There's only so much volume available as a result of the short positions. WSB et al are putting in money on a long hold. As a result that drives up the price. Yeah gamma's are in for sure making money. There are some people who have made multiple millions. One individual sitting at $31M currently on a $50k investment.
Some retail will lose, but wall street institutional short sellers are getting hit hard right now. For them to win this they need to keep putting more money into the fire which pulls in bigger and bigger fish. At some point large institutional investors aren't willing to bail out the short sellers.
It is also a strong argument that wall street isn't as intelligent or in control as they like to promote.
General public doesn't understand the trade or the sentiment behind it.
This isn't true. The institutions with Short Exposure are connected to the institutions who buy Robinhood data and perform high frequency trading on those orders. Citadel and Melvin can BUY GME themselves to mitigate the risks. It is likely that a substantial amount of GME is being held by the institutions who had short exposure. It's basic risk mitigation.
The high frequency traders who have the Robinhood data are making money on every Buy GME order and will make money on every sell when this bubble collapses.
It is wrong to present this as a populist uprising.
This is an incredible fluctuation, a hilarious anomaly, but it is nothing more than that. It will have no lasting impact.
I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically using robinhood data and are making money off of retail right now.
My message to the people here: /r/wallstreetbets is not a gameshark. You are still playing their game. You are still playing a rigged game and you are still losing.
Melvin buying GME is not "mitigating," it's closing the short position. If you close your short position high, you got screwed and you lost money. They did close it recently... At a massive loss.
"I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically using robinhood data and are making money off of retail right now."
How... Would "making money off of retail" in a pernicious sense be possible right now? If a retail trader on WSB bought in at $20, and sold at $200, they got 1000% ROI on their trades. Do you think that a bank secretly snuck in greater than 1000% ROI? The WSB trader got 1000% ROI, but the bank got 2000% ROI on the set of trades? The stock would have to be trading at $600 and the bank secretly pocketed $400 for that to happen.
Sure, the HFT front-run orders. But they are constantly buying and selling the shares they trade, they're not just buying. They don't get the buy-and-hold wins that the slow retail traders got off of a rally like this. HFT make money by providing liquidity, not by buying and holding GME.
Also, just as a technicality, Melvin is not a high frequency trader. They are not the same people front-running Robinhood orders. Melvin lost big time.
"My message to the people here: ... you are still losing"
My message to the people here: if you got >1000% ROI, you won. Don't let randos on HN make you feel bad.
(Close your position though.)
Citadel is the main internalizer for Robinhood.
I don’t think it changes much about your post but the connection between HFT and Melvin is public and directly financially relevant.
I would also be fairly surprised if Citadel made, say, 1000% ROI on their total GME trades this week. Giant bull runs are fine for HFT, sure; everyone wins when stonks go up (except for shorts, who lose big time). But giant bull runs are generally better for buy-and-hold investors than for HFT, because the buy-and-hold investors weren't doing all the useless intermediate buying and selling that the HFTs were. If a stock goes up and to the right, the best (retrospective) move is to have invested all of your position early, not to have constantly invested a bit of it over time as it went up like HFTs do. Basically: GME's performance favored avid WSB investors who got in early, much more than it favored HFTs front-running Robinhood for pennies on every trade. To quote Matt Levine, "you don't need special evil HFT powers to see" GME going up, it was happening for weeks [1]. You didn't need HFT powers to see WSB posts about the squeeze, or about short interest being 130% of the float. If you were an avid WSB user, and you got in early, you really did take Melvin for a ride. Sure, Citadel did well too — but your returns would still probably blow theirs out of the water.
IMO, WSB won the biggest.
(I do worry about the retail traders who bought in late due to the hype; this rally doesn't seem sustainable.)
1: https://twitter.com/matt_levine/status/1354131836323196928
-- They would have to do this at great cost and loss (rumor mill has it at current loss of $4B). If you believe the reports in the media Melvin has had to go ask for money from other institutions. Thus bigger fish would now be involved as they are putting money out to Melvin.
