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Learning, Sharing, and Teaching => Investor Alley => Topic started by: ChpBstrd on January 25, 2021, 10:58:47 AM

Title: GME deathwatch - how to profit?
Post by: ChpBstrd on January 25, 2021, 10:58:47 AM
Background:

Gamestop (GME) is a bricks-and-mortar retailer of physical game discs, gaming accessories, merchandise, and used game discs. They face risks due to decreasing mall traffic, the shift to downloadable games and online retailing, and the obsolescence of physical game discs, with the next hardware cycle probably not even having disc drives. Comparisons are made to Blockbuster video in the early 2000's. Lots of hedge fund money plowed into shorting the stock in 2020, to the point where short interest exceeded 135% of the float.

The high level of short interest led to an epic short squeeze, and since April the stock has gone from $3 to almost $100. The squeeze is actually being organized / pumped by the 1.8 million users of Reddit's wall street bets sub, some of whom have become paper millionaires going long the stock and its call options. Today the stock is up 51%. Friday it was up something like 45%. Trading was briefly halted both days.

Prognosis:

The only significant change in GME's prospects has been a position taken by Chewy cofounder Ryan Cohen, and some board seat changes initiated by him. This sparked speculation that GME will close physical stores and transform into a Chewy or Netflix-like digital distributor. It could happen; dumber things have occurred. Yet it would seem Amazon, Netflix, Apple, Facebook (remember Occulus?), Microsoft, the game developers themselves, or a startup unencumbered by the physical store legacy would be in a better position to execute such a plan - and they are all facing flattening growth if they do not move into new markets. Again, there are many cases of well-capitalized companies missing the obvious, so it could happen that no big competitor decides to seize this game distribution middleman market in the next 2 years or so. As of now, GME management has not articulated a clear physical-to-digital transformation plan.

In the short term, the company is certainly not worth $6.6 billion. That's 15% of a Chewy or 143% of a Macy's. The stock is where it is due to the short squeeze, and that's the end of story. I don't see the company getting cheaper credit due to the short squeeze or being able to issue shares at today's inflated values. If they did issue shares, it would pop the short squeeze, and prices would go down in a hurry.

GME went to the moon, but it can't keep climbing forever. Most short squeezes end after a period of several months, but this is not a typical short squeeze due to (1) a lack of fundamental justification that would keep the stock propped up, such as an earnings surprise, (2) short interest over 100% of float instead of the more typical 20-30%, and (3) the involvement of retail investors.

The price is still increasing at a beyond-exponential rate as the shorts are margin called. In theory, the squeeze ends as the shorts are liquidated and the cost to short goes up (currently ~25%!), but some may double-down. Short interest has only gone from 135% to 102% this month.

Additionally, we all know the end game of the wall street bets retail investors is to sell GME high. If they all started selling, the price would plummet. Thus there is a certain prisoner's dilemma to the squeeze - this cartel of retail investors don't know each other's plans and nobody wants to be the last one to sell their GME.

The willingness of both sides to play chicken means short term price action is unpredictable - it might go up or down 50% tomorrow. However I think the long-term is more clear.

The Question:
 
I humbly predict GME will be worth less in 6 months than it is today. How would you profit from this view?

a) Buy the July 16, 2021 $70 strike put for $38.5/share (breakeven at $31.5).
b) Buy the July 16, 2021 $10 strike put for $1.75/share (breakeven at $8.25).
b) Sell a bear put spread at 80/90, attempt to earn 50%.
c) Set up a condor, etc. (so far volatility has been so high none of these appear profitable)
Title: Re: GME deathwatch - how to profit?
Post by: J Boogie on January 25, 2021, 11:15:11 AM
Insane price swings today.

I'd go with B.

The Tesla casino can stay open far longer as new tech rolls out and wows investors convinced it's the only company unlocking the future.

What good news can GME share, that they have decent margins on their PS5 sales? That they're going to open more stores? The fact that expanding would probably be taken as bad news means you're probably safe shorting a company that just had a massive runup based on meme kids and their inherited cash that they're dying to blow.
Title: Re: GME deathwatch - how to profit?
Post by: lemonlyman on January 25, 2021, 11:45:56 AM
I wouldn't touch it. The government is going to do more stimulus soon. This thing can stay inflated way past that expiration.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 25, 2021, 01:47:34 PM
Great question and nice outline of background info.

My short answer to your four possible choices: I'd choose 'A' b/c it has a high break even stock price. In second place I'd choose "C" along the same lines.

I think that borrow rates at 25% per annum* (?) are still rather low for a stock with GME level of volatility. If you can short at $90 or $100 and cover at $20 (the 'natural' price level of GME?) then you can can pay 25% annually till the cows come home. An increase in borrow rates along with a margin call, well, that'd be enough to ruin anyone's day.

Tangential question: What happens if a market maker has loaned you shares to short and then the account from which the market maker has borrowed the shares then decides to sell the shares that were loaned to you? Are you automatically 'bought-in' by the market maker, like when someone exercises a call or put early? Or does the market maker just borrow from a different account and the short seller never knows about the switch? What happens if a market maker cannot find 'new' shares to replace the borrowed shares that the original owner wants returned?

*25% per year = 2% per month = 0.5% per week, 0.1% per day, round numbers.  So, on $1m (or 11,100 shares of GME at $90) that's only $1000 per day, or ten cents per share per day.
Title: Re: GME deathwatch - how to profit?
Post by: Psychstache on January 25, 2021, 02:28:30 PM
Random question: What happens to options if a company goes bankrupt? Can they still be exercised?
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 25, 2021, 02:34:49 PM
Random question: What happens to options if a company goes bankrupt? Can they still be exercised?

I held long-duration put options in Sears and went through their bankruptcy. Shares continued trading as usual, but the ticket symbol changed and they were moved to the pink sheets. When that happened, one could no longer take on new long positions in calls or puts, but one could sell their existing options to the market maker or presumably hold out for assignment. I wish I had gone all-in on those.

Google can lead you to the rest of the details.
Title: Re: GME deathwatch - how to profit?
Post by: blue_green_sparks on January 25, 2021, 03:10:41 PM
Sometimes I buy in on these rockets and take a very short ride up with a trailing stop loss order.
Title: Re: GME deathwatch - how to profit?
Post by: marty998 on January 25, 2021, 09:40:34 PM
oh jesus christ I just went down the Reddit/Wall St Bets rabbit hole on this one. Cracking read.

Bless them all. I love cheering for the underdog.

Nothing better than seeing hedge funds get their asses handed to them. Leeches on society and our investments the lot of them.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 26, 2021, 08:27:49 AM
Random question: What happens to options if a company goes bankrupt? Can they still be exercised?
Bankruptcy most likely sends the stock lower than all call options.

For example, I have call options with a $3 strike on a small oil company that went bankrupt.  Bankruptcy adds "PQ" to the stock symbol name, and that stock is now selling for $0.12/sh.  Exercising one contract (100 shares) costs $300 to get 100 shares, which are worth $12.  If I exercise a contract, I lose $288, so the call options are worthless to me.  For those options to be worthwhile, the stock needs to go up +2500%, which is why there's no market for them - no buyers.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 26, 2021, 09:24:02 AM
a) Buy the July 16, 2021 $70 strike put for $38.5/share (breakeven at $31.5).
b) Buy the July 16, 2021 $10 strike put for $1.75/share (breakeven at $8.25).
b) Sell a bear put spread at 80/90, attempt to earn 50%.
c) Set up a condor, etc. (so far volatility has been so high none of these appear profitable)

I opened a bear call spread. The options prices are insane and the chances of it going to 200 are almost nil. I hope.
Title: Re: GME deathwatch - how to profit?
Post by: v8rx7guy on January 26, 2021, 10:51:08 AM
GME is taking off... 1% per minute.  Circuit breaker likely...
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 26, 2021, 11:28:27 AM
I've watched GME range from $88/sh to $114/sh today.  I understand that wallstreetbets has billions, but I think the market structure can absorb their attack.  Right now the stock is $102/sh, with the highest strike at $200/sh.  If they push the stock higher, a circuit breaker is triggered - and more strike prices can be added, making their objective harder to reach.  They push, circuit breaker stops trading, and when trading resumes their objective has moved further away.

One way to profit is buying a PUT option, but they have really high costs right now.  Even the 2003 expiring $230 strike options break even in the $75/sh range (I looked when the stock was trading at $110/sh or so, so the first -32% drop only breaks even).  The PUT options seem too pricey.

Which suggests another approach, selling call options.  Neither Vanguard nor IBKR will allow me to sell naked calls - they require owing the stock before selling a call option.  Selling an unprotected call would stand directly in the path of the wallstreetbets locomotive - you only get to decide the distance, not if you'll get run over.  Selling covered calls on a stock you expect to drop would lose more money than you gain by selling early.  So this doesn't seem to be a good choice.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 26, 2021, 11:30:53 AM
  Neither Vanguard nor IBKR will allow me to sell naked calls - they require owing the stock before selling a call option. 

Hmm, this must be a setting in IBKR. I can sell naked calls all day as long as the margin satisfies.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 26, 2021, 12:04:12 PM
  Neither Vanguard nor IBKR will allow me to sell naked calls - they require owing the stock before selling a call option. 
Hmm, this must be a setting in IBKR. I can sell naked calls all day as long as the margin satisfies.
I think I found the IBKR setting:
settings > account settings > trading permissions > options

I checked "limited options trading" when I first signed up, which might be why I have that restriction.
Title: Re: GME deathwatch - how to profit?
Post by: v8rx7guy on January 26, 2021, 12:23:00 PM
a) Buy the July 16, 2021 $70 strike put for $38.5/share (breakeven at $31.5).
b) Buy the July 16, 2021 $10 strike put for $1.75/share (breakeven at $8.25).
b) Sell a bear put spread at 80/90, attempt to earn 50%.
c) Set up a condor, etc. (so far volatility has been so high none of these appear profitable)

I opened a bear call spread. The options prices are insane and the chances of it going to 200 are almost nil. I hope.

Are you concerned yet?
Title: Re: GME deathwatch - how to profit?
Post by: The Hin on January 26, 2021, 12:31:25 PM
A friend of mine texted me a screenshot of a GME trade he made this morning:
- purchased 200 GME at $86.325
- sold 2 Jan 29 $90 GME calls for $17.20 each

His logic was that unless the price of GME falls below $69.15 before the closing bell on Friday, he'd make money on the trade - and if it closes at $90+, he'll make $735 on the gain in stock price plus $3,440 on the calls = $4,175 profits on an original cash outlay of $13,825. He showed it to me soon after pulling the trigger; I thought about maybe doing the same, but (a) I'm much more risk-averse than him, and (b) I had work and parenting obligations preventing me from giving it full attention.

Of course, GME's price rocketed skywards after he made the trade, and he expressed regret that he had not been more aggressive and sold calls at $100 or higher. C'est la vie, right?
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 26, 2021, 12:46:16 PM
a) Buy the July 16, 2021 $70 strike put for $38.5/share (breakeven at $31.5).
b) Buy the July 16, 2021 $10 strike put for $1.75/share (breakeven at $8.25).
b) Sell a bear put spread at 80/90, attempt to earn 50%.
c) Set up a condor, etc. (so far volatility has been so high none of these appear profitable)

I opened a bear call spread. The options prices are insane and the chances of it going to 200 are almost nil. I hope.

Are you concerned yet?

That's why it's a spread. The downside is limited.

But, yeah, profits will start to slide if there's another huge day.
Title: Re: GME deathwatch - how to profit?
Post by: mizzourah2006 on January 26, 2021, 02:09:13 PM
I honestly think this can get to $200. All the Friday options are ITM by a longshot right now. Those calls are going to trigger another gamma squeeze. From the looks of the order flow the shorts are doubling down. Huge walls at $125 and $150 today and walls of 20-30k at all the other 5s and 1s from $110 to $135 and they busted through those.

Edited to say it's over $175 in AH trading.

Sometimes I buy in on these rockets and take a very short ride up with a trailing stop loss order.

This hasn't seemed to work so far. The shorts are hunting the trailing stop losses. That's largely what caused the rapid drop from $150 to $60 yesterday.

Title: Re: GME deathwatch - how to profit?
Post by: PathtoFIRE on January 26, 2021, 02:38:50 PM
I was watching the AH ticker, and it just rocketed from $200 to $220 in less than a minute. Crazy
Title: Re: GME deathwatch - how to profit?
Post by: v8rx7guy on January 26, 2021, 02:46:50 PM
I was watching the AH ticker, and it just rocketed from $200 to $220 in less than a minute. Crazy

Millennial investors on Robinhood might be the next wonder of the world... joking, but seriously.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 26, 2021, 03:01:10 PM
I tried to do a small, short duration $5 bull put spread around the $50 strike this afternoon just for the shits and giggles but my broker popped up a message that shares were difficult to borrow, please call the trading desk.

Also, there was an internet outage in the Northeast today.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 26, 2021, 03:05:27 PM
I was watching the AH ticker, and it just rocketed from $200 to $220 in less than a minute. Crazy

Millennial investors on Robinhood might be the next wonder of the world... joking, but seriously.

In order to cash out and make money, wouldn't they have to sell to other robinhooders?

This power will eventually be corrupted by investment companies who learn how to manipulate the stock meme.
Title: Re: GME deathwatch - how to profit?
Post by: blue_green_sparks on January 26, 2021, 03:21:38 PM
I saw a post warning members of "bot post" attacks by the pro traders saying "the top is in" and to hold fast to $1K ;)
Hmmm..Hi son, BTW can I borrow half a million?
Title: Re: GME deathwatch - how to profit?
Post by: marty998 on January 26, 2021, 05:41:46 PM
Elon Musk tweeted in solidarity and after market trading went bonkers.

