The GameStop ShortSqueeze Explained – The News Today
The Short squeeze of GameStop By wall street bets. I really explain, What short sales are, But I didn’t give you enough explanation About, what a short squeeze actually is Technical.
I apologize for that and in this news article. Now, If you short a stock you basically land shares, You sell these shares wait for the share price to drop. Buyback your shares and return them to The lender Pocketing.
The difference now it may Happen that, While you wait the share price actually Goes up you’re I mean, you pretty much have to pay the Difference now. Here’s the thing Everybody knows exactly which shares are Getting shorted.
It’s public information so, you know exactly which companies are heavily Shorted. Now if everybody in the market knows That certain stocks are Shorted like GameStop. because they’re Actually known to be in trouble As far as.
You know where the market is Going their declining revenues. So, what happens that if people know that. A stock is heavily shorted It creates an opportunity. Now, this Opportunity would be in the form of Squeezing.
what is GameStop Short?
The shorts Exactly how it works now, if I’m hoping That the share price goes down While, I actually owe the shares to Somebody else. What will happen if the Share price goes up.
I get stuck I have to pay the difference. I’m losing money. So, what actually happens in a short Squeeze is that by creating this Massive demand.
You increase the price of A stock almost Instantaneously and hyperbolically Without Any fundamentals actually driving. The Share price up for example an approval By the FDA for pharmaceutical company Right.
If nothing fundamentally changed in just Creating an Artificial price spike, that is a short Squeeze since this company is heavily Shorted. You basically now putting the short Sellers in the ringer. They have to join In the action and basically Dig their own grave.
That is the crazy Part. So, what these people actually do Is, they wait for a piece of good news For example the investment by Ryan Coyne Into GameStop.
Which actually created a lot of positive momentum. They get on that wave and they start a Tidal wave By buying up stock like crazy. Now what happens is that, While they’re driving the stock price up. The short sellers Are trying to cover their positions Trying to cover their shorts.
Because They’re anticipating a price increase. So, they have to cover the shorts before The margin call now. I’ll explain in a Second what a margin call is but Basically. It’s almost like a self-feeding fire or Whether you want to use a different Analogy.
A snowball effect as the share price Goes up. The short sellers are actually joining In on the buying action Creating their own demise. Essentially digging their own grave. So, as this actually gets stronger and Stronger the short sellers are actually The ones Fueling the fire.
Because they’re buying up everything. They can cover the Shorts now.
what is GameStop short-sellers?
The short sellers are basically Terrified of one cataclysmic event. Now if your broker at some point thinks That you can’t cover the position.
They’re going to close the position for You and they’re going to buy that Whatever cost. the market will actually Have at that time. Which might be a cataclysmic Catastrophic event for you. If the share price is really really high now that’s. The whole story here, Now here’s the thing according to the Sec.
I’m reading directly from the SSC website. Short sales are legal short squeezes can Happen naturally but here’s what they Have to say, Although some short squeezes may occur Naturally in the market.
GameStop short squeeze
A scheme to manipulate the price of Availability of stock. In order to cause a short squeeze is Illegal. Now how does this apply to wall street?
Bets well first of all you have to prove. That you had A scheme to manipulate the market.Which Is a questionable thing to prove. because It’s just as subreddit. A lot of these people out there are Joking kidding.
It’s really hard to tell, How serious that is in my layman’s opinion. Good luck to the sec to prove That. That actually, what happened with Wall street bets good luck finding these People.
I don’t think that beyond an academic Question. This actually has Any actual real-life implications Ramifications. Whatever you want to say about it now, What are the next targets. I think that Blackberry is one that’s going on right now.
I think that AMC is definitely on their Sides. There’s a lot of short squeezes now a Lot of questions. Is this now a good Time to actually short game stop now. That the short squeezing it No stay away short selling isn’t for you.
It’s for institutional investors And even then it’s extremely dangerous. I Don’t recommend short selling anything. I definitely don’t endorse participating In the short squeezes. As well I just generally like to pick good Stocks so AMC Gamestop blackberry.
These are all dead Companies in my opinion. I wouldn’t touch it with a poll but you Know as always this is just my opinion. Might be wrong might be inaccurate might Be, the ramblings of a madman. Now I hope this was much clearer as far As what a GameStop short squeeze Is. I’ll see you guys in the next News.