> The high frequency traders who have the Robinhood data are making money on every Buy GME order and will make money on every sell when this bubble collapses.
-- Agreed i said as much in my comment that people will make money on it - some retail some institutionals.
> It is wrong to present this as a populist uprising.
-- Disagree. This is a trade that at its core is a sentiment of disenfranchisement, anger at wall street short sellers, financial establishment - and of course with the hope of making money.
> This is an incredible fluctuation, a hilarious anomaly, but it is nothing more than that. It will have no lasting impact.
- Agree - most likely - it will however make wallstreet institutional short sellers think more carefully about their positions. There will be impacts but doubtful anything transcendent on the markets. If anything SEC will investigate Wallstreetbets traders as opposed to doing anything to Wall street (which has been having carte blanche under the last administration's effort to neuter the SEC).
> I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically using robinhood data and are making money off of retail right now.
-- Might be, however the losses they took at the beginning on their position were pretty steep to jump right back into the pool.
> My message to the people here: /r/wallstreetbets is not a gameshark. You are still playing their game. You are still playing a rigged game and you are still losing.
-- I don't think anyone has allusions that the tables have turned. This is more like the chance for this one time give a giant F U to wallstreet who has been perceived to be making money off the backs of the population without any care at all from retail investors.
"We don't know how bad things we could get if we are wrong" means you're doing something you shouldn't be.
I am just pushing back at the narrative that this is a "win" for the little guy and a "loss" for wall street.
Retail investors putting money into the market _at all_ is a net win for wall street _every time_ imo.
This is what I think to myself everytime I see one of those Acorn ads.
The game is rigged against you, but you're still better off if you play.
I understand your sentiment but that's a pretty overbroad assessment. There are obviously non-pro traders people killing it, and a lot more than a blip, tons of people have bought and sold out of their positions, average schmoes. There will be a ton of bagholders and losers, and expired options "Loss Porn". But to say that EVERYONE is a loser in a rigged game is too bold a statement. Maybe, Most will be losers in the rigged game.
To some extent, sure, but bear in mind the total short exposure was 140% of the total GME shares.
What happens when one tries to cash out this kind of position? Does he or she actually walk away with $31M?
Edit: He just updating his daily position. Cashed out 13M, has 35M still riding in shares and options.
[1] https://old.reddit.com/r/wallstreetbets/comments/l6ekdz/gme_...
It's very easy for retail investors to look at points in time and see stellar results. Unless they cash out some of that, before things start to drop, their massive position vanishes as quickly as it arrived.
Presumably they'd want to split the sell offer into smaller portions to avoid indicating a turn in the market which might cause a fall in price before they realise [as big a] profit on their position?
Like trying to get out of a place when you see things heading south (ie a calamity approaching). If you run for the door then everyone will see you and the people close to the door might block your exit as they seek to escape. If you cautiously walk, avoid being direct, etc., you've more chance to get out.
Often large positions as a single order are used to create buy or sell walls that can influence sentiment and algorithms to move the price in a way that they desire.
The most interesting technical thing about this fracas is the fact that WSB has managed to play the options-sellers off against the shorts to set this off. The kids have temporarily played the adults off against one another and caused an explosion.
In the end, the savvy and the lucky will have more capital than in the beginning, and the un-trained and unlucky are going to be very sad. In the meantime, food-fights are fun while the food is flying.
It's past clever trading at this point.
While it's likely that some of the wsb crowd plays it yolo style and doesn't care (it's for the lulz), I don't think the people who invest because they saw it on mainstream media will see it that way.
It’s not like this is some random event that could happen to any position. There seem to be a number of factors in play, but it’s not random, and it’s not because a meme got popular.
GP is not dismissing it. They're saying that a stock play turning into a meme is becoming a serious additional risk factor.
not at this price. There's a rationale for doing so at sub $10 a share.
Buy things, hold things, sell things.