I was watching the AH ticker, and it just rocketed from $200 to $220 in less than a minute. Crazy

Millennial investors on Robinhood might be the next wonder of the world... joking, but seriously.

In order to cash out and make money, wouldn't they have to sell to other robinhooders?

This power will eventually be corrupted by investment companies who learn how to manipulate the stock meme.


The market makers need to buy a shit tonne of shares to cover all the “covered” calls they are writing and are gonna get called on. Even now Melvin seems to be doubling down on the bet.

With more than 100% of shares sold short there’s plenty of “demand” on the sidelines for the reddit and RH crowd.

It really looks like a win for the little guys.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 26, 2021, 05:49:34 PM
I was watching the AH ticker, and it just rocketed from $200 to $220 in less than a minute. Crazy

Millennial investors on Robinhood might be the next wonder of the world... joking, but seriously.

In order to cash out and make money, wouldn't they have to sell to other robinhooders?

This power will eventually be corrupted by investment companies who learn how to manipulate the stock meme.

It's the never-ending short squeeze. The buyers at these levels are those who shorted at earlier levels. We know this because the short interest has held steady at 140% of the float. The short covering allows for those shares to be re-shorted to a new short seller. The sellers are the new shorts (or Robinhooders/WSB cashing out)--lining up to get their heads ripped off.

The beauty of the market is that for every buyer there is a seller. The only reason GME is possible is that the shorts pressed their bets and kept shorting at.... $10? Or $5? until there were no shares left to borrow. Most of the price increase above $40 is due to short covering, IMHO, yet the short interest doesn't decrease. You are witnessing the MOASS.

Title: Re: GME deathwatch - how to profit?
Post by: Psychstache on January 26, 2021, 06:35:47 PM
anyone checked on the popcorn futures? They must be through the roof!
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 26, 2021, 06:56:04 PM
The market makers need to buy a shit tonne of shares to cover all the “covered” calls they are writing and are gonna get called on. Even now Melvin seems to be doubling down on the bet.

With more than 100% of shares sold short there’s plenty of “demand” on the sidelines for the reddit and RH crowd.

It really looks like a win for the little guys.


It's the never-ending short squeeze. The buyers at these levels are those who shorted at earlier levels. We know this because the short interest has held steady at 140% of the float. The short covering allows for those shares to be re-shorted to a new short seller. The sellers are the new shorts (or Robinhooders/WSB cashing out)--lining up to get their heads ripped off.

The beauty of the market is that for every buyer there is a seller. The only reason GME is possible is that the shorts pressed their bets and kept shorting at.... $10? Or $5? until there were no shares left to borrow. Most of the price increase above $40 is due to short covering, IMHO, yet the short interest doesn't decrease. You are witnessing the MOASS.

Right but there's a natural limit. Melvin only has/had $12.5B in assets and the current GME market cap is about at that limit. If Melvin is hitting margin calls, and they probably are given the Citadel funding, there's not much more hedge fund money. If Melvin accounts are closed down, their prime broker will close any shorts immediately and go after Melvin/Citadel for the losses.

tl;dr Short interest reports are updated 2x/month. The next report date is for this Friday and it's entirely possible that Melvin has capitulated and now it's retail traders buying and selling from one another.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 26, 2021, 07:44:49 PM
Right but there's a natural limit. Melvin only has/had $12.5B in assets and the current GME market cap is about at that limit. If Melvin is hitting margin calls, and they probably are given the Citadel funding, there's not much more hedge fund money. If Melvin accounts are closed down, their prime broker will close any shorts immediately and go after Melvin/Citadel for the losses.

tl;dr Short interest reports are updated 2x/month. The next report date is for this Friday and it's entirely possible that Melvin has capitulated and now it's retail traders buying and selling from one another.

See bold.

I bolded exactly what needs to happen to see short capitulation and drive the stock well past $500 and possibly even to $1000. Heck, known short hater Elon Musk sent a single one word tweet and the stock went up $70 points.

I don't think that Melvin has capitulated--if they've shorted 20% of the float since, say, $20, that'd be 10 million shares, then at today's close at $140 that'd be just a $1.2 billion mark-to-market loss. If they've shorted 40% of the float, that'd be 20 million shares, still just $2.4 billion. Enough to get a lot of people fired and clients upset, but still about only 20% of Melvin's capitulation. So, I don't think they've capitulated yet.

Until we see a decrease in short interest (and so far we haven't), then no capitulation has happened-- Just one short seller being replaced by a new short seller. WHo's next in line to lose a fortune? The shorts see the price rise and can't wait for their broker to call them and say they've found shares they can short. Until the stock doubles, of course, then margin calls, covering, and the same broker calls up a new short seller and says they've found shares to short. Rinse. Repeat.

Capitulation is after the broker has called every short seller he knows and no short wants to touch GME. Then the last short to cover has to take any offer, at any price and since there is no new short seller offering product, the broker has to raise the bid to entice longs to liquidate their position. Thus, the price skyrockets.

Since the GME squeeze started at 140% short interest, there isn't any inventory available to be located to offered to the market. It's the perfect set-up. Wall St. got careless. Wall St Bets found the opportunity and now the efficient market theory is being tested.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 26, 2021, 07:55:30 PM
Until we see a decrease in short interest (and so far we haven't), then no capitulation has happened

You're not seeing any change in short interest because the last public short interest report was on the 15th and the next one is this Friday (to be released next week).

Do you have access to the paid (and $$$) daily transaction short volume to confirm that more shorts are entering?


Edit:

Quote
Capitulation is after the broker has called every short seller he knows and no short wants to touch GME. Then the last short to cover has to take any offer, at any price and since there is no new short seller offering product, the broker has to raise the bid to entice longs to liquidate their position. Thus, the price skyrockets.

If the last short covers at, say, $1000, then who is left remaining to sell to? As someone pointed out already, how does this unravel? This play is based on a short squeeze but if there are no more shorts left that can cover, who gets left holding the bag?
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 26, 2021, 08:30:34 PM
@bacchi ; I do not have access to daily short reporting. I'm trying to follow news reports for this, but I haven't seen any sign of short interest decrease in news reports.

To the second point: No question GME will end in tears, whether for bulls or for bears remain to be seen. Right now it looks like a re-run of WWI style war of attrition.

I'm looking for a massive blow-out with short capitulation at a stock price that would seem ridiculous right now; a 2008 VW style blow out, where the stock went from 200 EUR to 1000 EUR in a matter of a few hours. The only bidder from, say, 400 EUR to 1000 EUR were short coverers. Once that bid was filled, the offer price dropped back down to 200 EUR. The person left holding the bag was the short coverer(s).

I believe that GME has the set-up for such a supernova ending. Time will tell.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 27, 2021, 08:32:38 AM
I honestly think this can get to $200. All the Friday options are ITM by a longshot right now. Those calls are going to trigger another gamma squeeze.
I hadn't realized there was an Elon Musk booster stage ready to push GME higher.  So yeah, $200 is possible ... in big drop.  GME was over $300/sh overnight, and is $287/sh now.

Earlier in this thread I was trying to sell $230/sh call option for $17/sh roughly, which would currently be losing -200% (247 @ 0%, 265 @ -100% ,  282 @ -200%).  And although this sounds weird, I kinda want to see what happens to the call options.  Will people exercise the call and take profits, or keep going?

I think I need to distract myself by selling Macy's call options (which had good digital sales... but +30%?  Maybe, but Macy's has fully recovered at these levels)
Title: Re: GME deathwatch - how to profit?
Post by: chicklets123 on January 27, 2021, 09:43:37 AM
Now it’s AMC


Sent from my iPhone using Tapatalk
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 27, 2021, 10:37:08 AM
They are targeting both AMC (+175% today) and GME (+105%).
Title: Re: GME deathwatch - how to profit?
Post by: The Hin on January 27, 2021, 10:56:16 AM
Seems to me that unless the SEC makes a case for social media-driven short squeeze raids being illegal (and doesn't seem like there's a good case to be made for that) then nothing stands in the way of this kind of coordinated short squeeze on other stocks to continue ad nauseam, right? IMO, the thing that really put the pieces in place for this to happen now, as opposed to say 5 or 10 years ago, is the drop in transaction fees on stock trades (and particularly options trades). Thing is, I think the free trading genie is out of the bottle, companies aren't going to go back to charging hefty trade transaction fees unless they're forced to be a legislative or regulatory body.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 27, 2021, 11:17:55 AM
Seems to me that unless the SEC makes a case for social media-driven short squeeze raids being illegal (and doesn't seem like there's a good case to be made for that) then nothing stands in the way of this kind of coordinated short squeeze on other stocks to continue ad nauseam, right? IMO, the thing that really put the pieces in place for this to happen now, as opposed to say 5 or 10 years ago, is the drop in transaction fees on stock trades (and particularly options trades). Thing is, I think the free trading genie is out of the bottle, companies aren't going to go back to charging hefty trade transaction fees unless they're forced to be a legislative or regulatory body.

The reason traditional pump-and-dump schemes are illegal is because of the deception.

https://www.investopedia.com/ask/answers/05/061205.asp

"Pump-and-dump is a scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements."

Is this a false, misleading, or greatly exaggerated statement? And, even if it was, how does Melvin/Citadel sue 1000s of redditors?

Quote from: reddit
DONT FALL FOR THE FAKE BS REPORT BY CNBC
Discussion
Melvin capital have not closed their positions!! The volume is too low for it to be even possible. The short interest has not changed!

The squeeze has not been squoze.


(The volume yesterday was 3x the float, which is plenty of volume for Melvin to have closed out their short position.)
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 27, 2021, 11:29:44 AM
Seems to me that unless the SEC makes a case for social media-driven short squeeze raids being illegal (and doesn't seem like there's a good case to be made for that) then nothing stands in the way of this kind of coordinated short squeeze on other stocks to continue ad nauseam, right? IMO, the thing that really put the pieces in place for this to happen now, as opposed to say 5 or 10 years ago, is the drop in transaction fees on stock trades (and particularly options trades). Thing is, I think the free trading genie is out of the bottle, companies aren't going to go back to charging hefty trade transaction fees unless they're forced to be a legislative or regulatory body.

The main thing standing in the way of this happening to any other stock is that GME's short interest (the percentage of the float that was sold short) was 140% when it began. That was the set-up for the run from $20 (?) to $380 in about three weeks.

Since a short interest of 20% is generally considered high, there aren't many other stocks that could be short squeezed like this.

Borrow rates are also around 40% p/a today; https://iborrowdesk.com/report/GME (https://iborrowdesk.com/report/GME). About 3% per month--higher than your credit card and millions of dollars. With this level of volatility, it's just a slow bleed on the shorts.
Title: Re: GME deathwatch - how to profit?
Post by: crimp on January 27, 2021, 12:48:16 PM
Since I don't often see mea culpa posts around here, I figured I would post my flag and welcome any and all face-punches. Had an idea of myself as a rational, buy-and-hold index fund investor. Got swept up in all the GME speculation, bought a small position. Immediately regretted it, and put in a limit order to sell at the buying price. Came back a while later, and sold at market rate for a small loss. All in all, today I bought a much needed lesson I thought I would never need to learn as a personal experience.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on January 27, 2021, 01:06:06 PM
Got swept up in all the GME speculation, bought a small position. Immediately regretted it, and put in a limit order to sell at the buying price. Came back a while later, and sold at market rate for a small loss.

I actually put in a limit buy order last night. Then I got out of bed to cancel it. I figured what the heck, I haven't been to a casino in years, and why not risk a couple hundred to be part of a meme?

But there's a reason I haven't been to a casino with my couple hundred bucks in a long time: I can always think of a better use for the money. And I started thinking exit strategy because this clearly wasn't a long-term buy & hold play, and I realized the problem that once again I'd have to outguess or outsmart the entire market.

Maybe it will go up more for a few days, maybe not. But I'm convinced no matter what happens it will come crashing down hard in the near future. But I'm also convinced I'm not going to profit off of that arc.

It's a fun story to watch play out, though!
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 27, 2021, 01:08:01 PM
The shorts screwed up by letting short interest get so high the market for shares could be cornered.

The longs at wsb will get a mixed outcome depending on whether they are early to sell or late to sell.

There is no way to predict this outcome. Can the shorts maintain their loans until the inevitable redemption?
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 27, 2021, 01:16:48 PM
Got swept up in all the GME speculation, bought a small position. Immediately regretted it, and put in a limit order to sell at the buying price. Came back a while later, and sold at market rate for a small loss.

I actually put in a limit buy order last night. Then I got out of bed to cancel it. I figured what the heck, I haven't been to a casino in years, and why not risk a couple hundred to be part of a meme?

But there's a reason I haven't been to a casino with my couple hundred bucks in a long time: I can always think of a better use for the money. And I started thinking exit strategy because this clearly wasn't a long-term buy & hold play, and I realized the problem that once again I'd have to outguess or outsmart the entire market.

Maybe it will go up more for a few days, maybe not. But I'm convinced no matter what happens it will come crashing down hard in the near future. But I'm also convinced I'm not going to profit off of that arc.

It's a fun story to watch play out, though!

My 180/200 spread has been crushed to the tune of -$1500. There's plenty of theta but I shorted too soon.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 27, 2021, 01:36:35 PM
Since I don't often see mea culpa posts around here, I figured I would post my flag and welcome any and all face-punches. Had an idea of myself as a rational, buy-and-hold index fund investor. Got swept up in all the GME speculation, bought a small position. Immediately regretted it, and put in a limit order to sell at the buying price. Came back a while later, and sold at market rate for a small loss. All in all, today I bought a much needed lesson I thought I would never need to learn as a personal experience.

