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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.

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    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's going to 1k...then????

    The hedges even said last time if it didnt get pulled it was going into the thousands

    Is the 100k reddit throws around possible...I wouldn't count on it

    Is 10k in play...I think possibly

    But my 1st price point is 1k

    The squeeze hasn't squoze...

    Lol are not just dropped 50$ while typing

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    2 minutes ago, Bone3421 said:

    That is wierd as fuck...volume is super low how is it dropping that much...I spell fuckery

    yeah, there's something going on. the volumes don't seem to warrant the fall in price. reminds me exactly of last time.

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    And it screams back to immediately reclaim almost half of what it lost into another halt.

    If this continues into Friday, I think it is possible that the SEC finally steps in to long term halt the trade.

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    This is why I said $1k/share is a pipe dream. The cult-like holders of this stock are going to miss out on massive profits because of the diamond hands mantra. 
     

    Take some money off the table dudes!

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    This is why I said $1k/share is a pipe dream. The cult-like holders of this stock are going to miss out on massive profits because of the diamond hands mantra. 
     
    Take some money off the table dudes!
    Nah 1k is in play...that was some fuckery for sure...volume doesnt justify the drop but it's already back up like eastwood said a decent chunk
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    This is why I said $1k/share is a pipe dream. The cult-like holders of this stock are going to miss out on massive profits because of the diamond hands mantra. 
     
    Take some money off the table dudes!
    I'll be honest, on the long run ups like last week I start to get the FOMO itch and get a little bummed that I'm out, then something like this happens and I get reminded just how much stress I'm saving myself from.

    I'm not a fan of Jim Cramer for all the obvious reasons, but he was right when he said that people need to take profit here. You did it. You were a part of something they will write about for centuries in finance classes. You also made some money along the way. 99% of people will not nail the top. Make money.
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    HF shorted that shit nearly 6 million shares trying to get paper hand bitches to fold. I bought twenty more at $200, thanks for the fucking discount...we hit $300 before EOD

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    And if you doubt this wasnt a coordinated attack look at AMC and GME at the same exact time and notice how news companies put out pieces seconds after it happened while not saying a word the past two days. Fuckery is afoot

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    200.gif
     
    I hope you are right [mention=1923]Bone3421[/mention]It sure does seem like every time it’s about to explode “something” happens to reign in the madness.  Curious. 
    It is very suspect for sure...
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    32 minutes ago, Hank_Hill said:

    This thing just is not going to be allowed to blow to 1k. Whether by big money or regulation. Plan accordingly and take profits on the way up. 

    Fuckery will abound but some things will be inevitable

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    This isn't a retail vs hedge fund battle, its a proxy war being fought using options.

    We don't have access to the full order book to reconstruct it piece by piece, but 3rd party data provider shows some detail, such as at ~1hr before that big price drop, an order came in for 4000 put options at 250 strike.  that's ~$4M order.  the market maker(s) who facilitates these transactions would have held a large inventory of shares that they bought to hedge all the volume/oi on the left side of the graph.  they would have sold off some of these shares to hedge the new 250-strike put order.

     

    that would've sent the price down.  couldve happened around the time the 200P were also transacted (again i dont have minute by minute record)

     

    everything on this page expires friday, so by tomorrow a lot of the pressure exerted on market maker(s) will be gone.  but $300 is still a battleground.  if the price can get up and over that level, it would sprint the price upwards.

     

    (this assumes a naive gamma exposure, without having done the actual math)

     

    1002657176_ScreenShot2021-03-10at10_24_35PM.thumb.png.73df41a92718dd9267cf35270c61bab9.png

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    It is absolutely bonkers that the price dropped 150$ and it still finished up 7%....this shit is going to go crazy(relative to gme, this shit is already crazy)

    I'm scared, nervous, excited, optimistically pessimistic...or am I pessimistically optimistic

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    maybe this is susquehanna and de shaw prop desks fucking around.  the rest of the institutional holders are stodgy funds like fidelity.  these guys have the weight, models, and stake to toy around the stock

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    Still some time left...but if it finishes in the green again isnt that like 10 days are something in a row

    No idea what tomorrow will bring...might fight over EOW options or they all might just wait for next week when monthly,weekly,quarterly shit all ends on the 19th....

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    This week will be interesting...the new tactic of sell all at once to drop price 15-20% seems to work quite well

    If Cohen is going to take over as CEO at some point Gamestop would need to recall their shares for a vote and all the shorts and supposedly naked options would need to start covering.