A more-sophisticated investor than I could also hedge against undesirable long-tail events.
To me, with a long-term/value perspective, these transients are a bummer because they distract from efficient price discovery. But, with a long-term perspective, these transients are mostly irrelevant. If a quality company's price drops precipitously, it is then on sale and worth buying. If it becomes quickly inflated, I can either hold with a smile or, if it is just too insane, sell with the expectation of buying in again later. The only real risk is of a meme-driven fluctuation shorting an otherwise-okay company into bankruptcy.
Hide your position better. Put out fewer signals. Lobby to make trades secret.
Don't take short positions. They add nothing of value to anyone. They are just fancy gambling.
Plenty of WSB posts with multi million positions.
Disclosure: I long GME.
The way the stock price goes up is by more volume coming in at the highs. But we are talking 57 M shares traded at noon today with outstanding float of 65M. Those are professional day traders propelling the stock. Buying high and selling higher. It's not WSB.
Correct, I know at least 5 people who bought GME this week. It's way bigger than WSB now.
This is interesting. I wonder what percent of outstanding shares of $GME WSB commenters collectively own and whether the SEC could make the case they're operating as a "group" for disclosure purposes.
15 U.S. Code § 78(i)(a)(2) - Manipulation of security prices
[It shall be unlawful...] ...to effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.
1. Back channel communications and coordination between users.
2. User identities, including how many participating Reddit accounts are operated by the same individuals as alt accounts.
Basically, doing any effort to raise stock price beyond it's "proper" price in a coordinating way is a violation. Proving it is an entire another thing. I doubt this is what happening right now. I would like to see anyone trying to prove that ":rocket::rocket::rocket: GME to 1000" counts as such.
However, liability like that is why AMC is forbidden to mention in r/WSB by its name. It's easy to pump and dump that ticket.
This is why many "Let's take over this company with small market cap" threads were removed back in a day.
It's more fun than playing lottery for sure.
But they didn't cause this crazy short squeeze. It's the other hedge funds and day trading shops that are causing this because they see weakness and an easy way to day trade to crazy profits.
Who has the money to keep buying at $350 to propel the stock to $400? Definitely not WSB. I know plenty of people dipping their toes in and buying 10 or 20 shares for fun right now. But there's 55M shares trading at all time highs. That's not retail. That's day trading shops and deep pockets.
Delta hedging, potentially
> But there's 55M shares trading at all time highs
55M is the float but there's nowhere near that much actively available. Fidelity and Blackrock together own about 25M I think [0], along with other institutional investors as well as staff in stock incentives. Some of this will be liquidated as the price goes up but not all of it.
[0] https://news.gamestop.com/stock-information/institutional-ow...
One thing that’s different is commission-free trades. Plenty of folks buying and selling 10 shares at a time a dozen times/day “to profit off volatility”.
Doesn’t explain everything, but retail can put through more volume than ever before.
Just checked GME spread though, and it’s about $1.50 or about 0.5%, so the market makers must be happy with that and the volume.
“Holding until it’s over” now means having enough capital for 100x any short position you take. That limits how much you can short.
I'm here just puzzled, why exactly would you need hundreds of people? And why would all of them "jump on the same stocks" as opposed to a single person doing that? Do stocks care how many people jump on them, or what?
Yes, some hedge funds have lost their shirts, but those are the first ones who were in the short before the squeeze. The hedge funds and more importantly day trading shops making money right now are the ones who saw the activity and are goosing the stock price right now. I don't know if people realize that there are thousands of day trading shops where hundreds of people are in a single room, like an internet cafe, where people are day trading at terminals and people bark orders to each other and they all jump on the same stocks. These are probably the shops that are responsible for most of this volume.
There is no way that WSB boosted the price for $40 to $400. Those are hedge funds and trading shops that jumped into it afterwards.
They will sell at the top, and retail investors are going to buy on the fall, thinking it's "on sale" and then they will get wiped out.