Jump to content

Eastwood

Certifiably Surly
  • Posts

    2899
  • Joined

Everything posted by Eastwood

  1. He sold calls, I think. In theory, his potential loss is infinite.
  2. I'm actually a very unimpressive 35 years old. Jim Cramer types like to keep running with the scenario that the new retail investors are all early 20s punks living at home, so I don't mind letting them keep thinking that.
  3. From my post in the Markets thread:
  4. 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. 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: 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... 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.
  5. Beware the gamma squeezes, fellas. Don't get burned.
  6. I took profit on half of my position. I haven't worked since March and it was a helluva trade. Still have skin in the game, though, but taking profit gives me some breathing room.
  7. 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 cantagion in the broader market.
  8. We're once again ITM for all calls on the board. Unreal.
  9. 117k+ of those were still open at the close. That's 11.7 million shares. 20% of the real float. Anyone who sold those calls naked and didn't start to cover last week have until Tuesday to do it. And the 115s were immediately ITM at the premarket open when it touched $130 briefly. Today and tomorrow are going to be a wild ride.
  10. That was a week before the huge leap Friday and most of those people are on their way out of the company in June, as my understanding goes.
  11. No, the crude market was behaving normally and then retail investors started engaging in trades they didn't understand. With this, institutional investors latched on to the thesis that GameStop was going bankrupt and started rampantly shorting it, further depressing the price. As the price dropped, the shorting accelerated to the point where hedge funds and other institutional investors were engaging in naked shorting. Essentially, they borrowed shares not to sell them, but to lend them to someone else to sell and collect lending fees as well as the profit for when they returned the shares to the original owner. Obligatory disclaimer that I am not a financial adviser and this is not financial advise. I lost my job in March due to Rona and had time to kill, so I was hunting for trades to make while killing time at home. I used to work at GameStop in undergrad, so I pulled up the stock on TDA just to see what it was up to. This was in April. I noticed that the short float was around 90% and the institutional ownership was at 102%. I thought there's no way that could be right, but other places were showing the same data. So I started researching what a "normal" short float is and what the consequences of a high float could be. That led me to the 2008 VW parabolic squeeze and the 2019 Tesla slow burn squeeze. I bought some OTM calls for May that expired worthless and realized that this is a powder keg without a lit fuse. I then bought shares and a call for January 15 21 at a 10 strike, which was 100% OTM (I exercised the hell out of that call, BTW). Looking at the 20 year chart, I saw that GME experienced huge price movements during console launches. That was the spark that was needed to light the fuse, IMO. What I didn't foresee was Ryan Cohen, the Chewy wonderboy, stepping in and starting the show early. The price shot up to almost 10 in September and that is when I posted my original post in the Markets thread. As it turns out, other people saw the same thing I did and started posting positions from farther back than mine on WallStreetBets explaining essentially the same thesis. The holiday season combined with the new console release started causing mini squeezes of retail shorts, which then caused little gamma squeezes, and the theory started gaining traction. It's possible that the main squeeze has not even started. In December, the short float was 140%(!!!) and institutional interest was 122%(!!!). Literally more shares shorted than actually exist. Literally the entire float, plus 22% more, sitting with institutional investors who are limited in how quickly and how much they can trade, effectively locking down large chunks of those shares. It is possible that every retail share bought since the institutional ownership went over 100%, possibly 18 months worth or more, is actually a "synthetic" share that was created by a short seller lending already borrowed shares to someone else who sold it to retail investors or Ryan Cohen, who is here to stay and bought a 13% stake in the company over 3 months. In the event of a full squeeze, there would be infinite demand of shares with finite supply. As the price went up, the situation started accelerating until the first 40% pop. Now there was so much attention that literally EVERY call for 01/22/2021 was ITM at expiry. Think about that for a second. Literally EVERY strike for that day was ITM. I am still dumbfounded by that. According to my ThinkOrSwim app, there were still 117,094 open interest calls at the end of the day. That means those calls are possibly being exercised on Monday or Tuesday. If all of them are exercised, that's 11,709,400 shares that HAVE to be bought by the writers of the calls to close out. The range of losses on that is anywhere from $5 per share up to $59.50 per share, as well as being 20% of the entire actual GME float, not the short float. Those are monumental losses that will possibly skyrocket as the remaining covering occurs on Monday. And data from Ortex indicates that the short interest went UP (!!!) 3 or 4% on Friday. I think we are seeing something historic with this stock. I think some funds got out over their skis, engaged in unethical and possibly illegal short selling, and thought they could short GME to zero and bankruptcy, meaning that they could pocket everything and give nothing back. They didn't think GameStop would make it to the holiday season and the new console cycle. But think about how much they hurt GameStop in the process. Market share less than $1 billion, lowered credit ratings, and less borrowing power due to depressed share price by manipulation through that naked shorting. How many layoffs because of that? How many management level people with families got let go? How about the remaining retail shareholders who lost literally billions in value up until now? Now WSB and others are excited to give the funds a taste of their own medicine and turn them upside down and shake their pockets out.
  12. If you think that sucks, they never extended out the call strike prices for today's expiry earlier in the week and GME closed above $65. The highest strike for options was 60 for today. That means literally every open option interest on the board for today was ITM. Anyone who sold naked calls for today that didn't close has to cover on Monday.
  13. By all means, SEC, please investigate GME. This squeeze happened due to naked short selling by hedge funds. It got so out of control that there were literally more shares shorted than there were existing shares by 40%. A bunch of hedge funds got their naked positions dunked on and now people are crying manipulation. Please.
  14. GME in a nutshell: Hedge funds got greedy and started shorting synthetic shares. Now they can't cover. Those who hold actual shares now set the price. Holy shit, I was right.
  15. I wouldn't want to be anywhere near GME with anything other than house money, right now. It's going to rip one way or another and the losing side is going to lose big. My cost basis is $7.50 a share, so I'm fine if it retreats heavily. But if you want to play this stock now, only do it with fun money, nothing that you will need in the future.
  16. I haven't seen Kangsta on these boards in what feels like a decade and a model train thread brings him out. I love this site. This isn't a knock on him, btw. I enjoyed his posts.
  17. No. Still holding. January 15 calls, which were heavily bought, expire tomorrow. I exercised mine this morning. They were $10 strike bought back in the summer.
  18. Technical issues has their Drilling Permit Query out of whack. They are working to fix it.
  19. Dear Stan, I wrote you but you still ain't callin'...
  20. 122% institutional ownership with 160% short float. The naked shorting of this stock will be eventually investigated, IMO.
  21. Trump is lucky that Pence isn't a stone cold political tactician and vengeful man. Trump, et al almost got him and his family killed and he's just sitting on his hands. Dick Cheney would bully, blackmail, and threaten the Cabinet into the 25th, become president, and have anyone who even so much as sneezed in his general direction that day arrested, as well as anyone who told them "bless you."
  22. That's a real head scratcher. I can't think of a reason for him to be in the RGV.
  23. There is no peaceful transfer of power, anymore. We get to try again in 2024.
×
×
  • Create New...