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?
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