Stock Analysis and Trades Thread

[jonebone | 1,307]

18 minutes ago, arch_8ngel said:

It is going to be interesting to watch this unfold, for sure.  It isn't close to over yet.

There is a genuine war going on, with a hedge fund that was heavily short needing to borrow billions of dollars to cover losses, so far.  There is way more at stake than the WSB guys may have originally appreciated, and it is wild to see it all first-hand.

But if the WSB guys "lose" to the shorters, it will get ugly quick -- very exciting.

 

EDIT:  from what I'm reading, since monthly calls expire on Friday, and the highest monthly calls were written at $115 -- another major gamma squeeze is on the table, the closer we get to friday with the price above $115 (since those calls were outrageously out of the money when they were written, so had minimal hedging at the time).

 

Can you explain this Gamma squeeze in layman's terms?  I get that this thing is accelerating still (unbelievably) but can't find decent reading to summarize it all briefly.

[arch_8ngel | 1,597]

5 minutes ago, Californication said:

If it closes like half of what it has increased today the couple billion that company borrowed is gone. I mean they have an untenable position. Their only hope is that money managers are worried about being the last one in today. You would thibk they could been accumlating today and try and sell off near end of day to trigger limit sales.

The larger short players apparently think they're able to outlast the longs, because they've maintained and actually increased the short positions.

Meanwhile some BIG buyers have stepped in as well.

It isn't just the little guys versus the hedge fund shorts -- there are big players on both sides.

It is wild.

[arch_8ngel | 1,597]

21 minutes ago, jonebone said:

Can you explain this Gamma squeeze in layman's terms?  I get that this thing is accelerating still (unbelievably) but can't find decent reading to summarize it all briefly.

My (very ill-informed) understanding is this:

(1) market makers decide on what calls and puts can be offered on the market in the first place

(2) based on how far out of the money or in the money those positions are, the market makers are forced to hedge to be "delta neutral" (i.e. they are a market maker, not a "participant" making a bet to one side or the other)

(3) IF you have a situation where calls ALL go "in the money", and it happens fast enough, then the market makers are FORCED to buy to hedge those calls (other circumstances come into this, as to whether they were naked calls in the first place, or fully covered)

In this case -- the market maker for GME got behind the curve on the hedging they were obligated to do in order to "make the market" and their hand was forced (on Friday, at least -- MAYBE yesterday, as well).

But come friday -- there are monthly calls written back when the stock was only worth $20, or so -- it becomes a matter of how well the MM hedged the highest calls (that will hypothetically all be deep in the money at current prices)

But if they're forced to hedge and buy -- that creates an episode like last Friday -- only on a larger scale.

 

AND THIS IS INDEPENDENT OF THE "SHORT SQUEEZE" THAT IS BEING TALKED ABOUT.  (which is what makes it all so wild)

 

Unlike the shorts, that can presumably choose to keep paying interest and keeping short positions open (assuming they can negotiate away a margin call) -- the market maker is REQUIRED to "make the market".  They can't put it off if the hedging requires them to buy.

And hypothetically -- a big enough squeeze of that type can then force margin calls on shorts that otherwise could have avoided it by their size.

 

The whole thing is so much crazier that I ever thought possible -- from a market functionality standpoint -- and is really kind of scary to consider in terms of how badly both hedge funds and the market makers themselves misjudged.

 

 

(And please don't take any of that above as gospel, because I have a very rudimentary understanding of the concept, and I'm probably saying it wrongly - options are not my game, and I don't have a particularly deep understanding of how, exactly, market makers have to hedge in the process of "making the market")

 

 

EDIT:  and some of this may also have to do with whether the market makers expect call holders to actually exercise their positions, or not, or if they just sell the calls back at a profit when closing their positions.  (i.e. the question of whether the derivatives, themselves, ever get used to claim the associated shares -- or whether they just go back into the ether)

 

Edited January 26, 2021 by arch_8ngel

[arch_8ngel | 1,597]

18 minutes ago, jonebone said:

Can you explain this Gamma squeeze in layman's terms?  I get that this thing is accelerating still (unbelievably) but can't find decent reading to summarize it all briefly.

