Joey has a 5$ taco...
He gives it to Ike to invest...
Ike sells it thinking he can buy it back at a lower price later to make profit...
Autists buy all tacos...
Now Ike can't pay Joey back....
Ike has to buy tacos from Autists to replace Joey's....
Price is up.. Ike loses money....
billionaires sought to chew over the carcass of gamestop, smart redditors saw it, decided to fuck over the billionaires and caught them with their pants down, instead of making millions this hedge fund has already had to sell off billions in assets to not go under, and their 'short' option doesn't end til friday, meaning these redditors can keep fucking them over for two more days. The higher the price goes the more billionaire hedge funds have to pay.
If you can organize enough people to invest in a major failed business that has bottomed out, you can trigger the rest of the market to follow the lead.
It's likely that a lot of these people got burned by their AI or algorithm or whatever they're using for their investments. Everyone else see's "Holy shit people are dumping money in to Gamestop, something must have happened". So they all dive in. People were assuming Gamestop got bought out or merged or something.
The people who triggered that investment surge, get out after the price soars. Everyone who tried to jump on the bandwagon without knowing what was going on, got left holding the empty bag.
This was a little more complicated. A hedge fund saw the growth and figured there is no way in hell that gme could hold that price, so they borrowed a bunch of gme and sold it high, with the plan to buy it back low and pay back the stock they borrowed. Problem is that gme has gone to the moon since they did that and unless it comes back down by the time that note comes due, they are gonna lose their whole fucking ass.
Lol, and I just popped over to WSB. They want blood. Talking about holding at all costs, just to fuck over some of the people who fucked us all in 08. These guys are gonna pay through the nose.
Would be great if this could be turned into a repeatable formula to fuck up the massive funds and/or keep them honest on dangerous and unethical trading practices like, say, going in on naked shorts with more shares than exist.
I honestly don’t know exactly how it is done. You can do a similar thing by buying a put option, which gives you the right to sell 100 shares at an agreed upon price by a certain date. Once the share price drops low enough, you buy shares and sell them at the contracted price to the entity you bought the contract from. Alternatively, you could turn around and sell the contract off to someone else. If the share price goes up, the value of that contract goes down. If the date passes, the contract expires and you’re out the price of the contract.
Say STK is on its way up and trading for $10 per share. Thinking it’s overvalued, you buy a $9 put option that expires on 2/28, and the cost of the contract is $2 per share. Tomorrow, STK slides down to $9 so you haven’t broken even yet but it’s looking good. Now that same contract is selling for $3. You could sell that contract to someone else, but you have diamond hands and 50% in a day isn’t good enough.
The next day, the STK headquarters announces they are bankrupt and can’t afford to pay their employees or fulfill their contracts, then they get raided by the feds and everyone gets arrested, causing the price to slide down to $1 per share.
Now you make your money. You buy 100 shares at one dollar each, then execute your contract. The person who sold you the contract is now obligated to buy 100 shares from you at $9 each. The shares cost you $100, the contract cost you $200, so you just made $600 in profit and your maximum risk was the $200 cost of the contract.
I wonder how many actual human beings were actually involved in the trading. Aren't these big firms running micro transactions that take place in microseconds?
I would bet they all run AI systems, and an autist who analyses it can learn to trigger it. I wouldn't be surprised if these algorithms get leaked in secret. And I wouldn't be surprised if insider trading is just SOP and someone dropped an anonymous tip, suggesting something big was happening and to be ready to get in.
Encrypted communication is so easy, I don't see how it could ever be possible to prevent those types of shenanigans with that much money at play.
I think the microsecond AI is mostly just perfected swing trading.
I’m not sure what exactly they use the AI for other than that, but I’m sure they are.
Insider trading must be SOP, but needs to be done with layers of plausible deniability and not be a pattern of behavior. The trades have to look like something you would do without inside info. Like if some company is sliding into the dumps and you get a tip they are about to post a bn dollar quarter you can’t dump your entire portfolio into it.
Patterns of unreasonable trades that cash out big will get you fucked. Even one of those trades can fuck you if your friend works at that company.
Apparently though, if you overhear insider info then it’s fair game. Like if you were a doorman on Wallstreet and hear insiders on their phones you can trade on that info. Or if some executive dropped his briefcase and you find next quarters P+L sheet looking like a hockey stick.
I imagine you would keep a relationship going, after you've established it (communicating with something like Signal). And once you have credibility, you can burn that person by duping them with this kind of one time scam that they would have had no reason to doubt.
Elon has talked a lot about this being one of the dangers of AI. I never bought in to the fearmongering about nuclear war from paperclip manufacturing scenarios. But his concerns about AI in the stock market sounded scarily plausible.
With a bunch of tangentially related moves, investing or pulling out money, you can orchestrate circumstances that lead to conflict and war, because your AI calculated that some country or another collapsing will result in you getting paid off in some other country because coffee crops were wiped out in some other country. And that can all start with an investment in tire manufacturing on one side of a border, and divesting from something else on the other side of a border, putting people on both sides out of work and at odds.