I was 110% sure I was going to sit out this rodeo. Why risk money I don't need for something I already can't get more of (FI)?

I watched it go from $35 to $40 to $60 and then at $90 I decided to buy a few shares, which I promptly sold the next day (yesterday) for $140, very sure I was a smart guy.

I bought back in today at $321, YOLO'd about $10k. I'm holding until options expiration on Friday. Apparently so many naked calls have been written and since the stoke is above the top strike price, it's impossible to hedge above that strike. i.e. shorts cannot use calls to cover.

Here's a conservative (?) way to play GME; write Jan. 29 puts in the $100 to $200 range. The bids are still pretty high ($20 on the $190 strike price) and the likelihood of having them put to you is rather slim, in my non-professional opinion.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 27, 2021, 03:03:09 PM
Interestingly, the mood has darkened on r/wallstreetbets.

A couple of weeks ago when I first started monitoring them, it was about 30-40% silly memes such as the battle scene on "300" with the words wsb and citron written over the combatants. The rest were encouraging people to buy into GME, some gain porn --- and also mention of several other heavily shorted stocks like BB, BBBY, AMC, JMIA, etc. They referred to themselves in depreciating terms that are offensive to the mentally disabled and had a happy-go-lucky bro culture. 

Now, all talk of buying any other stock has been banished. Several posts admonish readers to focus on GME because talk of any other stock is a ruse by "the bots" to divert funds from GME. Memes are fewer and farther between, and less funny. About half of the posts are conspiracy theories arguing that broker outages, media stories, posts on other boards, hedge fund activities, the timing of when option chains are updated, etc. are all attempts by the rich and powerful to prevent Robinhood investors from buying more shares. Posts by people with low credit have been banned.

Perhaps experts on the evolution of cults will have something to say here, but to me it seems like the sentiment on r/wallstreetbets has moved from opportunity-seeking to defensiveness. Love-bombing and isolation have occurred and now we're on to strict control. The longs need a steady supply of new buyers to offset defections (people who sell GME) and they need to control defections, but they're changing strategies away from what worked in the past to recruit people to the idea. Maybe the new darker theme will be less appealing to new recruits, and the longs fall apart for that reason. Or maybe the viral momentum and FOMO rationale are by now far more powerful than anything posted on a Reddit forum. We'll see.
Title: Re: GME deathwatch - how to profit?
Post by: MetalCap on January 28, 2021, 11:13:59 AM
I've followed WSB for a while but have resisted most of their calls, instead going with other more heavily researched discussion forums, still only with play money.

I think after GME things will calm back down.  Their readership went from 700k to 3.6M in a week so there has definitely been a flood that has undermined conversation and any other discussions.

That coupled with the national attention and lockout of Robinhood, etc has pushed them to this corner.  Fun to watch, a tinge of FOMO but its too late IMO.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on January 28, 2021, 11:19:29 AM
I'm selling near term waaaay low priced puts. think 10 dollars. Practice safe position sizing of course.

Heres the deal, Gamestop just became a viable business thats going to last for 5 or more years. Whaaaat you say?

GME likely has, and if not will, sell more shares. they may wait a little and follow SEC rules, but at current prices, they will sell equity and get a S#$%^ ton of cash. years of cash. 

sure, some redditors will be left holding the bag. Sell the volatility in safe doses.
Title: Re: GME deathwatch - how to profit?
Post by: v8rx7guy on January 28, 2021, 11:22:49 AM
I'm selling near term waaaay low priced puts. think 10 dollars. Practice safe position sizing of course.

Heres the deal, Gamestop just became a viable business thats going to last for 5 or more years. Whaaaat you say?

GME likely has, and if not will, sell more shares. they may wait a little and follow SEC rules, but at current prices, they will sell equity and get a S#$%^ ton of cash. years of cash. 

sure, some redditors will be left holding the bag. Sell the volatility in safe doses.

AMC already did this... sold a crap ton of shares @$13.51 .  Reddit is going to make them survive the pandemic

https://www.marketwatch.com/story/amc-entertainment-to-issue-444-million-shares-as-investors-opt-to-convert-600-million-of-convertible-debt-2021-01-28
Title: Re: GME deathwatch - how to profit?
Post by: mizzourah2006 on January 28, 2021, 11:24:07 AM
Since I don't often see mea culpa posts around here, I figured I would post my flag and welcome any and all face-punches. Had an idea of myself as a rational, buy-and-hold index fund investor. Got swept up in all the GME speculation, bought a small position. Immediately regretted it, and put in a limit order to sell at the buying price. Came back a while later, and sold at market rate for a small loss. All in all, today I bought a much needed lesson I thought I would never need to learn as a personal experience.

I was 110% sure I was going to sit out this rodeo. Why risk money I don't need for something I already can't get more of (FI)?

I watched it go from $35 to $40 to $60 and then at $90 I decided to buy a few shares, which I promptly sold the next day (yesterday) for $140, very sure I was a smart guy.

I bought back in today at $321, YOLO'd about $10k. I'm holding until options expiration on Friday. Apparently so many naked calls have been written and since the stoke is above the top strike price, it's impossible to hedge above that strike. i.e. shorts cannot use calls to cover.

Here's a conservative (?) way to play GME; write Jan. 29 puts in the $100 to $200 range. The bids are still pretty high ($20 on the $190 strike price) and the likelihood of having them put to you is rather slim, in my non-professional opinion.

I YOLO'd back in with some of my gains from originally buying in at $85 Monday morning and then comes the coordinated short ladders. Unless the buy side can get more volume I may be writing this off to offset my earlier gains. The coordinated shutdown of several of the biggest retail trading apps/sites an hour before open was purposeful. The shorts are going to cover their bad shorts and short at the top and make money off of this. Before they all announced they wouldn't allow buying GME was trading at $506 in the early trading hours.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on January 28, 2021, 11:56:32 AM
About half of the posts are conspiracy theories arguing that broker outages, media stories, posts on other boards, hedge fund activities, the timing of when option chains are updated, etc. are all attempts by the rich and powerful to prevent Robinhood investors from buying more shares.

When that failed they just straight up stopped letting robinhood investors buy shares.  I had $35 fun money in robinhood and put it in GME.  As of right now robinhood will let me sell my position, but I'm not allowed to purchase any.
Title: Re: GME deathwatch - how to profit?
Post by: mizzourah2006 on January 28, 2021, 12:00:36 PM
About half of the posts are conspiracy theories arguing that broker outages, media stories, posts on other boards, hedge fund activities, the timing of when option chains are updated, etc. are all attempts by the rich and powerful to prevent Robinhood investors from buying more shares.

When that failed they just straight up stopped letting robinhood investors buy shares.  I had $35 fun money in robinhood and put it in GME.  As of right now robinhood will let me sell my position, but I'm not allowed to purchase any.

Yup, they know the people investing in RH don't exactly have huge amounts of money sitting in a savings account that they can just transfer into Fidelity or E-trade. Even if they have cash positions in RH or could have sold other positions that will take a few days to get over into another brokerage. This was not an accident. As somebody else said the market makers would be held holding the bag for a lot of this and one of the main market makers is Citadel, who also is responsible for basically all of Robinhood's Revenue. Better to have me and you holding the bag than to have Citadel.
Title: Re: GME deathwatch - how to profit?
Post by: PathtoFIRE on January 28, 2021, 12:42:22 PM
GME likely has, and if not will, sell more shares. they may wait a little and follow SEC rules, but at current prices, they will sell equity and get a S#$%^ ton of cash. years of cash. 

I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which apparently details how many new shares they can issue, the number being not too many. Having never read an 8k or having the slightest idea of what any of that means, maybe someone else can take a look and see whether significant dilution is an option. I kind of figured this was all going to be too short term to matter anyway, but now that WSB seems to have gotten a handle on the huge garbage posts influx from yesterday, I see a lot of chatter about the short squeeze lasting a week or two, not just until tomorrow, so maybe there's time for the board to take advantage of the stock price.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 28, 2021, 12:56:09 PM
Vanguard still allows buying GME shares.
Or at IBKR, call option contracts - I assume Vanguard would allow that as well.

I think tomorrow will get interesting.  There's a lot of call options expiring tomorrow, and the stock price is already above most of them.  I'm guessing we'll see another push up in the stock price...  I mean, it's probably all castles built on air, but I had a lot of fun setting a limit order for $500 :), with my guess being $300-$400 range tomorrow as the fight enters it's last day: option expiration day.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on January 28, 2021, 01:03:17 PM
GME likely has, and if not will, sell more shares. they may wait a little and follow SEC rules, but at current prices, they will sell equity and get a S#$%^ ton of cash. years of cash. 

I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which apparently details how many new shares they can issue, the number being not too many. Having never read an 8k or having the slightest idea of what any of that means, maybe someone else can take a look and see whether significant dilution is an option. I kind of figured this was all going to be too short term to matter anyway, but now that WSB seems to have gotten a handle on the huge garbage posts influx from yesterday, I see a lot of chatter about the short squeeze lasting a week or two, not just until tomorrow, so maybe there's time for the board to take advantage of the stock price.

at 300+ they don't need to sell many shares! er, oops, 230! :)

Seriously though, 1. they have authorized shares not issued, 2. they may have treasury shares (authorized, issued and just held by the company) and 3. speed dial, security lawyers and a zoom board meeting more shares will be issued.  The board will get it done, its in their fiduciary duty to shareholders to keep GME a going concern and this does that.

The short case for bankruptcy is totally decimated. Thats not to say I think its worth 300 or 230 or whatever a share. But God Dam, I went to college with a lot of those hedge fund snot rockets and am loving this.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 28, 2021, 01:07:06 PM
I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which

https://news.gamestop.com/node/18351/html

Shares of our Class A common stock having an aggregate offering price of up to $100,000,000
Common stock to be outstanding immediately after this offering: Up to 75,863,167 shares, assuming sales of 6,116,207 shares of our common stock in this offering at an offering price of $16.35


I don't know if they can sell 6M shares at current prices or if they have to sell a lower amount of shares to get their $100M. Either way, not a huge dilution.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 28, 2021, 01:42:08 PM
GME likely has, and if not will, sell more shares. they may wait a little and follow SEC rules, but at current prices, they will sell equity and get a S#$%^ ton of cash. years of cash. 

I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which apparently details how many new shares they can issue, the number being not too many. Having never read an 8k or having the slightest idea of what any of that means, maybe someone else can take a look and see whether significant dilution is an option. I kind of figured this was all going to be too short term to matter anyway, but now that WSB seems to have gotten a handle on the huge garbage posts influx from yesterday, I see a lot of chatter about the short squeeze lasting a week or two, not just until tomorrow, so maybe there's time for the board to take advantage of the stock price.

I am skeptical about both ideas:

1) Share issues usually require a couple of months planning with an investment bank. Since the company had no idea there'd be a short squeeze like this, they may not have started the process. Plus, the last couple of months have been occupied by the entrance of a new activist investor and the installation of new board members, so it's unlikely this project is in an advanced stage. Plus, how do they know they aren't going to get everything ready for a dilution, and then the bubble pops and they raise only a few million. Timing would have to be perfect to get $ to flow from the shorts to the company itself.

2) IDK if there's still time to "take advantage" without "being taken advantage of". We all know it's going to $5, or zero, eventually. We also all know there is no inherent limit to how high the price can go or how long the squeeze can last. A bet in any direction is a gamble on the timing of unpredictable events.

In terms of "how to profit?" I'm thinking of watch for the landslide to begin and then use a series of rolling bear spreads to profit on the way down, with limited losses - IF your broker will let you. When the longs start selling, and we're down 50% or more over 5 days or so, everyone knows it'll become harder to attract new money to the trade. The catch with this plan is you could get assigned shares or forcibly liquidated even with lots of time value remaining on your options, because the bid-ask spreads on the stocks might be greater than the TV on the options.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 28, 2021, 07:19:40 PM
I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which

https://news.gamestop.com/node/18351/html

Shares of our Class A common stock having an aggregate offering price of up to $100,000,000
Common stock to be outstanding immediately after this offering: Up to 75,863,167 shares, assuming sales of 6,116,207 shares of our common stock in this offering at an offering price of $16.35


I don't know if they can sell 6M shares at current prices or if they have to sell a lower amount of shares to get their $100M. Either way, not a huge dilution.

Thanks for that link! The document is from early December, so my question is did they already sell these shares, or are they about to be issued?
The number of shares outstanding increased from 65.2M in October to 69.75M on Dec. 1. Was this what the filing was about, or are there more shares authorized for issue?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 29, 2021, 07:12:19 AM
By market value, $100M is under 1% of the current market cap.  If they dilute by adding shares, that's 10% of the market cap.  Either way, it gets absorbed.  Personally, I just bought 11 shares to see what happens today in dramatic trading.  RH investors helped save me money in bankrupt companies last year, so maybe I'm giving them some of their money back.

Robinhood tried stopping GME purchases for a time, but relented after a massive backlash.  I'm not too attached to events, but I also got angry when IBKR did the same - this is my broker, stopping other clients from buying shares on the open market?  It's not a liquidity issue when I pay cash to buy shares, so their reasoning seems flawed.  I'm glad they are allowing purchases again.

So a group of RH and IBKR investors might be back in the game, buying more today.  This is also the day about 100k GME call options expire, and it's a safe bet people are going to exercise their option and demand shares.  That will put more buying pressure in the market - those shares must be delivered within 2 days.

