Re:Hedge fund Melvin sustains 53% loss after Reddit onslaught
by kreeben on Sunday January 31, 2021 @08:25PM
(#25984534)
>> I'd imagine there's plenty of funds willing to short GME at $300
Plenty? What type of mathematical model would support a move like that? Are hedge funds predicting a government bailout? Or are they certain retailers will close on Monday?
Re:Hedge fund Melvin sustains 53% loss after Reddit onslaught
by gruez on Sunday January 31, 2021 @08:31PM
(#25984574)
>Plenty? What type of mathematical model would support a move like that?
Do you really need a mathematical proof of this? If a stock is $30 and you think the FMV is actually $20. Then you'd expect to make $10 from shorting it. If it's at $300 you'd expect to make $280. So the higher the price, the more money you expect to make from it, and the more tempting it is.
>Are hedge funds predicting a government bailout? Or are they certain retailers will close on Monday?
No not really, a sibling comment explains it better than I can: https://news.ycombinator.com/item?id=25984493
And I suppose that's because short interest isn't going down? Aside from the fact that other short-interest sources (all unofficial, by the way) shows that short interest cooled down last week. it also ignores the fact that it's possible to close short positions by transferring to another fund. I'd imagine there's plenty of funds willing to short GME at $300.