Yeah I don't claim to understand the stock market. I'm confused as to how this scheme works or how the billionaire stockbrokers were taking advantage of Gamestop.
From what I understand, wsb owned a lot of low value Gamestop stock. The redditors who organized, dumped money in to it. When the price climbs, it doesn't also climb for wsb?
Gamestop is a bad company - they had bad fundamentals as a company (the whole movement to internet retail, etc.), they were likely going under if nothing changed.
Institutional Investors/Hedge Funds (Melvin Capital) make their move - saw this and decided to hasten the process and began short selling the stock, which means that they sold shares of stock that they didn't have, with the plan to buy it back at a later date at a better price (they can use some shady strategies to do this such as ladder selling, but that's too complicated for this discussion, they also profit from some options activity around the sell off)
Gamestop is still a bad company - This is a problem for GameStop because they can't issue shares to raise some capital to keep themselves afloat, restructure, imrpove stores, etc. This increases the likelihood of bankruptcy
Hedge Funds/Others get greedy - They shorted the stock so much that they literally sold more than then entire number of shares available (140% of available shares)
WSB notices how crazy this is - they saw that there is an opportunity for a short squeeze if they buy and hold and the idea is promoted continually on the site for a few months
WSB makes a move - they gained critical mass and bought the stock up enough that it gained critical mass, others likely hopped in (momentum traders etc.).
Shorts getting squeezed - This creates huge losses for Melvin (~3B initially, not sure where it is now). They said they sold off their position, but the short interest remains strong at 140% of shares
What happens from here is anybody's guess, there have been some other things happening (Robinhood disabling trading on GME, politicians sounding off, SEC investigation, etc.). But if the WSB crowd can buy and hold enough, they will eventually cause the shorts to cover and make money because shorts have to pay interest to the brokerage on their short positions, and interest is very high (it was around 80% last time I checked, could be over 100% now).
Joey has a 5$ taco... He gives it to Ike to invest... Ike sells it thinking he can buy it back at a lower price later to make profit... Autists buy all tacos... Now Ike can't pay Joey back.... Ike has to buy tacos from Autists to replace Joey's.... Price is up.. Ike loses money....
billionaires sought to chew over the carcass of gamestop, smart redditors saw it, decided to fuck over the billionaires and caught them with their pants down, instead of making millions this hedge fund has already had to sell off billions in assets to not go under, and their 'short' option doesn't end til friday, meaning these redditors can keep fucking them over for two more days. The higher the price goes the more billionaire hedge funds have to pay.
Just listen to Big Balls by AC/DC and prance around knowing that the good guys got a win today.
It's Reddit so i wouldn't call them the good guys
It's more like the bad guys hurt the rich bad guys today
Yeah I dunno man. I've been on top of roofs, on farms and inside factories most of my life. This internet world of forums is new to me.
Hedge funds agreed to sell shares they didn't have for $5-10 each.
Now the shares are worth hundreds each so they have to buy at that to sell at $5-10 each.
But it's worse. Because they sold more shares at $5-10 each than actually exist.
Yep this
If you can organize enough people to invest in a major failed business that has bottomed out, you can trigger the rest of the market to follow the lead.
It's likely that a lot of these people got burned by their AI or algorithm or whatever they're using for their investments. Everyone else see's "Holy shit people are dumping money in to Gamestop, something must have happened". So they all dive in. People were assuming Gamestop got bought out or merged or something.
The people who triggered that investment surge, get out after the price soars. Everyone who tried to jump on the bandwagon without knowing what was going on, got left holding the empty bag.
That’s just a basic pump and dump.
This was a little more complicated. A hedge fund saw the growth and figured there is no way in hell that gme could hold that price, so they borrowed a bunch of gme and sold it high, with the plan to buy it back low and pay back the stock they borrowed. Problem is that gme has gone to the moon since they did that and unless it comes back down by the time that note comes due, they are gonna lose their whole fucking ass.
Also. They sold more shares than exist.
So they have to buy several times over to fulfill contracts.
Lol, and I just popped over to WSB. They want blood. Talking about holding at all costs, just to fuck over some of the people who fucked us all in 08. These guys are gonna pay through the nose.
Would be great if this could be turned into a repeatable formula to fuck up the massive funds and/or keep them honest on dangerous and unethical trading practices like, say, going in on naked shorts with more shares than exist.
How do they manage to borrow stock in the first place? Can i borrow stock?
I honestly don’t know exactly how it is done. You can do a similar thing by buying a put option, which gives you the right to sell 100 shares at an agreed upon price by a certain date. Once the share price drops low enough, you buy shares and sell them at the contracted price to the entity you bought the contract from. Alternatively, you could turn around and sell the contract off to someone else. If the share price goes up, the value of that contract goes down. If the date passes, the contract expires and you’re out the price of the contract.
Say STK is on its way up and trading for $10 per share. Thinking it’s overvalued, you buy a $9 put option that expires on 2/28, and the cost of the contract is $2 per share. Tomorrow, STK slides down to $9 so you haven’t broken even yet but it’s looking good. Now that same contract is selling for $3. You could sell that contract to someone else, but you have diamond hands and 50% in a day isn’t good enough.