I also think others are joining in, adding to the upward spike.  A side note - I can afford to lose these shares.  Those who can't... well, where do you think greedy manias lead?
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on January 29, 2021, 10:29:12 AM

I also think others are joining in, adding to the upward spike.  A side note - I can afford to lose these shares.  Those who can't... well, where do you think greedy manias lead?

I'm going to disagree on this idea that it protects the little investor. Many many of the WSB people got in a long time ago. WSB has lots of stupid comments, but also lots of thoughtful and researches comments. Their cost basis could be down at 11 to 20 ranges. or sub 100 if they kept buying.  post squeeze and equity raise, GME is worth more than it was simply because they have cash hand. A lot of these guys may not sell... but if GME eventually drops back down to 20, they will still make a little bit of money. 20 is a made up price target, I don't follow GME's fundamentals enough to have a real target but with BK off the table, it settling higher than before is reasonable.

But yes, for the many have also piled on to a momentum trade and at some point will learn how those work!
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 29, 2021, 11:10:53 AM
I bought ~11 shares a couple days ago.  Honestly I don't care if I lose this money, even though I'm up a ridiculous % right now. 

I'm in it for other reasons, which I'm sure has already been beaten to death in this thread.  Sometimes your own medicine is a little bitter.

IMO shit is about to get crazy toward the end of today and into Monday.  They have many calls ITM and still a huge amount of short positions to close out.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 29, 2021, 11:18:37 AM
There is the off chance GME takes this opportunity to somehow raise funds. Convertible bonds with maturity dates a year or so out would be a great play because it could help the shorts cover and might not be perceived as dilution by the longs. If they could suddenly raise a half-billion, then the new leadership could take the company in a startup direction.

Very few companies have prospered as a middleman reseller of software / digital media. There is strong economic incentive to buy directly from the software developer rather than a retail store, B&M or online. This is because software has a near-zero cost of inventory and because software has near-zero distribution expenses. Netflix and Pandora come to mind as businesses who essentially resell digital content on behalf of creators/developers. So the question is how could Gamestop become the Netflix/Pandora of gaming?

Traditionally, games have been locally installed because internet bandwidth did not support the streaming of rich graphics from a server at the same time as receiving user input, all with very low latency ("lag"). Yes, there were web-based flash games etc. but the real money was in the graphically intense stuff, and the only way to do that was to install software on the local machine. Hence the disc/console or disc/PC economy of the last 20 years.

Internet speeds have been increasing for years decades and we are approaching the point where 1080p or even 4k streaming can be delivered with zero buffering in real time. As 5G rolls out, we can expect speeds near 1GB per second on mobile devices, which is many times beyond the 20mb/s or so required to stream buffered video one-way. Within a year or two, a server will be able to deliver games over the internet at the same level of quality that today requires a local installation. Imagine Gamestop as an app that connects to a Gamestop server offering you the option to play a wide variety of games, just as Netflix offers a wide variety of movies. Instead of buying $60 plastic discs and trading them in, you pay a monthly subscription, get lots more variety, and don't have to regret buying the wrong disc (90's peeps recall mistaken CD purchases).

So GME has a touch of visionary leadership in Cohen and his board picks, but there is no guarantee they will pursue this path or any other. There's also no reason to think GME will succeed in raising a billion or so from the short squeeze, or if Amazon, Netflix, Apple, Google, Microsoft, or anybody else who can raise a billion bucks just by asking semi-politely won't beat them to the punch. Arguably, a startup with a few good engineers would be ahead of GME at this point, and that's the way the evolution of the internet has always gone.

More people might be attracted to the long side if rumors suggest GME could be the next Pandora or Netflix. This could extend the squeeze beyond its current insanity.

Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 29, 2021, 11:23:45 AM
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.
Title: Re: GME deathwatch - how to profit?
Post by: crimp on January 29, 2021, 12:50:44 PM
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

I think the commentary on Friday was because of expiring calls. Shorts don't expire so much as the folks holding them just have to pay interest, right? So there isn't a hard deadline on when the folks shorting these stocks have to cover. You're right that the folks who bought in at high prices are wont to convince others there's still room to grow, regardless of the time horizon (at least until they themselves sell).
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 29, 2021, 01:33:52 PM
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

Obviously not the subject but the...method and manner of spreading the reddit vs hedge fund narrative.
Title: Re: GME deathwatch - how to profit?
Post by: crimp on January 29, 2021, 01:50:52 PM
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

Obviously not the subject but the...method and manner of spreading the reddit vs hedge fund narrative.

Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 29, 2021, 03:37:23 PM
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

Obviously not the subject but the...method and manner of spreading the reddit vs hedge fund narrative.

Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 29, 2021, 04:09:04 PM
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

Obviously not the subject but the...method and manner of spreading the reddit vs hedge fund narrative.

Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

You'd be surprised.  I've been on the WSB discord voice channels which are equally vulgar to the sub reddit and the whole political spectrum is represented.
Title: Re: GME deathwatch - how to profit?
Post by: CodingHare on January 29, 2021, 04:15:55 PM
Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

You'd be surprised.  I've been on the WSB discord voice channels which are equally vulgar to the sub reddit and the whole political spectrum is represented.

I think the missing link here is that the sort of young Redditor who really enjoys WSB pre-GME probably had a not insignificant crossover with the sort that plays video games and enjoys gaming MMO economies.  They were the ones who set the tone before 4 million newbies showed up.  Lots of Reddit is bro culture.  Not saying it is good and it is certainly playing into lots of narratives about the "dangerous alt-right trolls", but it is a bit more nuanced than WSB = Gamergate = Alt Right some pundits are trying to draw an arrow to.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on January 29, 2021, 04:46:03 PM
Quote from: ChpBstrd link=topic=120407.msg2783272#msg2783272
[/quote

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

the young liberal lads talk like this all the time if they think now one is looking. Coastal professional white boys know when they have to value signal like champs to succeed in todays world and they do.

My perusal of WSB is far from complete, but most of the tone is anti-establishment/downtrodden worker. It could just as easily be Bernie supporters as Trump supporters!
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 30, 2021, 06:18:15 AM
Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

You'd be surprised.  I've been on the WSB discord voice channels which are equally vulgar to the sub reddit and the whole political spectrum is represented.

I think the missing link here is that the sort of young Redditor who really enjoys WSB pre-GME probably had a not insignificant crossover with the sort that plays video games and enjoys gaming MMO economies.  They were the ones who set the tone before 4 million newbies showed up.  Lots of Reddit is bro culture.  Not saying it is good and it is certainly playing into lots of narratives about the "dangerous alt-right trolls", but it is a bit more nuanced than WSB = Gamergate = Alt Right some pundits are trying to draw an arrow to.

Exactly.  CNBC has been trying to build the narrative as the WSB sub being what you described.  You can't possibly tell me they (CNBC) don't have buddies/overlords on Wall Street.  I've seen some of their hosts get absolutely destroyed verbally by guests who actually understand what is going on.  Some of the crusty billionaires they bring on are totally out of touch and it's borderline hilarious.

Anyone see the ad Melvin was running, claiming they had closed their short positions for GME?
1.) Why would a hedge fund ever advertise when they close short positions if they didn't have something to gain from people panic selling?
2.) If you did actually cover all your shorts, you certainly wouldn't advertise it.  You would want people to keep driving the price up and buying like what has been going on

The fact is, the stock still has ~110% short interest.  Aside from being insane, this should be illegal.  If the retail investors do actually continue holding the stock, the price will skyrocket as the short positions bleed massive amounts on interest and have no choice but to cover.  But, if people start cashing out, the squeeze will be minor if not non-existent.

IMO, we might see the price flirt with $1k/share, but I can see most wanting to cash out around then.
Title: Re: GME deathwatch - how to profit?
Post by: ender on January 30, 2021, 06:27:46 AM
Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

This is such a ridiculous comparison.

There is a several day settlement period for options which expired today.

I've been an avid lurker on WSB for a long time (well before the last few weeks) and there are plenty of people on both sides of the political party there.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

Most people do something like, "well I'm <republican/democrat/libertarian/etc> and there are X other of us, who are all pretty much the same as me, therefore, since I can't imagine my party doing Y they can't."

But real life political parties are way more diverse than a monoculture.

Not to mention most posters let alone lurkers in WSB don't actually even do what you are saying. So characterizing most of WSB this way is pretty naive.

I'm not particularly surprised to see people stereotyping though, given the ad hominem media campaign this last week.

Anyone see the ad Melvin was running, claiming they had closed their short positions for GME?
1.) Why would a hedge fund ever advertise when they close short positions if they didn't have something to gain from people panic selling?
2.) If you did actually cover all your shorts, you certainly wouldn't advertise it.  You would want people to keep driving the price up and buying like what has been going on

The fact is, the stock still has ~110% short interest.  Aside from being insane, this should be illegal.  If the retail investors do actually continue holding the stock, the price will skyrocket as the short positions bleed massive amounts on interest and have no choice but to cover.  But, if people start cashing out, the squeeze will be minor if not non-existent.

IMO, we might see the price flirt with $1k/share, but I can see most wanting to cash out around then.

One thing to keep in mind here is there are real people with money invested in Melvin Capitol too - it's possible the "we closed the shorts" stuff is entirely about alleviating anxiety in those folks.
Title: Re: GME deathwatch - how to profit?
Post by: Wordstew on January 30, 2021, 08:37:48 AM
The Problem Has Not Fundamtally Changed.....

Retail Investors Still Exposed, their Positions and Strategies are Out in the Open for all to see....

Hedgies and the Pros still not Transparent, Yeild a ton of $$$ and Leverage....

I Do Not See This Ending Well for Retail Investors.....

Many Hedgies Hopped On Board and Joined the Reddit Crowd....

Now they will Strategize and Employ Every Possible Method to Take all the Retail Investors $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.....(BEWARE)

The Nature of the Beast
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 30, 2021, 09:26:33 AM
^ Hedgies have very few moves left.  There were no shares to be bought for the HF because retail investors AREN'T SELLING.  At least for now.  Volume has been quite low the last few days comparatively.  Every day they hold short positions without covering they are losing BILLIONS to interest.

Take a look at the charts for GME on Thursday morning.  Massive ladder shorting going on in the morning to artificially lower the price from ~430 ---> ~140 to try and scare people into panic selling.  What happened after?  Price shot right back up, after retail investors were allowed to actually buy again.

Same thing at the end of the day yesterday, but the price didn't drop nearly as much.  The GME and AMC charts looked almost IDENTICAL during price dips (i.e. coordinated ladder shorting attacks by HF), meaning they are doubling down on their short positions and manipulating the price, NOT joining the people holding long positions.  The only hedging they did was some options to offset their short positions.

They are bleeding profusely right now and desperate.  I agree with you that they will pull every trick in the book to minimize their losses.  But, it ultimately comes down to how long retail investors hold their shares and NOT SELL.  Either way, hedgies have and will lose huge amounts of money.  The thing HF didn't prepare for: most of us don't give two shits if we lose $$$ holding GME.  It's fraction of a fraction of my net worth I have into this, and there are millions more like me.  There are retail investors who were down 10s of millions during the dip on Thursday and still didn't sell.
Title: Re: GME deathwatch - how to profit?
Post by: ctuser1 on January 30, 2021, 09:46:01 AM
Internet speeds have been increasing for years decades and we are approaching the point where 1080p or even 4k streaming can be delivered with zero buffering in real time. As 5G rolls out, we can expect speeds near 1GB per second on mobile devices, which is many times beyond the 20mb/s or so required to stream buffered video one-way. Within a year or two, a server will be able to deliver games over the internet at the same level of quality that today requires a local installation. Imagine Gamestop as an app that connects to a Gamestop server offering you the option to play a wide variety of games, just as Netflix offers a wide variety of movies. Instead of buying $60 plastic discs and trading them in, you pay a monthly subscription, get lots more variety, and don't have to regret buying the wrong disc (90's peeps recall mistaken CD purchases).

So GME has a touch of visionary leadership in Cohen and his board picks, but there is no guarantee they will pursue this path or any other. There's also no reason to think GME will succeed in raising a billion or so from the short squeeze, or if Amazon, Netflix, Apple, Google, Microsoft, or anybody else who can raise a billion bucks just by asking semi-politely won't beat them to the punch. Arguably, a startup with a few good engineers would be ahead of GME at this point, and that's the way the evolution of the internet has always gone.

More people might be attracted to the long side if rumors suggest GME could be the next Pandora or Netflix. This could extend the squeeze beyond its current insanity.

Gamestop has a heck of a competitive landscape to beat - Steam (which I personally used for years), Google Stadia, and others I don't know much about.

Their chances of success 10 years out is less than any other startup trying to achieve the same in this same space. I say a little less than a startup because historically startups seem to succeed more often than outright strategy pivots. OTOH, companies that manage to strategy pivot successfully (e.g. Amex in 1918, after the Woodrow Wilson government basically outlawed their primary business) become the new "built to last" corporations where you can invest and forget for the next few decades.

My money is still on Gamestop going bankrupt in the next 10-15 years, first gradually and then suddenly - Sears style.

Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on January 30, 2021, 10:22:12 AM
Personally I just sold a put option on FIZZ a few days ago.  A real company that I already own some stock in, somehow some book maker paid me $27/share for a $100 put option for later this year.

I'll probably buy to cover for $10-$14/share in another week or two as volatility declines. 