As an addendum to the above post -- the steady runup TODAY is NOT a "gamma squeeze". (though it COULD BE shorts capitulating OR it could be market makers trying to gradually hedge in advance of Friday to avoid a second gamma squeeze after last week -- now way at all to know until after the fact on that)

The concept of how a "gamma squeeze" comes to pass is evidently the kind of massive spikes that happened on Friday that are practically guaranteed to trigger breakers.  

 

EDIT:  as another note to my earlier post about who is on the other side of this stuff -- the hedge fund that had to borrow billions -- evidently blows up completely (suffers 100% loss on their fund, in total) due to their GME short once GME crosses $175.

There is an immense amount at stake, on this thing.

Edited January 26, 2021 by arch_8ngel

[Californication | 1,478]

Shit, is this a buy moment. I put a limit buy in. Not sure if this isna good idea.

Edited January 26, 2021 by Californication

[arch_8ngel | 1,597]

16 minutes ago, Californication said:

Shit, is this a buy moment. I put a limit buy in. Not sure if this isna good idea.

If I knew the right answers on GME, I would have made millions on it by now 

I'm just along for the ride playing with a little bit of "house money" from swing trading it in December before things really got exciting!

 

EDIT: and I'm not going to lie -- this whole even makes me want to find a couple of books to understand how options actually function and are priced.

For instance, over the past year, I have seen a lot of discussion about using calls and puts as superior to limit buy and limit sell orders -- assuming you're willing to lots of 100 shares.

Edited January 26, 2021 by arch_8ngel

[Californication | 1,478]

4 minutes ago, arch_8ngel said:

If I knew the right answers on GME, I would have made millions on it by now 

I'm just along for the ride playing with a little bit of "house money" from swing trading it in December before things really got exciting!

I thought it was going to open lower after the halt, but I went too low on my buy price.

It's gotta drop in the AH.

Edited January 26, 2021 by Californication

[arch_8ngel | 1,597]

Just now, Californication said:

 

It's gotta drop in the AH.

Hedge funds have been saying that since last March and have lost billions of dollars in the process  

There is at least one that is genuinely at risk of suffering a 100% loss due to their GME short position blowing up in their faces.

[Californication | 1,478]

2 minutes ago, arch_8ngel said:

Hedge funds have been saying that since last March and have lost billions of dollars in the process  

There is at least one that is genuinely at risk of suffering a 100% loss due to their GME short position blowing up in their faces.

I just saw someone say they will sue GameStop if they don't do a stock offering. They were so greedy they were not going to walk away until GME was bankrupt and now they want them to do them a favor. The irony is so sweet.

[arch_8ngel | 1,597]

6 minutes ago, Californication said:

I just saw someone say they will sue GameStop if they don't do a stock offering. They were so greedy they were not going to walk away until GME was bankrupt and now they want them to do them a favor. The irony is so sweet.

GameStop had already filed that they could do an offering up to $100M -- which right now wouldn't move the needle on stock price.  (stock was only $20/share when they floated that)  And, ironically, them offering stock to get $100MM "for free" from share buyers could be taken as bullish and savvy on their part.

Also -- check out the status of the true believer (deep fucking value):

Dude is currently at $22 MILLION.  Still has his 50,000 shares -- sold 200 of his April calls for a cool $2.4 Million in cash during the big bump early Monday.

Ignore the cost basis on that image -- it reflects options that he's sold and then bought stock with along the way, or otherwise rolled into other options -- his REAL "cost basis" is $55,000 from back in April 2019.

