You're betting "That stock is going down ", but the way you do it is basically a promise "I will give you a share of stock ... in a month for your money now." (Or two months, or whatever they have set up, precisely).
Unlike "going long" there's a laundry list of things that "make you redeem it" now now now. Going long, you paid up front. You can hold the stock as long as you like.
But. The stock edged up.The actual mechanisms of "how much shorting can one do" and all sorts of other things start triggering "Hey! You're going to lose some money if you don't buy the stock (that you've already promised)" So, people with small "short" positions start "covering" - they start buying with "well, drat." But ... Now you're racing the stock higher. And now that it's higher ... more people are "triggered" and it becomes a race.
The bigger players held too long. and they took it in the shorts. They've promised to hand over stock they haven't even bought yet ... and look at the size of the peak.
Can someone explain this to me lol I go offline for a few hours and all of a sudden GameStop is a trending topic
The key is understanding "a short".
You're betting "That stock is going down ", but the way you do it is basically a promise "I will give you a share of stock ... in a month for your money now." (Or two months, or whatever they have set up, precisely).
Unlike "going long" there's a laundry list of things that "make you redeem it" now now now. Going long, you paid up front. You can hold the stock as long as you like.
But. The stock edged up.The actual mechanisms of "how much shorting can one do" and all sorts of other things start triggering "Hey! You're going to lose some money if you don't buy the stock (that you've already promised)" So, people with small "short" positions start "covering" - they start buying with "well, drat." But ... Now you're racing the stock higher. And now that it's higher ... more people are "triggered" and it becomes a race.
The bigger players held too long. and they took it in the shorts. They've promised to hand over stock they haven't even bought yet ... and look at the size of the peak.