There have been some wildly mispriced options on some of these short squeezed stocks, but you have to have the capacity to sell the option.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 30, 2021, 11:02:55 AM
The thing is, I don't think anyone on either the short or long side believes GameStop will survive anyway.  This is simply the hill chosen to fight the battle on.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on January 30, 2021, 01:10:40 PM
Nobody buying GME at this point is buying it for the underlying fundamentals, or the long term viability.  Everyone is hoping to extract some profit from a hedge fund.  They think they have the hedge fund by short and curlies and can bankrupt them, and they have a lot of momentum piling in now. 
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 30, 2021, 01:18:28 PM
Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

This is such a ridiculous comparison.

There is a several day settlement period for options which expired today.

I've been an avid lurker on WSB for a long time (well before the last few weeks) and there are plenty of people on both sides of the political party there.

Sorry, I wasn't clear. I'm not comparing the political leanings of the Q and WSB crowds. I'm comparing the methods and narrative. I.e., elites vs proles, conspiracies, making snap judgements from headline skimming, misinformation, not understanding how things work, memes, "Hold the line!" posts, etc.

It still hasn't been explained what the settlement has to do with a big jump. Since any shares were removed/added to accounts yesterday, why would any big jump be delayed? Were the market makers oblivious earlier in the week and were unprepared for expiration? That seems extremely unlikely.
Title: Re: GME deathwatch - how to profit?
Post by: hadabeardonce on January 30, 2021, 01:20:18 PM
GME deathwatch - how to profit?
There's an old adage about during a gold rush, the ones who make money are those selling shovels.

If you had capability to post YouTube videos, $1 ebook to explain what's going on, create "I bought GME" t-shirts, or something else, it would probably be a safer bet than getting your hands dirty.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 30, 2021, 01:22:29 PM
^ Hedgies have very few moves left.  There were no shares to be bought for the HF because retail investors AREN'T SELLING.  At least for now.  Volume has been quite low the last few days comparatively.  Every day they hold short positions without covering they are losing BILLIONS to interest.

This keeps getting repeated.

There was 3x the float traded on Wednesday.

Who was selling that day?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 30, 2021, 02:50:39 PM
Maybe Wall Street Bets members aren't selling, but retail investors are a wide group of people, many of whom are getting involved because of widespread news coverage.  Our discussion here is a good example - I bought on Thursday, but most of my limit orders triggered near Friday's open.  So I'm a retail investor who sold on Friday.

Options contracts exercised Friday require shares delivered in 2 days, and you can see heavy buying pressure from after-hours trading, where GME rose from $325/sh to $456/sh (+68%) so far.
(EDIT: GME actually dropped slightly in after hours trading, which Yahoo doesn't display)
https://finance.yahoo.com/quote/GME?p=GME

Game-themed ETF "GAMR" holds 27% GME, while S&P Retail ETF ("XRT") holds 20% GameStop stock.  A graph of their price changes over the past 5 days matches that of GME, although the percentages are different.  (GME more than tripled while GAMR went up +17%).  Those might be lower risk ways to benefit or get hurt by the GME stock price moves.
https://etfdb.com/stock/GME/
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on January 30, 2021, 02:58:38 PM
I understand the explanation of the squeeze and how these retail investors that are already in are going to (and already have) transfer a lot of money from hedge funds to themselves.  What I don't understand is the continued hype of buying in.  I visited WSB and the narrative appears to be to continue buying in and hold forever to bleed them dry.  But if I can just yolo my IRA into GME at market price on Monday morning and just hold those stocks to the moon, then why can't the hedge fund bros also just buy those same publicly available shares at market price?  If I can just buy and hold and "name my own ridiculous price", what's stopping them from just owning the stock first?  If there is a huge arbitrage available here, and the hedge fund guys are shitting their pants, then why is it still available?  What am I missing?
Title: Re: GME deathwatch - how to profit?
Post by: mizzourah2006 on January 30, 2021, 03:27:06 PM
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

It's kind of impossible to know what could have been. The buy side was completely restricted by the very sites/apps that most of the people use, specifically Robinhood, IBKR, and Webull. The gamma squeeze was very real last Friday without those limitations.

@MustacheAndaHalf I believe it was actually slightly down after hours, it looks like you are adding the days gain to the current price to get your $456, is that right? On Google and Stocktwits I'm seen an AH end of $312. Happy to be proven wrong though because that means more money for me :)
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 30, 2021, 03:48:40 PM
mizzourah2006 - Oops!  I mistook Yahoo's price change as after-hours, when it was actually Friday's price change.  I went to a higher quality source and found the last trade was $313/sh.  You're right, the price dropped.
https://www.nasdaq.com/market-activity/stocks/gme/after-hours-trades

frugalnacho - Using round numbers, about 100k call options expired Friday, with each option being a demand to buy 100 shares at a certain price.  Some fraction were "covered calls", where the seller of the option has 100 shares of GME waiting to be delivered.  Some fraction were "naked calls", with no shares of GME to hedge the risk.  I can't imagine market makers were prepared for this week, so I expect they don't have all 10 million shares needed to cover these call options - but they have a contractual obligation to do so within 2 days.

The price of GME is the last trade.  There's orders on NYSE's books right now, with all the buyers lined up below $325 and all the buyers above $325.  If a buyer says they'll pay $2,000,000/sh ... they are matched up with a seller just above $325, and that's the price of the trade.  If you place a market order to sell, it's similar: the highest price order to buy is matched, and a trade happens just below $325.

If there's equal numbers of buyers and sellers arriving near $325, the price stays about the same.  There's people waiting to buy from $325 down to $1, and people waiting to sell from $325 and up.  It might help to personify it as one fast Buyer and one slow Seller.  They have lots of orders already, waiting... and then the Buyer starts moving twice as fast as the Seller.  The Buyer and Seller agree on $325, but then the Buyer places another order before the Seller can react.  That order matches a $326 order the Seller made previously.  The Buyer and Seller place an order near $326 and a trade occurs.. but the Buyer moves too fast again, and has to trade against an old order at $327.

If a large enough fraction of Friday's calls lacked 100 GME shares, there should be immense pressure on Monday and Tuesday.  It's possible RH, IBKR and/or TD will restrict trading again, ruining the plan of pressuring the market markers who sold call options.  Apparently when I place an order, IBKR doesn't take my money immediately, but instead uses their own account to settle the trade ... and only later settles with me.  So that's apparently why they needed to limit trading, get loans, or both.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on January 30, 2021, 04:18:16 PM


One thing to keep in mind here is there are real people with money invested in Melvin Capitol too - it's possible the "we closed the shorts" stuff is entirely about alleviating anxiety in those folks.

Those real people placed their bets, and it didn't work out. Fortunately for them, those real people don't have to play by the same rules you or I do... their margin loans are being extended and not called because their friends know the price is an aberration and will go back. Plus their friends are stopping the order flow that goes against them!

some might feel this is unfair.

Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on January 30, 2021, 04:28:53 PM
So why didn't they buy the shares on Friday if they are contractually obligated to return those shares by Tuesday? If it closed at $313/share then that means there were shares available for $313 at the end of the day Friday, right? Isn't hat what the market price is? Why didn't the hedge fund in deep shit keep buying shares and driving the price up to the point that it's a financial wash for them? If $313 is a good price and is going to explode and cost the hedge fund money, why didn't they already buy it when it was available at $313?
Title: Re: GME deathwatch - how to profit?
Post by: firemane on January 30, 2021, 05:01:12 PM
Maybe I am being extra paranoid here, but aside from some potential quick cash is anyone actually worried about this meme stock stuff?

It’s cool that people are having their fight club deal against the hedge funds but there are more people to be hurt besides just hedge funds If they destabilize normal sp500 stock investments it’s bad news for everyone else. I see people with small portfolios that are egging on “taking down the market” on social media.

I didn’t think there was much to it at first until I saw Apple make record earnings and then tank 
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 30, 2021, 06:13:12 PM
Maybe I am being extra paranoid here, but aside from some potential quick cash is anyone actually worried about this meme stock stuff?

It’s cool that people are having their fight club deal against the hedge funds but there are more people to be hurt besides just hedge funds If they destabilize normal sp500 stock investments it’s bad news for everyone else. I see people with small portfolios that are egging on “taking down the market” on social media.

I didn’t think there was much to it at first until I saw Apple make record earnings and then tank

Apple is a $2 trillion company. There's no way redditors/memers are pushing it around.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on January 30, 2021, 06:49:10 PM
OK for all you participating in GME, I'm just gonna put this here

https://www.sec.gov/reportspubs/investor-publications/investorpubsholdsechtm.html

if you intend to hold and don't want your broker loaning out your shares to the shorts.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 30, 2021, 06:57:37 PM
I think the long term effects will be minimal on the market as a whole when the GME thing is all done.  We will, however, never see a situation like GME again.  Never again will a stock have this kind of short % of float.  Hopefully we see some regulatory changes because of it, because we are exposing a whole bunch of bullshit and shenanigans.  How is it even legal to have short % of float > 100?

@frugalnacho they haven't begun covering yet because they are trying everything they can (scare tactics, bullshit ads) to lower the share price to minimize their losses first.  They haven't realized all of the losses yet, but buying to cover at $313 and higher will lock in their current very very red positions.  Buying to cover does not mean they own the stock, they are only closing out what they borrowed.  They presumably shorted much of their positions at < $20/share.  Sure, they could take long buy positions like reddit is doing but then they are still short on their other positions.  Plus, with the daily interest owed it makes no sense for them not to close shorts first vs. going long.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 30, 2021, 10:57:59 PM
So why didn't they buy the shares on Friday if they are contractually obligated to return those shares by Tuesday? If it closed at $313/share then that means there were shares available for $313 at the end of the day Friday, right?
Yes, there were some shares at $313/sh, but not enough.  Thursday would have been a better time for them to buy, when many retail investors were blocked from doing so (Robinhood, Interactive Brokers and TD Ameritrade).

Are half of the market makers calls "naked"?  That would mean they need to come up with 5 million shares in 2 days.  Look at the Thursday close ($194) and Friday open ($380) - that's an example of excessive buying.  They didn't all get $194/sh, but had to find enough sellers to meet demand.

I was actually a seller in Friday's initial trading.  I had a limit order around $330 or $340 ... and it executed at $380/sh, the opening price.  Another order triggered soon after at $390/sh.  All of that happened from buying pressure, which moves the stock price as it eats up seller's orders.

I'll be interested to see if this buying pressure can be kept up on Monday and Tuesday.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 31, 2021, 06:38:20 AM
I think the hordes have been dumping Robinhood and moving to other brokerages that have actually been letting people buy at will (Fidelity, Vanguard).  We can expect more buying pressure this coming week most likely.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 31, 2021, 08:58:32 AM
Here's a conservative (?) way to play GME; write Jan. 29 puts in the $100 to $200 range. The bids are still pretty high ($20 on the $190 strike price) and the likelihood of having them put to you is rather slim, in my non-professional opinion.

GME stock closed at $325 on Jan. 29th, so the above trade would have been successful. However, the two day emotional rollercoaster would have been a doozy and not for the faint of heart.
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on January 31, 2021, 09:17:04 AM
This one has been infuriating to me...

I know it's going back to $20, but the put option market is incredibly expensive and there are no virtually shares to borrow and sell short.

The last set I looked at required paying $70 for a $100 put option for January of 2021.   Putting up $7,000 to potentially make $1,000 to $2,000 is not fun.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 31, 2021, 09:55:36 AM
I was looking at buying puts too, but hot damn it is expensive.  $3,300 for Feb 19 with strike price of $105.  This could very easily drag out longer than that.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 31, 2021, 09:56:02 AM
^ Hedgies have very few moves left.  There were no shares to be bought for the HF because retail investors AREN'T SELLING.  At least for now.  Volume has been quite low the last few days comparatively.  Every day they hold short positions without covering they are losing BILLIONS to interest.

This keeps getting repeated.

There was 3x the float traded on Wednesday.

Who was selling that day?

On Monday and Tuesday there was 3x the float traded. On Wed. it dropped to 76m (1.5x), on Thursday it was 56m and on Friday it was 50m.
I'm not sure what to make of these numbers, however.

Borrow rates on GME shorts are around 38% the last time I looked. This works out to about 3% a month, or .75% per week, or about .1% per day, including weekends. Borrow rates are subject to change quickly in either direction.

So, if you have sold GME short to the tune of $100m USD, then your daily interest is $100,000. Market cap at close on Friday was $23 billion and if 100% of the share are short, then the total daily interest the shorts are paying is $23m, or $161m per week. It would take six weeks for shorts to pay $1 billion at current market cap and borrow rates.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on January 31, 2021, 10:06:02 AM
If I were going to trade GME options, I think the safest trade would be to wait until Wednesday, Feb. 3rd.

If the volatility is still high, then I would sell deep out of the money puts at the Feb. 5 expiration.
Maximum profit is the income from the sale of the put.
Maximum loss (if the option expires in the money) is the strike price minus the premium received minus the price of GME.
Title: Re: GME deathwatch - how to profit?
Post by: sixwings on January 31, 2021, 10:19:29 AM
I'm watching but not buying anything, however I'm seeing tons of people on social media putting their life savings into this and posting about it and very clearly don't understand what's happening. This is also something that I could see people make a bit of money off and then decide they can easily repeat it (because they dont understand it) and bet it all on something again and lose it. WSB is inundated with people wanting to know what the next GME is to they can dump their life savings into it.

On the flip side, WSB may be big enough with enough influence to drive stock prices for small cap companies up at will by having a few influencers like DFV post about their next investment. Up to 8M users now. Populism in the stock market.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 31, 2021, 11:29:19 AM
I'm watching but not buying anything, however I'm seeing tons of people on social media putting their life savings into this and posting about it and very clearly don't understand what's happening. This is also something that I could see people make a bit of money off and then decide they can easily repeat it (because they dont understand it) and bet it all on something again and lose it. WSB is inundated with people wanting to know what the next GME is to they can dump their life savings into it.

