Back to the off topic discussion about GameStop. F
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Posted On: 01/28/2021 6:35:15 PM
Back to the off topic discussion about GameStop. From another board.
This explains well what happened with GameStop -
https://www.cnbc.com/2021/01/27/gamestop-mani...-pros.html
"A wave of at-home traders found each other on the red-hot “wallstreetbets” Reddit chat room, whose members have ballooned to over 3 million. By motivating each other to keep piling into shares and call options, they coordinated a monstrous short squeeze in the brick-and-mortar video game retailer."
"When retail investors looks for cheap upside calls, it leaves the sell-side or the market makers who are the middlemen in the transaction short a lot of upside calls, or short gamma. As the stock rises towards those strikes, the market makers need to buy increasingly more stock to hedge their short calls. This effectively accelerated the rally further in GameStop and other heavily shorted names."
This explains well what happened with GameStop -
https://www.cnbc.com/2021/01/27/gamestop-mani...-pros.html
"A wave of at-home traders found each other on the red-hot “wallstreetbets” Reddit chat room, whose members have ballooned to over 3 million. By motivating each other to keep piling into shares and call options, they coordinated a monstrous short squeeze in the brick-and-mortar video game retailer."
"When retail investors looks for cheap upside calls, it leaves the sell-side or the market makers who are the middlemen in the transaction short a lot of upside calls, or short gamma. As the stock rises towards those strikes, the market makers need to buy increasingly more stock to hedge their short calls. This effectively accelerated the rally further in GameStop and other heavily shorted names."
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