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Stock Thread (8 Viewers)

shades said:
The big hedge funds figured GameStop was going to go bankrupt, so they shorted the stock when it was like $8, figuring it'd go down in a year.

Some idiot on Reddit a year ago said "new consoles are coming out next year, and gaming is a huge industry and GameStop is the only physical brick-and-mortar player in the space" and I believe in that so much, I'm buying $53,000 worth of options a year out that it'll be at least $12 and maybe $18 by next year.

GameStop did pretty well in the year in between. They hired a new CEO, the guy who ran Chewy, which is one of only a few major companies out there that is beating Amazon in their retail space. The Chewy Guy is arguing GameStop can improve their online business too.

Then it was discovered that one hedge fund in particular was super-short on GameStop. There were 130%+ more shorts than longs... and all those shorts were going to have to buy GameStop stock by Jan 29th to make good on their contracts.

So reddit figured "if these guys have a contractual obligation to buy stock by Jan 29, and they need more stock than is actually available, and if we hold a bunch of stocks until they capitulate and pay whatever asking price we want for the stock, we can take this $20 stock and sell it to them at $200, $500, $1000 a share when Jan 29th comes and they have to buy from us."

When this word got out, it caused a bunch of people to start buying, making it even more expensive for the shorts to stay short. Now everyone is buying hoping that by Jan 29 they can force whatever price they want out of the shorts.

/WSB basically said "We're a bunch of idiot chimps flinging our poo around, but right now, we all just happen to be flinging it in the same direction"
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Who ARE you?  :oldunsure:

 
shades said:
The big hedge funds figured GameStop was going to go bankrupt, so they shorted the stock when it was like $8, figuring it'd go down in a year.

Some idiot on Reddit a year ago said "new consoles are coming out next year, and gaming is a huge industry and GameStop is the only physical brick-and-mortar player in the space" and I believe in that so much, I'm buying $53,000 worth of options a year out that it'll be at least $12 and maybe $18 by next year.

GameStop did pretty well in the year in between. They hired a new CEO, the guy who ran Chewy, which is one of only a few major companies out there that is beating Amazon in their retail space. The Chewy Guy is arguing GameStop can improve their online business too.

Then it was discovered that one hedge fund in particular was super-short on GameStop. There were 130%+ more shorts than longs... and all those shorts were going to have to buy GameStop stock by Jan 29th to make good on their contracts.

So reddit figured "if these guys have a contractual obligation to buy stock by Jan 29, and they need more stock than is actually available, and if we hold a bunch of stocks until they capitulate and pay whatever asking price we want for the stock, we can take this $20 stock and sell it to them at $200, $500, $1000 a share when Jan 29th comes and they have to buy from us."

When this word got out, it caused a bunch of people to start buying, making it even more expensive for the shorts to stay short. Now everyone is buying hoping that by Jan 29 they can force whatever price they want out of the shorts.

/WSB basically said "We're a bunch of idiot chimps flinging our poo around, but right now, we all just happen to be flinging it in the same direction"
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How did they gain access to the January 29 date?  That seems like a recipe for extortion.  

 
The Z Machine said:
See, that's what gets me fired up.  "We need hedge funds for liquidity and to manage risk."  Oops, you just effed over a bunch of pension funds for people that actually work for a living making, doing, teaching and not leeching.

Go away hedge fund brats.  Get a real job.
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It can make sense when you are looking for different strategies or access to private markets that are hard to get into. There can be distressed assets or market dislocations out there that, in a lot of cases, are the only way funds can meet their way too high statutory returns. I can tell you for certain that is not how it always works. All the good roadshows in the world couldn't outweigh the party favors.

I hear the pension fund I used to work for has cleaned up a bit though. I guess having the CIO try to create his own fund to invest 25% of the pension in was a bit too cheeky. Due diligence and effective oversight is a constant struggle. 

 
Leeroy Jenkins said:
How did they gain access to the January 29 date?  That seems like a recipe for extortion.  
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Option contracts expire on a set schedule. Usually every-other-Friday when it's within a couple of months, then once a month if you're looking forward into the future, then yearly if your timeframe is longer than that. They're betting this month is when the biggest shorts were targeting back when this started a year ago. They don't know for sure, and it's likely many of the shorts have "rolled" their options over into future months as a hedge.

