 $30 call options for 3.42  

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    1 minute ago, Trey3216 said:

    Fuck it.  Just bought 10 March 12 $30 call options for 3.42  

    My NGA.  Im on the 35C.

    Folks need to look at this option chain.  This is expiring next week, not this friday.

    Circle is daily traded volume.  next to it is open existing - meaning existing calls.

    TONS of new calls above current price has been opened up today.  This is potentially fuel for the rocket.

     

    image.thumb.png.4068f56d74b45ae859bd0d2b9ba13901.png

     

    To be clear, we dont know if this "fuel" is already used to sustain the current $30 pricing, or if thats setting up for a further sustained run.... quantitative folks actually have tools to measure 2nd order derivatives and look at vanna and vega and all that shit to predict reflexive action... but this is def looking bullish

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    2 hours ago, Trey3216 said:

    Fuck it.  Just bought 10 March 12 $30 call options for 3.42  

    not sure if you're in.  i just got out with my 35C.  In: 2.99, out 5.25. 

    Not trying be too greedy

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    2 minutes ago, 52-80 said:

    not sure if you're in.  i just got out with my 35C.  In: 2.99, out 5.25. 

    Not trying be too greedy

    Im fucking Walter Sobchak’ng this mofo.  It’s about to be in infinite gamma squeeze at over 36

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    2 hours ago, 52-80 said:

    My NGA.  Im on the 35C.

    Folks need to look at this option chain.  This is expiring next week, not this friday.

    Circle is daily traded volume.  next to it is open existing - meaning existing calls.

    TONS of new calls above current price has been opened up today.  This is potentially fuel for the rocket.

     

    image.thumb.png.4068f56d74b45ae859bd0d2b9ba13901.png

     

    To be clear, we dont know if this "fuel" is already used to sustain the current $30 pricing, or if thats setting up for a further sustained run.... quantitative folks actually have tools to measure 2nd order derivatives and look at vanna and vega and all that shit to predict reflexive action... but this is def looking bullish

     

     

    is it any surprise?  "they" filled out the options chain from 30-35 compared to last screenshot, which was new fuel to the rocket

    Screen Shot 2021-03-02 at 7.16.19 PM.png

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    Why are we talking about rocket in the thread...


    Wish I jumped on but wasnt sure if it was real. Some thought it was legit and some were saying it was just distracting from gme

    Speaking of gme is having a hard time cracking 130 last 2 days...

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    No doubt a lot of redditor money is now being diverted to RKT, but I bet it's people pulling out of AMC, BB, etc rather than GME. I'm basically at a breakeven point on AMC. Shoulda dumped it and put it in the shiny new rocket. 

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