Edited January 26, 2021 by arch_8ngel

[Californication | 1,478]

6 minutes ago, arch_8ngel said:

GameStop had already filed that they could do an offering up to $100M -- which right now wouldn't move the needle on stock price.  (stock was only $20/share when they floated that)  And, ironically, them offering stock to get $100MM "for free" from share buyers could be taken as bullish and savvy on their part.

Also -- check out the status of the true believer (deep fucking value):

Dude is currently at $22 MILLION.  Still has his 50,000 shares -- sold 200 of his April calls for a cool $2.4 Million in cash during the big bump early Monday.

Ignore the cost basis on that image -- it reflects options that he's sold and then bought stock with along the way, or otherwise rolled into other options -- his REAL "cost basis" is $55,000 from back in April 2019.

Well I am just going to sit in the corner and play checkers than.

[arch_8ngel | 1,597]

Just now, Californication said:

Well I am just going to sit in the corner and play checkers than.

No kidding.  By comparison of level commitment on GME, I'm not even the dog getting scraps under the table

Following that guy's saga, and a number of others that have pulled some big money on GME, has been a very humbling experience of realizing I am a lot more risk averse than I previously thought.

[DoctorEncore | 3,691]

39 minutes ago, arch_8ngel said:

GameStop had already filed that they could do an offering up to $100M -- which right now wouldn't move the needle on stock price.  (stock was only $20/share when they floated that)  And, ironically, them offering stock to get $100MM "for free" from share buyers could be taken as bullish and savvy on their part.

Also -- check out the status of the true believer (deep fucking value):

Dude is currently at $22 MILLION.  Still has his 50,000 shares -- sold 200 of his April calls for a cool $2.4 Million in cash during the big bump early Monday.

Ignore the cost basis on that image -- it reflects options that he's sold and then bought stock with along the way, or otherwise rolled into other options -- his REAL "cost basis" is $55,000 from back in April 2019.

 

26 minutes ago, arch_8ngel said:

No kidding.  By comparison of level commitment on GME, I'm not even the dog getting scraps under the table

Following that guy's saga, and a number of others that have pulled some big money on GME, has been a very humbling experience of realizing I am a lot more risk averse than I previously thought.

Just remember that nobody's made any money until they cash out. That guy is either a true mad lad or a secret billionaire. Any reasonable human being would have cashed out by now.

[arch_8ngel | 1,597]

1 minute ago, DoctorEncore said:

 

Just remember that nobody's made any money until they cash out. That guy is either a true mad lad or a secret billionaire. Any reasonable human being would have cashed out by now.

Look at the screenshot.

That guy has "made" almost $5MM in CASH on top of his 50,000 shares and his remaining 800 calls for April (at $12/share).

He has already cashed out nearly 100x his original bet. (though a hefty chunk of that is in reserve for the tax man, I'm sure).

 

EDIT:  but yes -- that guys is insane, because along the way he has ridding multi million dollar swings on a near daily basis.  I would have had a stroke by now from that level of intensity   (and no, he's not a secret billionaire -- he is just some dude on YouTube that goes by RoaringKitty)

Edited January 26, 2021 by arch_8ngel

[DoctorEncore | 3,691]

6 minutes ago, arch_8ngel said:

Look at the screenshot.

That guy has "made" almost $5MM in CASH on top of his 50,000 shares and his remaining 800 calls for April (at $12/share).

He has already cashed out nearly 100x his original bet. (though a hefty chunk of that is in reserve for the tax man, I'm sure).

 

EDIT:  but yes -- that guys is insane, because along the way he has ridding multi million dollar swings on a near daily basis.  I would have had a stroke by now from that level of intensity   (and no, he's not a secret billionaire -- he is just some dude on YouTube that goes by RoaringKitty)

My bad. I didn't look closely at that screenshot. Regardless, that dude is crazy. Hahaha.

People always say half jokingly that playing the stock market is like gambling, but most decisions are made on actual data. At this point he is literally just gambling. And winning.

Edited January 26, 2021 by DoctorEncore

[Kguillemette | 1,547]

2 minutes ago, arch_8ngel said:

Look at the screenshot.

