Look at Melvin - they are trying to convince the market they are still solvent.
Citron closed their shorts at a huge loss.
This really is a case of "seasoned professionals" getting slaughtered on awful trades, and they didn't appear to have a safety net set up.
edit: people seem to think I am cheerleading WSB...far from it, someone there will also get slaughtered by being the last fool to walk in on a risky trade. Trading is merciless, caveat emptor!
edit2: the article above does NOT refute my claims. Melvin took a $2 billion emergency infusion from Citadel. You don't do that if you safely closed your trades without hazard. Sorry I'm going to trust Bloomberg over "nope-its-lily"
There is zero percent chance that this is actually playing out the way WSB is claiming it's playing out.
What makes you say that? Any idea of what is happening?
There's a decent not-meme-based story around GameStop's turnaround, and a number of actual investment firms saw it weeks before they did. Investment firms are betting against each other, as per usual.
Also, now that GameStop has all this extra value, they can actually improve, so the not-meme-based story becomes even more compelling.
From the article in my previous comment:
>Even assuming the worst case scenario here (let’s assuming somehow the put value was $10 and they held until now and the put is worthless, the max loss is $54 million for a hedge fund with $20 billion AUM, for a max risk of about 0.27%), Melvin Capital is sleeping fine. Because they bought puts, and didn’t short shares directly, their max loss is capped (the premium they paid).
It sounds like they did short shares of gamestop. When the first article came out it said their puts had already expired. Gabe Plotkin called into CNBC this morning and said their "short had been covered" meaning that they did short shares.
https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddi...
"Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss, the hedge fund’s manager told CNBC’s Andrew Ross Sorkin."
https://www.ft.com/content/8be64f49-7c90-4fae-8370-c5c5c96d8...
TLDR Melvin Capital is already down 3.75 Billion 3 weeks into 2021...
>In general, a crafty short seller (a.k.a. most long/short funds) will do the following to ensure the internet doesn’t outsmart them:
> 1. Capping loss with put options — With a put option, you roughly get all the benefit of shorting a stock (minus the premium paid and strike) with a finite amount to lose.
> 2. Capping loss with OTM call options — This is my favorite, and one of the more common strategies. When you assemble a short position, you aren’t stupid hopefully — you understand stocks only go up, and infinity is a much farther number from current price than 0 (using a discrete numeraire, of course).
https://nope-its-lily.medium.com/gamestop-power-to-the-marke...