The next day, the STK headquarters announces they are bankrupt and can’t afford to pay their employees or fulfill their contracts, then they get raided by the feds and everyone gets arrested, causing the price to slide down to $1 per share.
Now you make your money. You buy 100 shares at one dollar each, then execute your contract. The person who sold you the contract is now obligated to buy 100 shares from you at $9 each. The shares cost you $100, the contract cost you $200, so you just made $600 in profit and your maximum risk was the $200 cost of the contract.
I wonder how many actual human beings were actually involved in the trading. Aren't these big firms running micro transactions that take place in microseconds?
I would bet they all run AI systems, and an autist who analyses it can learn to trigger it. I wouldn't be surprised if these algorithms get leaked in secret. And I wouldn't be surprised if insider trading is just SOP and someone dropped an anonymous tip, suggesting something big was happening and to be ready to get in.
Encrypted communication is so easy, I don't see how it could ever be possible to prevent those types of shenanigans with that much money at play.
I think the microsecond AI is mostly just perfected swing trading.
I’m not sure what exactly they use the AI for other than that, but I’m sure they are.
Insider trading must be SOP, but needs to be done with layers of plausible deniability and not be a pattern of behavior. The trades have to look like something you would do without inside info. Like if some company is sliding into the dumps and you get a tip they are about to post a bn dollar quarter you can’t dump your entire portfolio into it.
Patterns of unreasonable trades that cash out big will get you fucked. Even one of those trades can fuck you if your friend works at that company.
Apparently though, if you overhear insider info then it’s fair game. Like if you were a doorman on Wallstreet and hear insiders on their phones you can trade on that info. Or if some executive dropped his briefcase and you find next quarters P+L sheet looking like a hockey stick.
I imagine you would keep a relationship going, after you've established it (communicating with something like Signal). And once you have credibility, you can burn that person by duping them with this kind of one time scam that they would have had no reason to doubt.
Elon has talked a lot about this being one of the dangers of AI. I never bought in to the fearmongering about nuclear war from paperclip manufacturing scenarios. But his concerns about AI in the stock market sounded scarily plausible.
With a bunch of tangentially related moves, investing or pulling out money, you can orchestrate circumstances that lead to conflict and war, because your AI calculated that some country or another collapsing will result in you getting paid off in some other country because coffee crops were wiped out in some other country. And that can all start with an investment in tire manufacturing on one side of a border, and divesting from something else on the other side of a border, putting people on both sides out of work and at odds.
ah, that actually makes complete sense, thanks. Wish I got in before all this blew up lol.
The shall not guy above is right, this isnt your typical pump and dump. And wsb guys may or may not end up holding the bag, but I'm not sure they care
Yeah I don't claim to understand the stock market. I'm confused as to how this scheme works or how the billionaire stockbrokers were taking advantage of Gamestop.
From what I understand, wsb owned a lot of low value Gamestop stock. The redditors who organized, dumped money in to it. When the price climbs, it doesn't also climb for wsb?
No. They don't own the stock. Only a promise to sell it in the future for the low value.
They have to buy sky high to sell low.
But they also sold more stock than exists. So they'd have to do it several times.
Isn't Jesus supposed to have flipped some tables and made a scene over that type of shit?
They don't own the stock, so they're selling stock owned by the people who own these hedge fund collections of stocks?
The hedge funds need to buy stock to be able to sell it.
140% of all issued shares need to be sold to clear this debt.
Here's my two cents:
Gamestop is a bad company - they had bad fundamentals as a company (the whole movement to internet retail, etc.), they were likely going under if nothing changed.
Institutional Investors/Hedge Funds (Melvin Capital) make their move - saw this and decided to hasten the process and began short selling the stock, which means that they sold shares of stock that they didn't have, with the plan to buy it back at a later date at a better price (they can use some shady strategies to do this such as ladder selling, but that's too complicated for this discussion, they also profit from some options activity around the sell off)
Gamestop is still a bad company - This is a problem for GameStop because they can't issue shares to raise some capital to keep themselves afloat, restructure, imrpove stores, etc. This increases the likelihood of bankruptcy
Hedge Funds/Others get greedy - They shorted the stock so much that they literally sold more than then entire number of shares available (140% of available shares)
WSB notices how crazy this is - they saw that there is an opportunity for a short squeeze if they buy and hold and the idea is promoted continually on the site for a few months
WSB makes a move - they gained critical mass and bought the stock up enough that it gained critical mass, others likely hopped in (momentum traders etc.).
Shorts getting squeezed - This creates huge losses for Melvin (~3B initially, not sure where it is now). They said they sold off their position, but the short interest remains strong at 140% of shares
What happens from here is anybody's guess, there have been some other things happening (Robinhood disabling trading on GME, politicians sounding off, SEC investigation, etc.). But if the WSB crowd can buy and hold enough, they will eventually cause the shorts to cover and make money because shorts have to pay interest to the brokerage on their short positions, and interest is very high (it was around 80% last time I checked, could be over 100% now).