That guy has "made" almost $5MM in CASH on top of his 50,000 shares and his remaining 800 calls for April (at $12/share).

He has already cashed out nearly 100x his original bet. (though a hefty chunk of that is in reserve for the tax man, I'm sure).

He really is living up to YOLOing! Letting 18 something mil ride?! Wtf! I'd be uncomfortable letting 10 grand ride!

[arch_8ngel | 1,597]

16 minutes ago, Kguillemette said:

He really is living up to YOLOing! Letting 18 something mil ride?! Wtf! I'd be uncomfortable letting 10 grand ride!

The guy claims to have a long term plan that doesn't involve letting go of the 50,000 GME stocks (and potentially exercising an unknown amount of the remaining calls)

And yeah, your comment about the 10 grand is right on, in terms of me realizing my lack of risk tolerance for big asymmetric risk situations.

 

EDIT:  Elon Musk has apparently tweeted about it now... guess I should probably adjust my remaining limit-sell targets accordingly  

For reference, while I doubt Musk gives two shits about GME -- he HATES short sellers with a fiery passion, and is probably giddy with the opportunity to help blow a few up.

 

2nd EDIT: and that post from DFV is BEFORE the stock went up another 50 - 60% after hours today (actually caught one of my limit sell points in that burst)

Edited January 26, 2021 by arch_8ngel

[DoctorEncore | 3,691]

So for the savvy investors here I have a few questions:

1. Could this get to a point where the markets put an indefinite hold on trading the stock?
2. Could anything that's happening here be construed as market manipulation? 
3. If all of Reddit sold their stocks in a coordinated manner, would that be illegal?
4. Are there any more shares available to short at this point and if so what do you think the Buy price should be?

This is truly a fun ride from the sidelines and a great learning experience.

[arch_8ngel | 1,597]

5 minutes ago, DoctorEncore said:

So for the savvy investors here I have a few questions:

1. Could this get to a point where the markets put an indefinite hold on trading the stock?
2. Could anything that's happening here be construed as market manipulation? 
3. If all of Reddit sold their stocks in a coordinated manner, would that be illegal?
4. Are there any more shares available to short at this point and if so what do you think the Buy price should be?

This is truly a fun ride from the sidelines and a great learning experience.

1. I don't think it works that way. There are automatic circuit breakers that trigger due to specific criteria and provide time to work out discontinuities. But those are relatively brief.

2. Unknown. The short sellers SEEM to be coordinating their attacks AND pumping negative media messaging. The longs are similarly spreading their own hype but are not doing so at an institutional level.  Elon is going to almost certainly get a slap on the wrist for his tweet this afternoon, but he hates the SEC so he doesn't care.

3. This isn't really practically possible.

4. Short interest has been above 100% for awhile -- "shares to short" are all made up out of thin air at this point, which is why it has the potential to blow us so badly when they have to cover at any price during a squeeze.

4b.  What are you asking about with "buy price"?  When will the shorts be compelled to buy?  Or when would somebody buy back in?

 

 

[DoctorEncore | 3,691]

1 hour ago, arch_8ngel said:

1. I don't think it works that way. There are automatic circuit breakers that trigger due to specific criteria and provide time to work out discontinuities. But those are relatively brief.

2. Unknown. The short sellers SEEM to be coordinating their attacks AND pumping negative media messaging. The longs are similarly spreading their own hype but are not doing so at an institutional level.  Elon is going to almost certainly get a slap on the wrist for his tweet this afternoon, but he hates the SEC so he doesn't care.

3. This isn't really practically possible.

4. Short interest has been above 100% for awhile -- "shares to short" are all made up out of thin air at this point, which is why it has the potential to blow us so badly when they have to cover at any price during a squeeze.

4b.  What are you asking about with "buy price"?  When will the shorts be compelled to buy?  Or when would somebody buy back in?

 

 

Thanks!