Yes, that part scares me.  There will not be another GME.  Other stocks might see some small jumps because of GME (like AMC), but people putting their life savings at this...no bueno.  Worst case is a bunch of people with 0 experience make a ton on GME, get overconfident, then get suckered into "this is the next GME" type crap and then lose everything.

Hopefully the proportion of people throwing money at this for the memes/to bleed HF is greater.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on January 31, 2021, 12:23:34 PM
I think the long term effects will be minimal on the market as a whole when the GME thing is all done.  We will, however, never see a situation like GME again.  Never again will a stock have this kind of short % of float.  Hopefully we see some regulatory changes because of it, because we are exposing a whole bunch of bullshit and shenanigans.  How is it even legal to have short % of float > 100?

@frugalnacho they haven't begun covering yet because they are trying everything they can (scare tactics, bullshit ads) to lower the share price to minimize their losses first.  They haven't realized all of the losses yet, but buying to cover at $313 and higher will lock in their current very very red positions.  Buying to cover does not mean they own the stock, they are only closing out what they borrowed.  They presumably shorted much of their positions at < $20/share.  Sure, they could take long buy positions like reddit is doing but then they are still short on their other positions.  Plus, with the daily interest owed it makes no sense for them not to close shorts first vs. going long.

Doesn't closing your short or going long require the same action?Buying a share at market price.

This is what I don't understand. On one side you have WSB saying they got the hedge fund by the short and curlies, the hedge funds are absolutely fucked and will go bankrupt when they have to close these shorts out eventually, and they will close them because it's going to bleed them dry in the meantime.  And if they don't close their shorts the price is going to go parabolic and the sky is the limit. $500, $1k, $10k, etc.

Then on the other side you have the hedge fund not buying up all available shares at market price, which just had me scratching my head.  If the hedge fund is in as deep of shit as everyone keeps saying they should have been buying up shares at $313.  There should be no shares available for me to purchase at $313, or $350, or $400, or whatever. 

The very fact that I can jump on vanguard tomorrow morning and buy a couple shares at or near market price gives me great pause, because why isn't the hedge fund already placing orders at that price to close out their shorts?  I understand it's not as simple as them just buying 50M shares, but why not start buying until the price is driven up to the equilibrium where they think buying more shares will be more expensive than riding out the shorts? 

Title: Re: GME deathwatch - how to profit?
Post by: dignam on January 31, 2021, 03:48:26 PM
^ Yes - to an extent.  The problem is they have shorted > 100% of float.  They essentially short sold shares that didn't exist.  The price will not start going parabolic until they begin to close shorts, presumably.  The moment they start covering, and because there is a shortage of sellers (due to them shorting shares that didn't exist), it turns into simple supply and demand and will result in price skyrocket. If they sit there and bleed interest, the share price likely won't change much.  Their best bet is to somehow dramatically lower the share price first, THEN start covering...through ladder attack manipulation, or whatever method they can figure out.  I think we'll see some clever new tricks this week.

They should have been buying to cover days ago (driving up price), but they doubled down on shorts instead.  Not sure why...greed? Lack of cash? Refusal to be beaten by a bunch of "degenerates"?  Hoping to scare said degenerates into selling?  One thing we can be almost certain of is they were selling their winning long positions on Friday which might help explain the big price drops, even on companies that had phenomenal earnings reports (Apple for example).  There's only one reason they would do that.

They may be past the equilibrium point.  No one really knows exactly how deep they're in, and probably won't until after all is said and done.
Title: Re: GME deathwatch - how to profit?
Post by: blue_green_sparks on January 31, 2021, 06:10:26 PM

Comment I saw on WSB...Such a funny bunch !

Just called GME customer service & they told me to please HOLD.
Title: Re: GME deathwatch - how to profit?
Post by: Chris@TTL on January 31, 2021, 10:07:19 PM
I'm watching but not buying anything, however I'm seeing tons of people on social media putting their life savings into this and posting about it and very clearly don't understand what's happening. This is also something that I could see people make a bit of money off and then decide they can easily repeat it (because they dont understand it) and bet it all on something again and lose it. WSB is inundated with people wanting to know what the next GME is to they can dump their life savings into it.

Yes, that part scares me.  There will not be another GME.  Other stocks might see some small jumps because of GME (like AMC), but people putting their life savings at this...no bueno.  Worst case is a bunch of people with 0 experience make a ton on GME, get overconfident, then get suckered into "this is the next GME" type crap and then lose everything.

Hopefully the proportion of people throwing money at this for the memes/to bleed HF is greater.

I'm with you both.

While WSB has historically been a place to see wild memes mixed with wild bets, the huge influx of users has brought a lot of regular people unfamiliar with the landscape. Like you said, I've seen a ton of "I'm putting my rent check in $GME and paying rent with a credit card" posts that are heavily upvoted. And as you said, it's not just WSB—plenty of folks on social media are saying similar things.

It's always hard to separate fact from fiction on WSB, but I'm worried people are really doing it.

I wrote something up about just this—why I'm worried about Gamestop stock (https://www.tictoclife.com/gamestop-stock/).

Here's the sort of concern I have:

Quote
There is an ever-increasing number of commenters on /r/WallStreetBets saying they’re paying their rent with a credit card and buying a share or three of GameStop. Others have taken downpayment money or college funds and put it in. Many, many people suggest they’re paycheck-to-paycheck and are doubling-down on GameStop with any funds they can come up with.

As another poster mentioned, I think it's likely that institutional investors are riding the hype train bubble up...and will probably get out before regular joes and janes do:

Quote
Might individual long investors now just be selling to each other to keep the price going higher?

Is it instead today’s Tulipmania?

I don’t know. There’s not enough data to be able to analyze this. The folks who do have the data or at least an inkling of it are almost certainly taking advantage. Are the hedge funds now riding the stock price up, making a killing on the backs of regular Joes and Janes that have been trying to put the screws to them?

Probably. Sadly.

While I'm sad to think of what is likely going to come at the end of this for a ton of individual retail investors with large chunks of their savings in GME—especially in the context of someone who tries to promote financial independence—I also hope it leads to a less toothless SEC that might be able to even the playing field. I'm not sure how, but it's the sort of silver lining I'm hoping for. Anybody have some specific thoughts on that topic?

From a less emotional perspective, it's terribly interesting watch from the sidelines. It seems like a giant behaviorial economics experiment running in front of our eyes.

How long will the diamond hands last? How long will they fight rationality? Are the shorts already out and they're really just trading amongst themselves (a case of the "greater fool")? Or is there still plenty of short money to go around if they continue to hold?

On the experimental side, it makes me think a lot of the Public Goods Game:

Quote
Here’s a simple example:

Let’s say there are 4 players given $10 each and the pot multiplier is 2x. If everyone contributes their full $10, the total shared pot is $40. It’s multiplied by 2 and the total is $80 which is then divided amongst the 4 players.

Everyone walks away with $20 instead of the $10 they started with.

Let’s say this experiment is run again with the same players.

Having seen how things worked out, a player might rightly see that in their own self interest they could contribute none of their initial $10 and assume other players will contribute their full $10 again. Assuming so, the pot will be $30, multiplied by 2 to become $60 and divided amongst all players so each receives $15.

The player who contributed nothing will walk away with $25 (more than when they contributed in the first iteration). Other players only receive $15.

You can imagine how a third iteration may result in no one contributing anything and everyone getting just $10.

In fact, that’s what experiments in this game often show—different multipliers and group size affect the result but subsequent iterations tend to decrease contributions.

If GameStop investors continue to hold, they won’t see any monetary value from the increased share price. They’re effectively keeping as much money “in the pot” as they can.

Their self-interest pushes them toward selling as each day passes and more shares change hands in a sort of iteration of the public goods game.

Will our “players” in this game be able to hold through more iterations that have been found to be experimentally “normal”?

These Public Goods Games experiments, the classic "Prisoner's Dilemma", Game Theory... it all suggests that individuals still invested in GME at the moment should follow their own self-interest and get out.

But what happens if their self-interest isn't profit...and it's actually an ideological fight?

I'm not sure what's going to happen here, but as Mustachians...it's terribly interesting to watch and learn.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on January 31, 2021, 11:57:35 PM
There is so much attention around GME I'm not sure what to think anymore.

Holding isn't quite enough, though. People have to keep buying in to keep the price high, right? I would be an interesting thought experiment to ask what if literally nobody was selling, but that's not realistic, is it?

I'm actually currently long in GME. I think what I'll do is cover my original investment and then keep the rest and effectively play the lottery with house money. I think I can still do that.

I mean, there's a point at which everyone starts going bankrupt, right? The deep pockets aren't literally unlimited, are they?

The only thing I'm sure of is that the moment I'll know the right time to sell will be right after the right time to sell. Presuming I don't expect GME to actually be worth its current price long-term.
Title: Re: GME deathwatch - how to profit?
Post by: gentmach on February 01, 2021, 04:12:46 AM
^ Yes - to an extent.  The problem is they have shorted > 100% of float.  They essentially short sold shares that didn't exist.  The price will not start going parabolic until they begin to close shorts, presumably.  The moment they start covering, and because there is a shortage of sellers (due to them shorting shares that didn't exist), it turns into simple supply and demand and will result in price skyrocket. If they sit there and bleed interest, the share price likely won't change much.  Their best bet is to somehow dramatically lower the share price first, THEN start covering...through ladder attack manipulation, or whatever method they can figure out.  I think we'll see some clever new tricks this week.

They should have been buying to cover days ago (driving up price), but they doubled down on shorts instead.  Not sure why...greed? Lack of cash? Refusal to be beaten by a bunch of "degenerates"?  Hoping to scare said degenerates into selling?  One thing we can be almost certain of is they were selling their winning long positions on Friday which might help explain the big price drops, even on companies that had phenomenal earnings reports (Apple for example).  There's only one reason they would do that.

They may be past the equilibrium point.  No one really knows exactly how deep they're in, and probably won't until after all is said and done.

Someone posted the hypothesis that there is a lot of counterfeit stock floating around.

https://old.reddit.com/r/wallstreetbets/comments/l97ykd/the_real_reason_wall_street_is_terrified_of_the/

In theory Retail Investors own 100% of GME right now because they own all the authentic shares.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 01, 2021, 04:42:13 AM
Holding isn't quite enough, though. People have to keep buying in to keep the price high, right? I would be an interesting thought experiment to ask what if literally nobody was selling, but that's not realistic, is it?
Let me take this through a few levels of what you might mean:
(1) nobody places new orders to sell.  So there's no new demand, but the books still have orders on them, at higher prices.
(2) no orders at higher prices - no sellers, no orders from previous sellers.  This is where a market maker steps in, and sells some of their inventory.  Later when someone arrives at the market to sell, the market marker can buy from them to replenish their inventory of the stock.

If I place a buy order for GME at $1, nobody cares.  There's no market selling GME shares below $1, so my order sits there, but it's useless.  Similarly, if someone places a generous buy order with a $1,000/sh limit, nothing happens if there's no orders under that price.  In practice, a high-frequency trading firm would swoop in and sell stock at $1,000/sh and take a huge profit.  Or maybe a smaller profit - since other HFTs are trying to fill the order at the same time.

So there's the order book, the market maker, and HFT firms all providing liquidity.

---
I read about the way market makers can cheat with shorting shares, from a random source.  When a short position starts, there doesn't need to be any shares!  According to that random (not reputable) source, most people get 3 days to find shares, but market makers can spend 3 weeks finding shares.  If the shares don't exist, how can a market maker claim to be short in them?  But that's what the claim is - that phantom short shares are created, and last until the time limit expires.  The specifics and details seemed too specific to be complete fabrication - I think it's one of the top 10 threads on WSB now.
Title: Re: GME deathwatch - how to profit?
Post by: Travis on February 01, 2021, 05:32:15 AM
GME deathwatch - how to profit?
There's an old adage about during a gold rush, the ones who make money are those selling shovels.

If you had capability to post YouTube videos, $1 ebook to explain what's going on, create "I bought GME" t-shirts, or something else, it would probably be a safer bet than getting your hands dirty.

Actually that's happening.

https://llamafury.com/products/military-investors-gamestonk-t-shirt?fbclid=IwAR0p5YDUGrqQ33Jr-OQoBI4QzdHfxk8gVU5jJVtC1_8NVdeLLMQmH3ueYaw (https://llamafury.com/products/military-investors-gamestonk-t-shirt?fbclid=IwAR0p5YDUGrqQ33Jr-OQoBI4QzdHfxk8gVU5jJVtC1_8NVdeLLMQmH3ueYaw)

We seem to be rapidly approaching the "everyone thinks they're a stock-picking genius" territory again. The pickers are coming out of the woodwork here, on Facebook, and today on r/Army a soldier asked how he can get out of his TSP because "it did shit last year" because apparently 15% in a pandemic year just isn't good enough for him and he thinks he can do better.

Today's top growing Reddit communities are (in order):

-WallStreetBets
-Dogecoin
-RobinHood
-PennyStocks
-Investing
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 01, 2021, 05:34:48 AM
There is so much attention around GME I'm not sure what to think anymore.

Holding isn't quite enough, though. People have to keep buying in to keep the price high, right? I would be an interesting thought experiment to ask what if literally nobody was selling, but that's not realistic, is it?

I'm actually currently long in GME. I think what I'll do is cover my original investment and then keep the rest and effectively play the lottery with house money. I think I can still do that.

I mean, there's a point at which everyone starts going bankrupt, right? The deep pockets aren't literally unlimited, are they?