    Hopefully can get the gamma squeeze back on track beforehand

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    theres a chance that GME wasnt able to issue large amount of new shares (i.e. fund raise) due to being so close to earnings report, and them holding "material information" about the company and issuing a dilution is sort of a no-no.

    it's possible that after the ER, they could issue a bunch of new shares, which may kill the short-squeeze narrative.

    otoh, its very likely they would make some bombshell announcements such as cohen as new ceo, unveil big partnerships and grand plan for future, and that would stoke the enthusiasm for the stock, and retail would just gobble up the new shares -- dilution and squeeze narrative be damned.

     

    wild days out there

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    I dont know much about it or if its good/bad....but the new rage is that gme has a super high negative beta and negative betas are supposedly pretty rare....

    Layman terms is gme acts inversely to the market as a whole...market goes down gme goes up...

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    I dont know much about it or if its good/bad....but the new rage is that gme has a super high negative beta and negative betas are supposedly pretty rare....

    Layman terms is gme acts inversely to the market as a whole...market goes down gme goes up...
    Might be because when GME goes up, those on the wrong side of it have to liquidate other positions. We saw that when the first rocket launched and the big boys threw the private abort switch. I am absolutely convinced we saw the market shudder under the weight of the possibility of $1k per share and a broad sell-off occurred that afternoon. That evening, the various brokers announced the restrictions around GME.
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    Agreed...I'm just wondering how it plays into now...are we going to get this thing to blow or are we screwed until market notices the planned pivot and becomes the defacto Amazon of video game industry

    Been hoping it blows so I can sell then put nice chunk back in for the future when it settles down back around 50$

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    52 minutes ago, Eastwood said:

    Might be because when GME goes up, those on the wrong side of it have to liquidate other positions. We saw that when the first rocket launched and the big boys threw the private abort switch. I am absolutely convinced we saw the market shudder under the weight of the possibility of $1k per share and a broad sell-off occurred that afternoon. That evening, the various brokers announced the restrictions around GME.

    Yeah, this is what I noticed too. 

    2 hours ago, Bone3421 said:

    I dont know much about it or if its good/bad....but the new rage is that gme has a super high negative beta and negative betas are supposedly pretty rare....

    Layman terms is gme acts inversely to the market as a whole...market goes down gme goes up...

    Like Eastwood said, GME squeezing forced liquidation and general fear so it affects the entire market. It’s done it twice now. Whenever GME starts to squeeze, VIX rises right with it, but since GME has been squeezing for weeks now, the market doesn’t seem to hinge on it nearly as much lately. I’m sure if GME start squeezing over 500 or something, the market will start to get scared again. However, I don’t think the overall market going up will have any impact on GME. 

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    Forget wallstreebets, if you want to drink from the firehose go to r/gme. Those guys will have you planning how to spend your billions by the time you’re done with your morning coffee


    Sent from my iPhone using Tapatalk

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    lol for me it's like having a few lottery tickets.  If they fall to nothing it doesn't hurt, but on the offhand chance that they fuck around and find out I just want to be there for the experience.

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    I'm holding some shares still but I'm glad I sold for some profit back at like 220$ after fall from 300$....but this thing needs to start heading back up

    I feel like the fact it hasn't tumbled back down to 40$ is telling...but who knows what the fuck will happen

    Sent from my moto g play (2021) using Tapatalk

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    This thing has become Qanon for stonkers.  Execs are going to recall all the shares to vote and force the shorts to cover!  GME has super high Beta and that's why it opposite the market!  GME mentioned shorts in their latest filing, to the moon!  Do your research bro!!!!1!!!1

    I don't think anybody really knows shit here, other than the powers that be do fucky things when the stock goes on a run and that this whole "battle" has been large HF vs large HF duking it out in the options market since late January.  Those large funds will make most of the money and the diamond hands small guy who is waiting for 1k to take profits on his 10-15 shares is going to get bubkis. 

    I'm glad you took some profits @Bone3421  If this thing goes back below $50 I think I'll take a bite and go long on the turnaround being successful.

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    I don't think anybody really knows shit here, other than the powers that be do fucky things when the stock goes on a run and that this whole "battle" has been large HF vs large HF duking it out in the options market since late January.  Those large funds will make most of the money and the diamond hands small guy who is waiting for 1k to take profits on his 10-15 shares is going to get bubkis. 
    I'm glad you took some profits [mention=1923]Bone3421[/mention]  If this thing goes back below $50 I think I'll take a bite and go long on the turnaround being successful.


    The funds who wanted to fight it out got it all done in January. We saw the winners and losers there. Now, what we have going on is hedge funds maximizing what is known as "copperative surplus." Cooperative surplus is when two parties who are in a position to compete actually cooperate to maximize the total amount of profit available. Say there is $100 to split. If they compete against each other, they get $35 each and the remaining $30 is lost to other parties. If they cooperate, they get $45 each and $10 is lost to other parties. The total cooperative surplus realized was $20 split between the two.