I was wondering what price would be good to short since we all know the value of the stock will eventually come down to $20 or less. But with 100% interest on shorts, the answer is obviously never. Sunken cost fallacy is a bitch for the current shorts though.

[arch_8ngel | 1,597]

20 minutes ago, DoctorEncore said:

Thanks!

I was wondering what price would be good to short since we all know the value of the stock will eventually come down to $20 or less. But with 100% interest on shorts, the answer is obviously never. Sunken cost fallacy is a bitch for the current shorts though.

There are hedge funds that are about to blow up over this -- as in multiple hedge funds that may not survive the week.

Going short right now is a terrible idea.

The interest has nothing to do with it (and "short interest" is not your borrowing cost -- I think the borrowing costs are around 60% interest rate, right now, depending on the broker -- "short interest" is what percentage of the available shares in a company are shorted -- i.e. > 100% means that more shares are shorted THAN EXIST)

[arch_8ngel | 1,597]

And Jonas -- good call so far on AMC, as well -- I don't think it has long term legs, but it clearly is swept up in the short term meme-mania (+66% after hours today)

 

EDIT: and Jonas, the other thing I have to thank you for in all of this is giving me an excuse to figure out limit selling after hours.  To see people talk about post and pre-market activity, you'd think it was something that isn't readily accessible.  But it was no harder than setting a limit sell during normal market hours (you just have explicitly set it as "extended hours" as a no-expiration market-hours limit sell won't carry over to extended hours trading).  

 

Edited January 27, 2021 by arch_8ngel

[DoctorEncore | 3,691]

11 minutes ago, arch_8ngel said:

There are hedge funds that are about to blow up over this -- as in multiple hedge funds that may not survive the week.

Going short right now is a terrible idea.

The interest has nothing to do with it (and "short interest" is not your borrowing cost -- I think the borrowing costs are around 60% interest rate, right now, depending on the broker -- "short interest" is what percentage of the available shares in a company are shorted -- i.e. > 100% means that more shares are shorted THAN EXIST)

I had been seeing numbers in the 150% range for percentage of shares that had been shorted (obviously some have to be double shorted for that to happen). 60% interest is still horrid though. Obviously, the short game is over for GME. Can't wait to see what tomorrow brings. Reading the wsb reddit is like being in some kind of alternate reality fever dream.

[arch_8ngel | 1,597]

Just now, DoctorEncore said:

I had been seeing numbers in the 150% range for percentage of shares that had been shorted (obviously some have to be double shorted for that to happen). 60% interest is still horrid though. Obviously, the short game is over for GME. Can't wait to see what tomorrow brings. Reading the wsb reddit is like being in some kind of alternate reality fever dream.

Part of what is so insane about the current price and the level of shorting -- that $3B loan that the hedge fund took yesterday to stay alive?  BURNED THROUGH IT IN ONE DAY of staying short while the price kept going up.  

 

[jonebone | 1,307]

1 hour ago, arch_8ngel said:

And Jonas -- good call so far on AMC, as well -- I don't think it has long term legs, but it clearly is swept up in the short term meme-mania (+66% after hours today)

 

EDIT: and Jonas, the other thing I have to thank you for in all of this is giving me an excuse to figure out limit selling after hours.  To see people talk about post and pre-market activity, you'd think it was something that isn't readily accessible.  But it was no harder than setting a limit sell during normal market hours (you just have explicitly set it as "extended hours" as a no-expiration market-hours limit sell won't carry over to extended hours trading).  

 

Interesting. I went in about 5k on AMC and bought my first ever call options on it too. I like playing stable companies that have technical power on the charts and that's why I played it. I have GME profits in the account and have to play something. 

I dont put a lot of faith into after hours numbers as they are traded so sparsely. But yes if AMC holds $5 its a wide open easy run to $7 just from reading the chart.

My PZZA pick 2 weeks ago also worked out. In at 85 and now 102, 120 was my target there.