The only thing I'm sure of is that the moment I'll know the right time to sell will be right after the right time to sell. Presuming I don't expect GME to actually be worth its current price long-term.

That is my plan.  Going to sell what brings me to even then leave the rest in and see what happens.
Title: Re: GME deathwatch - how to profit?
Post by: sixwings on February 01, 2021, 08:22:15 AM
GME deathwatch - how to profit?
There's an old adage about during a gold rush, the ones who make money are those selling shovels.

If you had capability to post YouTube videos, $1 ebook to explain what's going on, create "I bought GME" t-shirts, or something else, it would probably be a safer bet than getting your hands dirty.

Actually that's happening.

https://llamafury.com/products/military-investors-gamestonk-t-shirt?fbclid=IwAR0p5YDUGrqQ33Jr-OQoBI4QzdHfxk8gVU5jJVtC1_8NVdeLLMQmH3ueYaw (https://llamafury.com/products/military-investors-gamestonk-t-shirt?fbclid=IwAR0p5YDUGrqQ33Jr-OQoBI4QzdHfxk8gVU5jJVtC1_8NVdeLLMQmH3ueYaw)

We seem to be rapidly approaching the "everyone thinks they're a stock-picking genius" territory again. The pickers are coming out of the woodwork here, on Facebook, and today on r/Army a soldier asked how he can get out of his TSP because "it did shit last year" because apparently 15% in a pandemic year just isn't good enough for him and he thinks he can do better.

Today's top growing Reddit communities are (in order):

-WallStreetBets
-Dogecoin
-RobinHood
-PennyStocks
-Investing

yep this is going to go very badly for most people doing this. It's tempting for me to put money into GME but I'm sticking to my index + tech ETF strategy, the FOMO is real though.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 01, 2021, 10:15:44 AM
One way you can make money is buying a PUT option, but I have two problems with PUTs on GME.
(1) GameStop can print money (shares) and put itself in a new position - they might no longer be a $20/share company.  Their new CEO is experienced with remaking companies, and that was before he got all the capital he needs.  They could just buy another company, and be worth more.
(2) The PUT options are very expensive.  With GME at $270/sh, PUT options with a $270 strike cost $210.  If GME drops back to $20/sh, that's only a 19% profit.

Another way is to stand in front of a news-breaking freight train. I went for it, and sold unprotected, long-dated high priced call options.  If GME rises above my strike price, the holder of the option can force me to buy GME stock.  But today GME didn't even spike at the open... it just dropped and wobbled around.  I had hoped they would pressure the market makers today and tomorrow, creating a big problem... but they seem to have shifted to targeting silver.

I'm prepared to lose -400% my investment.  So if someone wants to imitate this, and isn't ready to lose a multiple of what they invest, it's too risky.  Selling "naked" call options has no limit to the loss, since you're paying whatever gains occur above a certain price.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 01, 2021, 10:23:11 AM
One way you can make money is buying a PUT option, but I have two problems with PUTs on GME.
(1) GameStop can print money (shares) and put itself in a new position - they might no longer be a $20/share company.  Their new CEO is experienced with remaking companies, and that was before he got all the capital he needs.  They could just buy another company, and be worth more.
(2) The PUT options are very expensive.  With GME at $270/sh, PUT options with a $270 strike cost $210.  If GME drops back to $20/sh, that's only a 19% profit.

Another way is to stand in front of a news-breaking freight train. I went for it, and sold unprotected, long-dated high priced call options.  If GME rises above my strike price, the holder of the option can force me to buy GME stock.  But today GME didn't even spike at the open... it just dropped and wobbled around.  I had hoped they would pressure the market makers today and tomorrow, creating a big problem... but they seem to have shifted to targeting silver.

I'm prepared to lose -400% my investment.  So if someone wants to imitate this, and isn't ready to lose a multiple of what they invest, it's too risky.  Selling "naked" call options has no limit to the loss, since you're paying whatever gains occur above a certain price.

According to the wsb subreddit, the silver trade is a distraction orchestrated by the media and the hedge funds. I am seeing a little more chatter about AMC and BB.

I would take any quick profit on the naked short calls ASAP because this thing is unpredictable and not at all tied to reality. You're playing roulette with leverage there, and losses could exceed 400%. As they say on wsb "we can stay retarded longer than they can stay solvent".
Title: Re: GME deathwatch - how to profit?
Post by: bwall on February 01, 2021, 11:07:36 AM
^^^
+1.

This is not the time to stand in front of a freight train. Shorts are still at 100% (or more), meaning that the short covering that occurred and pushed the stock to $300 was merely replaced by renewed shorting. "The squeeze hasn't squooze." is what WSB likes to say, and I kinda agree.

Shorts are paying interest daily, which is small potatoes in this game, but ultimately leverage kills as surely as gravity, to borrow the phrase from @ChpBstrd.

I'd sell front week deep out of the money puts only a day or two before expiration. Fire and forget, make the trade and don't look at it again until Friday after close is the only way I could do it. It's not sophisticated and normally always a horrible trading strategy, but I can't control my emotions, so this would the only way possible for me.

Full disclosure: I'm not trading options in GME because I cannot control my emotions.

P.S. Game stock is getting plenty of free press out of this trade, so perhaps that will substantially increase their bottom line in the next months? Heck, I've been tempted to go into the nearest GME store and buy something. Anything. At any price. And I've never been inside one of their stores before. Ever.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 01, 2021, 12:13:43 PM
Consider WSB position right now, if they really have gone all in.  They're out of cash, and all their NW is in GME stock.  Now what?  They're stuck.  Without cash, they can't apply buying pressure.  If they sell, that creates selling pressure.

Look at the stock price moves.  Wed, Thurs, and Fri all opened with a spike in GME stock price, a display of power from Wall Street Bets - and that was impressive.  But the Wednesday close at $347.51 was followed by a Thursday open at $265, because several brokerages blocked buying GME stock.  Thursday was a down day for GME, showing that WSB is not a freight train.

Although Friday opened strong, the closing price was much lower.  And further, the "gamma squeeze" of WSB would be aimed at options that expire every Friday.  If they want market makers to suffer, why reduce the pressure Friday?  Or today?

The stock price fell slightly over the weekend, and then fell some more after moving up just 2%.  It looks like someone is selling.. but who?  Not only do WSB investors have tons of GME, they went all in, and have nothing else.  I think the explanation for today's price change is people selling their WSB stock.  That's how they could afford to go after silver, in my view.  If they're not selling, why is the stock falling?  And why would silver be pushing much higher right as GME falls lower?  That seems like too much a coincidence for me to blame in on their enemies, the hedge funds.

Look at Robinhood getting a $2.5 billion loan on short notice.  Hedge funds and institutional investors have far more than that, and some of them seek to find a profit in events like this.  I think WSB lacks cash, while their opponents have drawn on billions of reserves to profit off the situation.

The calls I sold are a very tiny part of my account at Interactive Brokers - they won't move the needle if I'm right.  I sold calls near the top end, and plan to "buy to cover" if the share price gets within $100-$200 of my strike price.  But take a look at Feb 5 and Feb 12 options - the highest strike options lost 75-80% of their value today.  If the gamma squeeze targeted last Friday, that makes sense - it's over.  But if it targets this Friday... they are paying a premium for options that aren't helping to push the price up.  They're wasting their money.

Based on what I see in the markets, WSB is probably losing.  They might attack again this week, but I think they'll meet opponents with much deeper pockets, who will absorb their buying power and profit off the attempt.
Title: Re: GME deathwatch - how to profit?
Post by: crimp on February 01, 2021, 02:15:48 PM
There are some rumblings that the price is dropping because of something called a ladder attack, in which the hedge funds sell each other the same shares at progressively lower prices to catch people with stop loss orders. It's entirely unclear to me whether or not this is actually happening or not, or if the WSB crowd is out of money to buy more shares than are being sold.

People are talking about trade volume as a measure to indicate whether or not retail investors are selling or not. The only thing I'm sure about is that I don't know how to read any of the indicators people are talking about.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 01, 2021, 02:54:34 PM
I would not view the WSB crowd as a static number of people who are already all-in. As their exploits have gone viral, the number of people visiting the forum is going up. As some people sell out, others join. It’s not a Ponzi scheme but it has the same unpredictable number of people who will sign up. As Bernie Madoff demonstrated, that can go on for a very long time.

Additionally, momentum funds and cap weighted index funds are required by their mandates to buy GME. Then there are the hedge funds betting against other hedge funds, and new positions opened by new short investors, all pouring money into the ecosystem.

As things go up, there are certain feedback loops that keep them going up. The funny thing about this short squeeze is that new participants are coming in to fuel both the long and short sides. Utterly defies prediction.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 01, 2021, 06:12:42 PM
Holding naked short calls on GME would scare the shit out of me.  But, more power to you.

With how comparatively low the volume has been today, I really don't think WSB sell-offs are to blame for the price decrease.  Volume would need to be huge for WSB to move the price like that.

Just looked up option chain on GME.  Currently there have been 5,057 Mar. 19th call $800 strike contracts purchased.  If my math is correct, that would cost ~ $25mil.  Take that how you will.
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on February 01, 2021, 09:59:02 PM
Congrats on the naked calls....great move but not something I have the stomach or liquidity for
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 02, 2021, 07:20:15 AM
ChpBstd - I completely agree WSB isn't monolithic, but my post was already too long to cover that.  I expect their core leaders are nearly all in on GME (and the other stocks), and that recent arrivals don't necessarily have the same goals and risk tolerance.

Another key point - this attack is a victim of it's own success.  Pushing the shares higher gets more difficult as time goes on.  From Yahoo data, back on Aug 14 shares cost $4.60 and volume was 3.5 million.  If WSB asks everyone to buy 0.01% of the volume, that's 350 shares x $4.60 = $1,610 invested that day.  People interested in the stock market probably have that kind of money.  Now fast forward to Friday, when the stock opened at $380 and had 50 million shares change hands.  To invest the same 0.01% that day required $380 x 5,000 shares, or $1.9 million dollars.  Now you're taking about amounts almost none of them have in cash (not GME stock - selling that defeats the purpose).  They have more members now, and maybe it's debatable if they have more cash (after using up so much already)... but it illustrates how pushing the stock around last year was much easier than this past week.

Looking at the trading volume versus the stock price, I see more reasons why I'm likely to profit on the calls I sold.  Jan 22, 25-26 had enormous trading volume of over 170 million shares each day.  But once the stock soared from $150 to $350, the volume fell by about half - Jan 27 was Wed, before trading restrictions were introduced.  Since Jan 26, volume has dropped every single day, often significantly.

crimp - I'm not familiar with a ladder attack, but it sounds like price manipulation designed to trigger sell orders.  Doesn't that leave hedge funds holding GME stock?  The hedge funds expect the price to fall back to normal valuations, so I don't get why they would want to buy GME.  But I could be wrong, as the price drops are accompanied by increases in volume - people are selling on the drops.

chasesfish - I can pretty much ignore the stock when it's trading near $300-$400, since my short calls are at a much higher price.  An even gutsier move might have been selling calls of shorter duration, like Feb 19 calls.  My approach has the disadvantage of "time value", where I might have to wait months for it to decay.
Title: Re: GME deathwatch - how to profit?
Post by: Rockies on February 02, 2021, 09:04:24 AM
Everyone can speculate on what to do, but this situation is unprecidented and crazy so no one really knows. I notice in the comments many people are speculating on what is happening behind the scenes but they all seem like guesses.

Maybe you should ask yourself - what would Charlie Munger do? He would stay the hell away and call the whole thing an "immoral cauldron of jackassery". Placing bets on either side of this is pretty stupid. But if this is your idea of fun - enjoy!
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on February 02, 2021, 09:27:37 AM
Placing bets on either side of this is pretty stupid. But if this is your idea of fun - enjoy!

My tiny bit of GME is the most fun I've had in the market, ever.

That said, for all the attention I've been paying it, it's nothing to me. I adjusted my sell limits after lots of thought, and then offhandedly liquidated over 20x my stake in GME in other stocks ETFs because it was roughly time to re-up my cash cushion.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 02, 2021, 09:32:14 AM
Rockies - All investing involves risk, but look at my earlier posts on GME.  I talk about the stock price, the volume, and things you can verify.  Can you disprove something I said, using data?

The stock is not "crazy", it's responding to buying pressure.  With more shares being bought than sold, the price rises to match each buyer with a seller.  Today far more shares are being sold than bought, so the price plunges as the extra sellers search for buyers at lower prices.

Look at the highest strike prices for GME call options - any date will work.  They're down 75% in one trading day because the stock has dropped in half, from $225 to near $110-115 now.

When WSB applies buying pressure, they have to buy - to tie up their money.  That reduces the amount of money they have for the next attempt, and in the meantime the stock price has gone up.  So each attempt is also more expensive.  Will that continue indefinitely?
Title: Re: GME deathwatch - how to profit?
Post by: crimp on February 02, 2021, 09:53:07 AM
crimp - I'm not familiar with a ladder attack, but it sounds like price manipulation designed to trigger sell orders.  Doesn't that leave hedge funds holding GME stock?  The hedge funds expect the price to fall back to normal valuations, so I don't get why they would want to buy GME.  But I could be wrong, as the price drops are accompanied by increases in volume - people are selling on the drops.

I believe the premise is that the folks executing the attack want to buy shares at much lower prices, and that they execute this attack to cover either a new or existing short. If it's happening, it would seem intended to reduce confidence in the price among the retail investors that might otherwise replace the earlier entrants who have taken profit.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 02, 2021, 11:54:36 AM
Placing bets on either side of this is pretty stupid. But if this is your idea of fun - enjoy!