 
Just bought some $M.  Small rumblings about it on WSB and lots of shares short.  Don't intend to hold it for long, but maybe for a couple days in case it grows into the next meme stock.

I realize how stupid that sounds after typing it out, but #YOLO

 
Desert_Power said:
It can make sense when you are looking for different strategies or access to private markets that are hard to get into. There can be distressed assets or market dislocations out there that, in a lot of cases, are the only way funds can meet their way too high statutory returns. I can tell you for certain that is not how it always works. All the good roadshows in the world couldn't outweigh the party favors.

I hear the pension fund I used to work for has cleaned up a bit though. I guess having the CIO try to create his own fund to invest 25% of the pension in was a bit too cheeky. Due diligence and effective oversight is a constant struggle. 
Click to expand...
Yeah, this isn't an episode of Billions where the head of the firefighter's union pension is bosom buddies with Bobby Axelrod and can make billion dollar investments unilaterally as a token of thanks for back scratching.  Pensions have large compliance and due diligence teams that are looking for the SLIGHTEST reason NOT to invest with a fund manager.  These people make actuaries look like Vegas Club DJs.

 
General Malaise said:
Yeah, this isn't an episode of Billions where the head of the firefighter's union pension is bosom buddies with Bobby Axelrod and can make billion dollar investments unilaterally as a token of thanks for back scratching.  Pensions have large compliance and due diligence teams that are looking for the SLIGHTEST reason NOT to invest with a fund manager.  These people make actuaries look like Vegas Club DJs.
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:lmao: @ bolded

 
SouthJersey said:
Just bought some $M.  Small rumblings about it on WSB and lots of shares short.  Don't intend to hold it for long, but maybe for a couple days in case it grows into the next meme stock.

I realize how stupid that sounds after typing it out, but #YOLO
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Noice. I scooped up some cheap M calls yesterday, before the craziness started.

 
Thanks to the above poster who explained the Jan 29 date on GME.

So when you short a stock you need to cover by a certain date which is the same as when an option expires?

How would we find the "magic" date for M, EXPR, AMC, etc?

 
Um, yeah, back in Nov I bought some BB around $6.  Just a diversification play, and a confidence vote in their efforts to get into the cybersecurity space.  Didn't know anything about this short squeeze thing.

On Monday, sold half my shares at 3x that price.

Now today...  :eek:

 
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Also, I think it's worth reminding those that aren't overly familiar with shorting that hedge funds have to secure their borrow first from a stock loan department at (one of) their prime brokers.  You go in with a request to borrow a certain amount of shares, wait for answer on how much you can borrow AND (and this is part I don't think gets touched on eough) the cost to carry the borrow.  The harder it is to find a borrow on a stock, the more you're going to pay the PB to borrow. 

In the case of GME, there is not ONE share out there right now for borrow according to Jefferies, which isn't exactly a boutique prime broker.  

Short selling is an incredibly risky endeavor and not ALL hedge funds engage in it as a large component of their investment allocations.  You may damn well be correct that GME is a loser and will go belly up in due time, but to borrow it and short it could cost you an exorbitant amount in borrow fees not to mention the risk of reddit chimps teaming up to conspire against you because one short seller had the incredibly poor idea (in hindsight) to taunt them.  

 
NajehHejan said:
Thanks to the above poster who explained the Jan 29 date on GME.

So when you short a stock you need to cover by a certain date which is the same as when an option expires?

How would we find the "magic" date for M, EXPR, AMC, etc?
Click to expand...


On Yahoo Finance or whatever broker/quote page you use, just click the button for Options or Option Chain and see what dates are out there. Of course, it costs to buy/sell these things... and on many of these stocks, the price you'll pay will eat up most of the profit. 

You really don't want to mess around with options unless you're seasoned in the area. 

 
General Malaise said:
Also, I think it's worth reminding those that aren't overly familiar with shorting that hedge funds have to secure their borrow first from a stock loan department at (one of) their prime brokers.  You go in with a request to borrow a certain amount of shares, wait for answer on how much you can borrow AND (and this is part I don't think gets touched on eough) the cost to carry the borrow.  The harder it is to find a borrow on a stock, the more you're going to pay the PB to borrow. 

