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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.

     

    • Hook 'Em 2

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    There is no way in hell I would have the balls (or believe it gets there) to hold for the 100k being thrown around....but just for fun...I would have 1.6 million (after my 960k in taxes lol)

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    Keep a realistic price target in mind. Most of these numbers don't take into account any outside elements. Let's be real here, anything above $1k per share is pure lunacy. The market couldn't stomach it threatening $500 per, so anything predicting above that should be viewed with skepticism. Don't expect the market to play fair after they already have shown they won't.

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    Keep a realistic price target in mind. Most of these numbers don't take into account any outside elements. Let's be real here, anything above $1k per share is pure lunacy. The market couldn't stomach it threatening $500 per, so anything predicting above that should be viewed with skepticism. Don't expect the market to play fair after they already have shown they won't.
    For sure...I dont see 100k happening at all, just a fun thought.

    1st price point is 1k for me...will sell probably 5 shares to lock in nice gains and then let rest ride if it continues to go up but if I dont like the movement then the rest gets sold
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    Been trying to pay attention to the candles last few days...can someone smarter explain why it appears the sellers have more power than buyers....

    I see green candles lately with twice the volume have equal to or less effect on price than the red candles...ex

    112k green volume raised price 1.48%
    67k red volume dropped price 1.13%

    132k green raised it .7%
    64k red dropped .55%

    Picked ones close together of course the last one is side by side in a 20min window

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    Green candles just mean the price went up during that timeframe, red means it went down.
    Lol...no shit
    Curious about the % being close on dbl of volume for ups vs down....just something I've noticed this week so far
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    What the hell is anyone’s justification for being short rocket mortgage?  They are the 800 pound gorilla in the mortgage industry, they AFS kicking ass and taking names, and even with interest rates likely going up this year the industry still projects to be worth 3+ trillion and have its 4th or 5th best year ever. Seriously, why short that fucking stock?  

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    1 hour ago, Wulaw Horn said:

    What the hell is anyone’s justification for being short rocket mortgage?  They are the 800 pound gorilla in the mortgage industry, they AFS kicking ass and taking names, and even with interest rates likely going up this year the industry still projects to be worth 3+ trillion and have its 4th or 5th best year ever. Seriously, why short that fucking stock?  

    The shorts are just playing the game. RKT will probably settle in the high 20s low 30s.

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    Anybody got a thesis....someone is buying deep in the money calls (12$-17$)for April 16th so far from the screenshots the total is 131mil spent on 12000 calls...so possible 1.2 million shares if exercised

    Redditor assumes it's someone waiting to start squeeze when they exercise options

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    2 hours ago, mycox said:

    The shorts are just playing the game. RKT will probably settle in the high 20s low 30s.

    I understand why a market needs to have the ability to short, but it’s fucking ridiculous on a solid, well run company like that. Hope they take it up the ass. 

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    4 hours ago, Wulaw Horn said:

    What the hell is anyone’s justification for being short rocket mortgage?  They are the 800 pound gorilla in the mortgage industry, they AFS kicking ass and taking names, and even with interest rates likely going up this year the industry still projects to be worth 3+ trillion and have its 4th or 5th best year ever. Seriously, why short that fucking stock?  

    I think someone had inside info on rates going up, which is going to effectively snuff out the latest surge of refis, which is the major chunk of RKT's business, if I recall correctly. But possibly a perfect storm of stock name (Rocket) attracting meme stonkers and people heavily monitoring for short interest caused a squeeze beforehand. Just my theory.

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    9 hours ago, Bone3421 said:

    Anybody got a thesis....someone is buying deep in the money calls (12$-17$)for April 16th so far from the screenshots the total is 131mil spent on 12000 calls...so possible 1.2 million shares if exercised

    Redditor assumes it's someone waiting to start squeeze when they exercise options

    There's also a tonnnn of open interest on the puts (opposite) side on the April expiration. 

    If our theory is that stock prices are driven by large share-trading action by market makers (which outweigh retail share buying), there's proxy input from both direction.

    I'm hopeful though.  Just for the lulz

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    There's also a tonnnn of open interest on the puts (opposite) side on the April expiration. 
    If our theory is that stock prices are driven by large share-trading action by market makers (which outweigh retail share buying), there's proxy input from both direction.
    I'm hopeful though.  Just for the lulz
    I get that....just seems paying that much for deep itm calls has got to be for a reason...gotta be more than just trying to profit on a mediocre price increase imo

    Curious if it could be hedge for a short or if it's a squeeze play...

    Today might be pretty crazy...
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    34 minutes ago, Bone3421 said:

    I get that....just seems paying that much for deep itm calls has got to be for a reason...gotta be more than just trying to profit on a mediocre price increase imo

    Curious if it could be hedge for a short or if it's a squeeze play...

    Today might be pretty crazy...

    fuckery's afoot.

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    fuckery's afoot.
    Indeed. Everyone is positioned now, in my opinion. HFs will now make money whichever way the wind blows. That might mean that this stock is stuck in a permanent battle of 50 to 150 (helluva range) until something changes with the company. If the company issues more shares, it changes the calculus. If the company is acquired, it rips. If they get cash flow positive long enough to reinstate their dividend, the stock rips. If Cohen leaves or his grand experiment fails, the stock tanks. There's always the possibility that the SEC halts trading to investigate the naked shorts, also.