    If they continue to fight like the others in January, that allows retail to pick off profits at the fringes of the trade. That's what I did and that's what a lot of you did. This group of hedges now are probably cooperating to rein in the lost surplus. This will continue until GameStop releases more shares. Which they will. I'm buying the dip when the offer comes out and holding long.

    I bought 1 share just before close on Monday for old time's sake. Keeping the rest of my powder dry for the real dip.
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    What is the basis for people talking about execs recalling shares and forcing shorts to cover? What does that actually entail, and how often do companies actually do that? The way people talk about it, they make it sound like a no-brainer. But there's got to be some sort of risk involved, right? Or is it just a lot of hoops to jump through without a lot of benefit in the end?

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    What is the basis for people talking about execs recalling shares and forcing shorts to cover? What does that actually entail, and how often do companies actually do that? The way people talk about it, they make it sound like a no-brainer. But there's got to be some sort of risk involved, right? Or is it just a lot of hoops to jump through without a lot of benefit in the end?
    It's my understanding that they can only recall shares for legitimate reasons, such as a shareholder vote on firing the current CEO before the end of his contract and appointing a new one. That's what the hype was around Ryan Cohen. This current line of speculation was originally fired up around Sherman being tossed and Cohen being installed.

    The path of least resistance to burn shorts, albeit temporarily, would have been issuing a one time dividend. They had the cash on hand to do it. Anyone short GME is responsible for paying the dividend to the holder of the shorted share. This would have possibly caused the institutional shorts with shallower pockets to close out, which could have caused a chain reaction of closing until you hit the funds with deep enough pockets to ride it out.
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    This thing has become Qanon for stonkers.  Execs are going to recall all the shares to vote and force the shorts to cover!  GME has super high Beta and that's why it opposite the market!  GME mentioned shorts in their latest filing, to the moon!  Do your research bro!!!!1!!!1
    I don't think anybody really knows shit here, other than the powers that be do fucky things when the stock goes on a run and that this whole "battle" has been large HF vs large HF duking it out in the options market since late January.  Those large funds will make most of the money and the diamond hands small guy who is waiting for 1k to take profits on his 10-15 shares is going to get bubkis. 
    I'm glad you took some profits [mention=1923]Bone3421[/mention]  If this thing goes back below $50 I think I'll take a bite and go long on the turnaround being successful.
    For sure...it's absolutely bonkers and I agree about the info...no idea what's real or not

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    On 3/17/2021 at 3:11 PM, Bone3421 said:

    planned pivot and becomes the defacto Amazon of video game industry

    I've seen this mentioned other places as well, and apologies if explained earlier in the thread, but how does GME become the Amazon of the video game industry?  If it wasn't for Reddit/short squeeze, how would GME be a fundamentally sound long investment?

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    I've seen this mentioned other places as well, and apologies if explained earlier in the thread, but how does GME become the Amazon of the video game industry?  If it wasn't for Reddit/short squeeze, how would GME be a fundamentally sound long investment?
    Ryan Cohen came onboard in December,he was the ceo of chewy.com...made billions on pets...

    Game industry>>>>>>>>>>>>>>> pet industry

    With him gamestop is expected to pivot to more online sales and delivery (already delivering same day). They will discard the stores that are not needed and keep strategic ones as delivery hubs, which will lower overhead drastically. Plus they are now moving into pc parts and there is talk about adding computer repair/build stations

    Could also potentially start a streaming service or just buyout steam....they already have the infrastructure and deals in place with all the big players in gaming.

    That's the jist...
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    Thanks for the explanation.

     

    How do they battle the trend (I'm assuming, too lazy to look up numbers) to digital downloads vs physical games?  The consoles have captive customers, and in 10-15 years if the vast majority of games are digital that just leaves PC gamers as customers.  I guess if they can acquire Steam or create a better service and take over Steam's customers that could work,  but Valve (the owner of Steam) is worth ~10B (according to Forbes) and GME's market cap currently is $10B at the inflated short squeeze stock price. 

    Getting into the PC hardware business is interesting, but seems like a lot of competition.  Also, the secondary market for games will likely dry up with the shift to all digital games.

    Plus, aren't most if not all of the physical games already on Amazon, which also offers same day delivery in many areas?

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    Lots to be determined for sure...who knows how long until everything is digital. Depends on if the masses go along with it or not. As for the Amazon bit ; Why is there ups and fedex, xbox and playstation....options are good and needed

    Also just off of memory I believe there was some reddit math that if gme was valued like a start up it's price based on cap/sales and whatnot would be around 100$ per share....the price being driven down below the fundamentals is what started all this

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