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Re:GameStop Is Rage Against the Financial Machine by 0xB31B1B on Wednesday January 27, 2021 @09:03PM (#25937170)
To add something to this:

The redditor doesn't need to pay 1 dollar per cow (the market price as sold by fund), the redditor pays .01 cents for an option contract to buy the cow for 2 dollars at the end of the month. The options contract requires the bank selling the contract to buy a cow today. In effect, the redditor is able to force the bank to buy 100 cows by spending only 1 cent.

Re:GameStop Is Rage Against the Financial Machine by Thorrez on Wednesday January 27, 2021 @11:56PM (#25938376)
The bank has to buy the cows right away? I thought when the redditor buys the call someone else, let's say Bob, sells the call. If Bob already owns 100 cows (covered calls), then no one will be forced to buy cows ever. If Bob doesn't own 100 cows (naked calls), Bob will have to buy 100 cows at the end of the month if the call is in the money, not right away.
Re:GameStop Is Rage Against the Financial Machine by onlyrealcuzzo on Wednesday January 27, 2021 @11:47PM (#25938318)
No. It's a lot more complicated than you buy a call option and the brokerage buys 100 shares immediately.
Re:GameStop Is Rage Against the Financial Machine by 0xB31B1B on Thursday January 28, 2021 @02:40AM (#25939249)
Yea, but we’re describing the basic mechanics of what’s happening, we don’t need to get into the details of delta hedging. The basic mechanic is that large groups of folks buying Out of the money calls results in the sellers of those options buying shares to offset risk in the trade. In effect, in an env where lots of shares are locked up due to shorts, an cash efficient way to cause a squeeze is to buy out out of the money options, causing more shares to be bought to offset risk, sending the price up.