If you are short 500 shares of a stock and buy 500, you have effectively closed your position despite not having returned the shares you borrowed. So regardless of how much further GME climbs, the hedge fund can cap their losses at their current bloodbath levels.
The first line of troops goes down in a rain of musket fire, but is replaced by the troops next in line. We are seeing a short-squeeze on older shorts who have incurred massive mark-to-market losses on their positions but are seeing new shorts coming in.
You’re forgetting a crucial step. Gamestop becomes global news along the way, and alot of idiots who have FOMO decide to come in and buy the stock at extremely high prices, keeping the bubble going for a few months. It’s these guys that will lose the money, probably not the people who started the bubble.
Given the current stock price I can either buy one share of Gamestop or a new Xbox. Decisions decisions.
These are “the sauce people”.
Eventually both items will have a <25% trade in value. ;)
Well, I think they will have plenty of time to exit if they want it. This gamestop story is global news, it’s everywhere right now, and I am speculating there will be many mainstream people who have never heard of sauce or this reddit group or even gamestop will come in to keep the bubble going for awhile.
Though they sold short to 130%, so while they can still close out, it left them scrapping just to do that.
Up next: WSB shorts Discord out of revenge, turns into what they’ve been fighting against.
Well, my son is one of the Reddit thugs involved in this. Over the past 3 days he locked in a profit of 30K. So, yeah, someone above mentioned an entry level trim SUV…
Well now I feel like I’m missing out.
10K on a laugh is too rich for my blood. Glad it worked out for him at the expense of whomever else.
Locked-in, meaning he sold his stock? That’s great.
Yep, he sold it. He knows “bulls make money, bears make money, pigs get slaughtered”.
I am financially ignorant. Maybe someone can help me walk through this.
Here’s a definition of short selling I googled:
In short selling, a position is opened by borrowing shares of a stock or other asset that the investor believes will decrease in value by a set future date—the expiration date. The investor then sells these borrowed shares to buyers willing to pay the market price. Before the borrowed shares must be returned, the trader is betting that the price will continue to decline and they can purchase them at a lower cost. The risk of loss on a short sale is theoretically unlimited since the price of any asset can climb to infinity.
What I don’t get is how you can borrow stocks? If I have some kind of trading license I can just borrow stocks? I don’t have to pay for them now, just return them by the agreed on date?
What does the lender of the stocks get out of this? A sure sale down the road? I assume the lender is Gamestop itself in this case? I don’t really understand all this, but then again I’m not an investor.
You pay someone who holds the stock a fee to borrow it, not the company.
My son tells me they have closed WallStreetBets which was the subreddit where this started
Interesting. So if I had a lot of stock I could make money lending it?
What was the reason given?