The truth of the matter is that hedge funds and institutions are quietly the ones actually pumping these stocks. Reddit likes to paint a narrative that they are in control, but when their messiah has 50MM max of securities and options, meanwhile single trades are going through worth over 700MM, the narrative just doesn't make sense. This is a battle of Wall Street vs Wall Street with some retailers playing along as pawns. Most likely, starry eyed retailers are going to be the ones holding the bag when it all comes down because they're playing a game without even knowing who they're up against.

As for the shorts, Melvin and Citron are out but new shorters get in every day. The higher the price goes the more incentive there is to short. Most will probably lose money as the bubble inflates. But a few will make out like kings when it pops.

The "short" (haha) answer is that we just don't know what the funds have done during the last week. They're incentivized to mislead the public about closing their positions. But the technical reasons the gamma squeeze happened and possible short squeeze today could happen still make sense: the equity has oversubscribed short interest and a skyrocketing price.

I'm kind of amazed how little transparency there is in the stock market. Everyone seems to be guessing. The unequal amount of information for regular people is really unfair and seems like an easy situation for corruption to take place

Believe it or not there is strong evidence that more shorts are being added.

Consider a potential attitude that Citadel is going to get away with this blocking. I mean, maybe ... just maybe ... they'll get an SEC fine of a few hundred million (while protecting many hedge funds from billions in losses). In a worst case scenario a sacrificial scapegoat or two goes to a minimum security country club or house arrest for 6 months/1 year. But that will take a few months/years to come to pass and public sentiment will be much less hot. So they're probably gonna force the price down to unwind existing shorts.

So, since there is a potential that the price will be pushed down due to the above ... doesn't it make sense to open a new short position?

No. Apparently other hedge funds got in line behind Melvin with even more aggressive shorts.

Why would you short when you can buy a put option?

Your gain in delta (due to the stock moving) will be offset by your loss in vega (due to the volatility coming off after the impending crash). Option fair value is a function of both underlying price and volatility, which is currently at unprecedentedly high values.

IV crush