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A comment on What Is a Gamma Squeeze in the Context of Stock Trading?. Parent comment

Re:What Is a Gamma Squeeze in the Context of Stock Trading? by kinghajj on Monday January 11, 2021 @07:38PM (#25740611)
1. Retail investors buy TSLA calls.

2. Market makers sell these calls, and so buy TSLA shares to cover their position.

3. Due to #2, TSLA shares appreciate, as well as the calls from #1.

4. Retail investors see all the money being made, and FOMO in to buy more calls; go back to #1, repeat.

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Re:What Is a Gamma Squeeze in the Context of Stock Trading? by beezle on Monday January 11, 2021 @08:15PM (#25740973)
TSLA has a pretty small float which is a large part of that.
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Re:What Is a Gamma Squeeze in the Context of Stock Trading? by im3w1l on Monday January 11, 2021 @08:11PM (#25740930)
Would this really happen be a relevant dynamic over long time periods? I would assume that at some point the market makers get nervous and stop selling calls?
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Re:What Is a Gamma Squeeze in the Context of Stock Trading? by dilyevsky on Monday January 11, 2021 @08:29PM (#25741094)
Why? they have cover and already pocketed fees
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Re:What Is a Gamma Squeeze in the Context of Stock Trading? by objektif on Monday January 11, 2021 @09:04PM (#25741337)
It does not have to be long time its up more than 5 folds in the last few months.
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Re:What Is a Gamma Squeeze in the Context of Stock Trading? by im3w1l on Monday January 11, 2021 @09:41PM (#25741567)
By long time periods I meant > 1 day. Maybe for a few hours some algorithm can do it's thing mindlessly, but then some real person will look at holdings with human judgement and start worrying. But I guess it depends who you think will be doing the marketmaking, and how stupid you think they are.
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Re:What Is a Gamma Squeeze in the Context of Stock Trading? by colinmhayes on Monday January 11, 2021 @10:01PM (#25741719)
tsla is up 22x in the past year and a half
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Re:What Is a Gamma Squeeze in the Context of Stock Trading? by edoceo on Monday January 11, 2021 @08:27PM (#25741082)
Ok, I see so around #3 sell to close? Or do you take the underlying?
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Re:What Is a Gamma Squeeze in the Context of Stock Trading? by overcast on Monday January 11, 2021 @10:23PM (#25741859)
Sell to close before expiration, it's usually never worth getting assigned shares.
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