Re:Why it’s usually crazier than you expect
by FabHK on Saturday January 30, 2021 @11:58PM
(#25976127)
You’re right, the option gamma squeeze works on the way down (past the strike) as well in accelerating the movement.
It is as if the option seller (who is short gamma) follows a momentum strategy - when price goes up, they buy, when price goes down, they sell.
As for the short squeeze - why would the owner of the shares want them back from the shorters? Well, presumably to sell them.
The conversation would go like this: BlackRock to Melvin: give me my shares back! Melvin: why? B: the Price has gone up to 300! It’s insane! We are a traditional fundamental investor and bought them at at 15. We want to sell them and lock in our profit! M: ok, how about I buy the whole bunch of you, and we call it even? B: done.
All the redditors that hold on to their shares for dear life: what just happened?
It is as if the option seller (who is short gamma) follows a momentum strategy - when price goes up, they buy, when price goes down, they sell.
As for the short squeeze - why would the owner of the shares want them back from the shorters? Well, presumably to sell them.
The conversation would go like this: BlackRock to Melvin: give me my shares back! Melvin: why? B: the Price has gone up to 300! It’s insane! We are a traditional fundamental investor and bought them at at 15. We want to sell them and lock in our profit! M: ok, how about I buy the whole bunch of you, and we call it even? B: done.
All the redditors that hold on to their shares for dear life: what just happened?