In the case of GME, there is not ONE share out there right now for borrow according to Jefferies, which isn't exactly a boutique prime broker.  

Short selling is an incredibly risky endeavor and not ALL hedge funds engage in it as a large component of their investment allocations.  You may damn well be correct that GME is a loser and will go belly up in due time, but to borrow it and short it could cost you an exorbitant amount in borrow fees not to mention the risk of reddit chimps teaming up to conspire against you because one short seller had the incredibly poor idea (in hindsight) to taunt them.  
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You should post on WSB that you have PB looking for carry, you would find some I bet. lol

 
NajehHejan said:
Thanks to the above poster who explained the Jan 29 date on GME.

So when you short a stock you need to cover by a certain date which is the same as when an option expires?

How would we find the "magic" date for M, EXPR, AMC, etc?
Click to expand...
This whole magic date thing is built on thin air.  It is one of those things like "Q" uses.  A=B and B=C but A doesn't always = C.

 
NajehHejan said:
Thanks to the above poster who explained the Jan 29 date on GME.

So when you short a stock you need to cover by a certain date which is the same as when an option expires?

How would we find the "magic" date for M, EXPR, AMC, etc?
Click to expand...
I think some of us might be confusing puts/options with outright shorting.  You can short a stock as long as you have the collateral, the balls and the ability to pay the cost to borrow the security.   But balls is the most important of these.

 
So reddit guys are buying gamestop and pushing the price up like crazy, hoping that some hedgefund is obligated to buy a big chunk of stock by January 29 at whatever price is available, because they run out of time at that point to meet their obligation.

 
And when Friday comes and goes, the folks who bought early on this short-squeeze play will sell and make money, and everyone who bought these last few days will lose their shirt and the hedgefund will laugh.

 
Leeroy Jenkins said:
And when Friday comes and goes, the folks who bought early on this short-squeeze play will sell and make money, and everyone who bought these last few days will lose their shirt and the hedgefund will laugh.
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I don't day trade but refuse to stay in these long term. 🤔 AMC is definitely a short term trade. :hophead:

 
Leeroy Jenkins said:
And when Friday comes and goes, the folks who bought early on this short-squeeze play will sell and make money, and everyone who bought these last few days will lose their shirt and the hedgefund will laugh.
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The majority of buyers (non-shorts) will make good money on this.  The Shorts are the ones that are bankrolling them.

 
To anyone who is invested in the current Reddit pump-and-dump stocks (GME, AMC, NOK), please sell off your shares before end-of-day on Friday (01/29).

These stocks are being artificially inflated due to increased volume. They are not increasing in price due to market conditions or speculation.

Because the markets are closed over the weekend, there is of course, no trading volume. Because of this, there is NO REASON for any of your shares in these companies to gain value over the weekend.

However, you are only putting yourself at RISK of a financial event to occur over the weekend to invoke an IMMEDIATE market selloff come Monday morning.

There is no upside to holding these securities on non-trading days, imo.

 
When you sell a stock in Fidelity, how long does it take for funds to settle?

I've got a decent amount of cash available to trade from stuff I sold over the past couple of days, but $0 settled. I'd like to take another bite of NOK before close, but would have to do so with unsettled funds. Will I be stuck holding it until the cash I use to buy it settles?

 
General Malaise said:
Yeah, this isn't an episode of Billions where the head of the firefighter's union pension is bosom buddies with Bobby Axelrod and can make billion dollar investments unilaterally as a token of thanks for back scratching.  Pensions have large compliance and due diligence teams that are looking for the SLIGHTEST reason NOT to invest with a fund manager.  These people make actuaries look like Vegas Club DJs.
Click to expand...
Cool. I'm glad you know more about my personal experience than me. I must have hallucinated being told to back-date due diligence on investments that had already lost 90% of their value.

 
Also, let's do our best not to intentionally create a financial bubble. We all know Gamestop isn't worth $300+ a share.

If you choose to involve yourself in a scheme where you're paying MORE for something than it's actually worth, you're probably the one getting scammed.

 
Also, you need to understand that a lot of this is possible only because of a short squeeze in these securities. Once the shorts are squeezed out, the situation is now reversed and the hedge fund money gets to bleed you out. Your security halts trading and you watch all that profit go down the tubes.

Ask me how I know.

 
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