    It's a casino, at this point. Some were calling it that before, but it was inevitable the first time around. Now? No clue.
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    26 minutes ago, Eastwood said:

    Indeed. Everyone is positioned now, in my opinion. HFs will now make money whichever way the wind blows. That might mean that this stock is stuck in a permanent battle of 50 to 150 (helluva range) until something changes with the company. If the company issues more shares, it changes the calculus. If the company is acquired, it rips. If they get cash flow positive long enough to reinstate their dividend, the stock rips. If Cohen leaves or his grand experiment fails, the stock tanks. There's always the possibility that the SEC halts trading to investigate the naked shorts, also.

    It's a casino, at this point. Some were calling it that before, but it was inevitable the first time around. Now? No clue.

    This is where I'm at on it too, it will probably stay in this range unless there is a major catalyst.  $1,000 is a pipe dream though, if it gets anywhere close to 50% of the ATH again, it's time to bounce IMO.

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    This is where I'm at on it too, it will probably stay in this range unless there is a major catalyst.  $1,000 is a pipe dream though, if it gets anywhere close to 50% of the ATH again, it's time to bounce IMO.
    I wouldn't say 1k is a pipedream... if it squeezes that is very realistic if the plug doesnt get pulled for only 1 side of the market again.

    Now the 100k is a fun pipe dream to think about. If it gets rolling and every call(800$) finishes in the $$$ by the 19th then I could see 5k being in play
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    Boring me to death....guess I shouldn't complain about my 184$ profit

    Just want this to hurry up and get over with....maybe that's the new plan just let it trickle up until everyone dies of boredom

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    Anybody got a thesis....someone is buying deep in the money calls (12$-17$)for April 16th so far from the screenshots the total is 131mil spent on 12000 calls...so possible 1.2 million shares if exercised

    Redditor assumes it's someone waiting to start squeeze when they exercise options
    Another 2500 deep in the money calls are purchased for 31 million....April 16 like the others except today also purchased a block on March 19

    Total is now 161 million spent on 14,500 calls
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    Really trying to drive that price up huh? How much are you down?
    I profited first go around 400% ....put some back in so technically rolling with free shares

    Just trying to share what I come across..and yes I do believe it will go up a pretty big % but who knows
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    This is what I was telling y'all about in my long bull case. If an acquisition or merger with Steam happens, it's easily a $500 stock. 73b7e1cc21a4b54c6bd6468cf63d72ed.jpg
    The future is bright for sure as the gaming industry is huge...which is why I'm hoping this thing squeezes again so I can cash out and reinvest with a chunk of profits after it falls back down...and if it doesnt squeeze, oh well I got in a possible juggernaut at 40

    That's what a lot of people dont get about the holders. Why sell for 300-200(last time on the way down) if the future is Amazon of gaming.

    Hell they are already doing delivery and getting stuff to buyers in less than 5 hours from a few reddit posts
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    So what does everyone think will happen today and the rest of the week?

    Prices are crazy but still trying to figure if there's an option angle here...

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    So what does everyone think will happen today and the rest of the week?

    Prices are crazy but still trying to figure if there's an option angle here...
    The price is expected to continue up....but it's all a gamble...best of luck

    Go read r/gme and some r/wallstreetbets
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    i bought in at 252. so, i guess i'm holding for a price above that. got in late. shoulda bought more at that $30, though i had given up on the stock at that point. not enough to sell, because fuck them that's why. 

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    i bought in at 252. so, i guess i'm holding for a price above that. got in late. shoulda bought more at that $30, though i had given up on the stock at that point. not enough to sell, because fuck them that's why. 
    If the rocket doesnt pick you up today, it should tomorrow
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    Another 2500 deep in the money calls are purchased for 31 million....April 16 like the others except today also purchased a block on March 19

    Total is now 161 million spent on 14,500 calls
    Missed it yesterday...but whoever it is is still gobbling up deep in the money calls thru the philly exchange

    Total is now 286.5 million spent on 21,000 calls

    Leaning towards more of a short hedging than someone planning to trigger the squeeze...but who the hell knows
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    1 hour ago, Bone3421 said:

    Missed it yesterday...but whoever it is is still gobbling up deep in the money calls thru the philly exchange

    Total is now 286.5 million spent on 21,000 calls

    Leaning towards more of a short hedging than someone planning to trigger the squeeze...but who the hell knows

    ITM calls are expensive. Deeper it is, the closer it is to 100 shares in terms of cash outlay and directional exposure to the stock. 
     

    If you purchase even a small chunk of that $280M in calls, you’d have to be massively short the shares.  Which also has a very limited upside given the share price.  And there are very limited shares to borrow to short. It’s almost a 0 sum position.  And your hedging calls would suffer high theta burn. 
     

    but weirder things have happened. 
     

     

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    i bought in at 252. so, i guess i'm holding for a price above that. got in late. shoulda bought more at that $30, though i had given up on the stock at that point. not enough to sell, because fuck them that's why. 
    Welcome back to the land of profit
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    ITM calls are expensive. Deeper it is, the closer it is to 100 shares in terms of cash outlay and directional exposure to the stock. 
     
    If you purchase even a small chunk of that $280M in calls, you’d have to be massively short the shares.  Which also has a very limited upside given the share price.  And there are very limited shares to borrow to short. It’s almost a 0 sum position.  And your hedging calls would suffer high theta burn. 
     
    but weirder things have happened. 
     
     
    I'm just trying to figure out who/why is buying so much that deep...I'm not sure but like you mentioned that deep it's closer to the dollar value so what I read mentions that theta isnt really a concern on deep itm calls...its all Greek to me

    Also mentioned if it is a short could also be a way to recover some Failure to delivers.
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