My tiny bit of GME is the most fun I've had in the market, ever.

That said, for all the attention I've been paying it, it's nothing to me. I adjusted my sell limits after lots of thought, and then offhandedly liquidated over 20x my stake in GME in other stocks ETFs because it was roughly time to re-up my cash cushion.

So much this, it's been a blast watching this play out.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 02, 2021, 12:28:08 PM
My broker locked me out of selling a bear call spread this morning because it's a "hard to borrow" stock, so the answer to "how to profit" was don't use TD Ameritrade, Interactive Brokers, or Robinhood. I also tried doing it with DDS - a lessor known short pump - and was denied.

At least I only wasted time trying to short the end of the squeeze instead of wasting money like the people going long into the squeeze. It's over now.

As a consolation prize I sold an XLE put for probably a 5% return by early March. Up $50, big whoop.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on February 02, 2021, 12:43:21 PM
My broker locked me out of selling a bear call spread this morning because it's a "hard to borrow" stock, so the answer to "how to profit" was don't use TD Ameritrade, Interactive Brokers, or Robinhood. I also tried doing it with DDS - a lessor known short pump - and was denied.

At least I only wasted time trying to short the end of the squeeze instead of wasting money like the people going long into the squeeze. It's over now.

As a consolation prize I sold an XLE put for probably a 5% return by early March. Up $50, big whoop.

I was able to open a 480/500 bear call spread at IB yesterday. I used the "complex options creator" tool or whatever it's called.
Title: Re: GME deathwatch - how to profit?
Post by: kenmoremmm on February 02, 2021, 12:52:18 PM
supposedly silver is the next one to get bid up to the moon?

https://www.youtube.com/watch?v=OjaG50BGcSo
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 02, 2021, 01:19:33 PM
My broker locked me out of selling a bear call spread this morning because it's a "hard to borrow" stock, so the answer to "how to profit" was don't use TD Ameritrade, Interactive Brokers, or Robinhood. I also tried doing it with DDS - a lessor known short pump - and was denied.

At least I only wasted time trying to short the end of the squeeze instead of wasting money like the people going long into the squeeze. It's over now.

As a consolation prize I sold an XLE put for probably a 5% return by early March. Up $50, big whoop.

I'm not convinced the squeeze has even started yet, given the amount of price manipulation going on (and amount of $800 call options traded compared to other strike prices).  Enough that I've left some of my shares long and will ride them to $1 if need be.

If I'm wrong, oh well.
Title: Re: GME deathwatch - how to profit?
Post by: Rockies on February 02, 2021, 03:02:13 PM
Rockies - All investing involves risk, but look at my earlier posts on GME.  I talk about the stock price, the volume, and things you can verify.  Can you disprove something I said, using data?

I cant disprove anything because I am not knowledgable about the subject nor have I ever executed any trade other than an ETF purchase for buy and hold. My opinion would be that in most cases even buying any single stock to hold it is a bit of a crazy and reckless move.  Index buy and hold is the way to go!
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 02, 2021, 04:01:06 PM
Rockies - All investing involves risk, but look at my earlier posts on GME.  I talk about the stock price, the volume, and things you can verify.  Can you disprove something I said, using data?

I cant disprove anything because I am not knowledgable about the subject nor have I ever executed any trade other than an ETF purchase for buy and hold. My opinion would be that in most cases even buying any single stock to hold it is a bit of a crazy and reckless move.  Index buy and hold is the way to go!

For long term, sure there's probably no one here arguing against that.  The vast majority of my portfolio is in index funds.  But I have a small pool of money that I play around with buying/selling stocks and options.  Money I don't really care much if I lose.  It's money I'm more willing to put toward far riskier plays (although, naked calls/puts is not one of them).  Who knows, I could get lucky and hit something big with it.  But it's such a small fraction of my NW that it won't make a huge difference if I miss.  The risk/reward is worth it for some plays.

It's not "stupid", it comes down to risk tolerance at the end.  Everyone has their own.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 03, 2021, 12:02:16 AM
Earlier someone called GameStop + Wall Street Bets a "freight train".  Since freight trains aren't known for going backwards at high speed, I think we need a new metaphor.

So what I propose as a metaphor is this:
"Into the valley of Death Rode the six hundred."

You have individual investors joining a cavalry, which gets stronger with numbers.  The threats and saber-rattling by WSB also fits.  Who are their opponents?  The literal and figurative big guns - Wall Street's hedge funds, high frequency traders, and institutional money.

For those who aren't familiar with The Charge of the Light Brigade, I'll quote it's most memorable lines:  "Theirs not to reason why, Theirs but to do and die."
Title: Re: GME deathwatch - how to profit?
Post by: swashbucklinstache on February 03, 2021, 07:35:36 AM
A wild guess on how to profit: if this ship does indeed go down, you might have a lot of first time stock market participants learning that harvesting losses is a thing for the first timeat tax time and selling near the very end of the year. Perhaps a play on that after things settle in the short term.
Title: Re: GME deathwatch - how to profit?
Post by: Financial.Velociraptor on February 03, 2021, 08:12:04 AM
I bought April puts at the 10 strike this morning.
Title: Re: GME deathwatch - how to profit?
Post by: hodedofome on February 03, 2021, 09:05:57 AM
I bought March BB $6 puts this morning as well.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on February 03, 2021, 09:43:16 AM
I bought April puts at the 10 strike this morning.

Are you my guy!?! shorter term than your Aprils I sold some 10 puts. figuring GME has raised some cash and will settle back to where it was.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 03, 2021, 09:54:17 AM
I guessing I'll have to feel left out.. anyone here buy my GME $950 call options?
Because most of the near term options top out at $800 strike, I went out a year.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 03, 2021, 01:37:05 PM
Also considering some April puts below $20 to hedge a bit.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 03, 2021, 01:58:35 PM
I guessing I'll have to feel left out.. anyone here buy my GME $950 call options?
Because most of the near term options top out at $800 strike, I went out a year.

You'll have to watch that thing decay for a year.
Doesn't your broker require you to hold cash reserves or a margin balance too?
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 03, 2021, 01:59:41 PM
I guessing I'll have to feel left out.. anyone here buy my GME $950 call options?
Because most of the near term options top out at $800 strike, I went out a year.

You'll have to watch that thing decay for a year.
Doesn't your broker require you to hold cash reserves or a margin balance too?

I think he was the guy who said he could sell naked calls.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 05, 2021, 09:46:28 AM
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.
Title: Re: GME deathwatch - how to profit?
Post by: v8rx7guy on February 05, 2021, 09:52:29 AM
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 05, 2021, 10:08:51 AM
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

A little less than a year of my life sold to the man. I'm considering wagering two or three.
Title: Re: GME deathwatch - how to profit?
Post by: v8rx7guy on February 05, 2021, 10:12:29 AM
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

A little less than a year of my life sold to the man. I'm considering wagering two or three.

But like, if the share price is over $40 on April 1, you lose your entire bet, under you double it?  Or is it like a sliding scale, or?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 05, 2021, 10:22:02 AM
I guessing I'll have to feel left out.. anyone here buy my GME $950 call options?
Because most of the near term options top out at $800 strike, I went out a year.
You'll have to watch that thing decay for a year.
Doesn't your broker require you to hold cash reserves or a margin balance too?
Technically, but not meaningfully.  Most of the price was an erroneous belief that WSB could push the price all the way past $1000/share.  As those beliefs fade, the options lose value (and buyers) dramatically.  So the options I sold Monday could be bought back for 5% of the price on Thursday, keeping 95% of the premium as profit.

When I look at other companies, their 1 year highest strike options are for 1.5x to 2x the company's current price, and trade for about 1% of the stock price.  With GameStop, 2x the price a year from now trade at 21% of the stock price.  Even the highest strikes (13x) traded at 10% earlier this morning (the last trade).

Once GameStop stock stops becoming interesting, the options prices will fall dramatically (like they did this week, so far).  Once the time value is decaying slowly each week, I'll probably cash out my gains.

dignam - Yes, I sold naked calls on Monday, but a small enough amount that I could afford to lose 4x the amount I invested.  Had GME reached $700-$850/share, my plan was to accept the loss and end the investment.

I predict the 2021 July call options at $800 strike will fall over the next 2 days.  Their bid-ask spread is $6.60 - $7.35 now, so you can at least sell them for $6.60.  I predict on Tuesday (Feb 9) you can buy them back for a much lower price.  This week GME shows they can't push the stock higher, so I view today as desperation from people who own high priced call options.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 05, 2021, 10:23:43 AM
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

A little less than a year of my life sold to the man. I'm considering wagering two or three.

But like, if the share price is over $40 on April 1, you lose your entire bet, under you double it?  Or is it like a sliding scale, or?
Sorry I misspoke. It's March 12! And I rounded: my breakeven is exactly $38.69. These options are very expensive.

If GME is below $38.69 on March 12, I profit (strike price - price paid - future stock price). These specific numbers are (70-31.31-X) where x is the stock price. If X=30 for example, I will have earned 8.69 per share or 27.8%.
If GME is at $38.69 on March 12, I break even.
If GME is above $38.69 on March 12, I lose my entire $31.31/share, or the equivalent of rolling a nice used uninsured car off a cliff.

So far I'm up $500 on paper, so that's fun.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 05, 2021, 10:38:41 AM
ChpBstd - Looking at July options, the closest PUT to that is $125 strike PUT selling for $90, so a $35/sh breakeven.  At the old stock price of $20/sh, that's only +17% profit.  You limit the loss to 100% of that investment, which is a nice feature.

With naked $800 strike calls expiring in July, a $900 strike translates to a -1400% loss for the seller of the calls.  Do you find that risk too high?  Or do you think the time value will fade more slowly?
Title: Re: GME deathwatch - how to profit?
Post by: v8rx7guy on February 05, 2021, 10:46:11 AM
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

A little less than a year of my life sold to the man. I'm considering wagering two or three.

But like, if the share price is over $40 on April 1, you lose your entire bet, under you double it?  Or is it like a sliding scale, or?
Sorry I misspoke. It's March 12! And I rounded: my breakeven is exactly $38.69. These options are very expensive.

If GME is below $38.69 on March 12, I profit (strike price - price paid - future stock price). These specific numbers are (70-31.31-X) where x is the stock price. If X=30 for example, I will have earned 8.69 per share or 27.8%.
If GME is at $38.69 on March 12, I break even.
If GME is above $38.69 on March 12, I lose my entire $31.31/share, or the equivalent of rolling a nice used uninsured car off a cliff.

So far I'm up $500 on paper, so that's fun.

Thank you, that really helps!  I'm rooting for you.  Biggest concern is that Musk does something stupid and starts a twitter storm or something...
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 05, 2021, 10:48:15 AM
I guess nobody is using my approach of selling calls at $800 strike, so I'll have to conduct the experiment.  I just sold one 2021 July call with an $800 strike for $6.00/share x 100 shares (total $600).

I predict these call options drop back to yesterday's price (!) of $3/sh, and I expect that to happen by Feb 10.  If the options are trading above $5/sh on Feb 10, I was wrong, and I'll wait to cover my position.

Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 05, 2021, 11:36:33 AM
ChpBstd - Looking at July options, the closest PUT to that is $125 strike PUT selling for $90, so a $35/sh breakeven.  At the old stock price of $20/sh, that's only +17% profit.  You limit the loss to 100% of that investment, which is a nice feature.

With naked $800 strike calls expiring in July, a $900 strike translates to a -1400% loss for the seller of the calls.  Do you find that risk too high?  Or do you think the time value will fade more slowly?

I think the TV will fade with astonishing quickness, but the risk is being liquidated on a burp in the stock price.

At my broker and probably yours, the maintenance requirement for selling naked calls is the greater of the following 3 formulae:
     1. 20% of the underlying stock less the out of the money amount (if any), plus 100% of the current market value of the option
     2. Calls: 10% of current market value of the stock PLUS the premium value
         Puts: 10% of Exercise Value of the underlying stock PLUS the premium value
     3. $50 per contract plus 100 % of the premium

So right now that would be formula #2, which is 10% of $63 (at this moment price) + $6, or about $12.30. That's the amount of cash you have to set aside to earn the $6 return, but it also includes the $6 return, so really you're setting aside $6.30/sh of your portfolio for this trade. The implied 5-6 month return on your cash is 95%.

Suppose Elon Musk tweets a suggested partnership with GME to trade in old video game discs at TSLA dealerships, or maybe short interest again exceeds 100% and the WSB crowd gets riled up for round 2. The stonk goes back to $420, and you have to put up additional maintenance cash or be liquidated immediately. We'll assume formula #2 still applies. The 10% of $420 would be $42, and the premium value might rise to, let's say, $50. Now instead of setting aside $6.30/sh you've suddenly got to free up $92/share, a 14.3x increase in the cash you have on hand. You decide to make pancakes that morning instead of eating cereal, so you miss the notice from your panicked broker and get liquidated by the algorithm for a triple digit percentage loss, right at the top.

It's not likely, but that's how you lose 800% even after making the right long-term forecast on a naked call. Most likely this option will be worth a penny by May.
Title: Re: GME deathwatch - how to profit?
Post by: mizzourah2006 on February 05, 2021, 12:06:18 PM
I guess nobody is using my approach of selling calls at $800 strike, so I'll have to conduct the experiment.  I just sold one 2021 July call with an $800 strike for $6.00/share x 100 shares (total $600).

I predict these call options drop back to yesterday's price (!) of $3/sh, and I expect that to happen by Feb 10.  If the options are trading above $5/sh on Feb 10, I was wrong, and I'll wait to cover my position.

Are they letting you sell those calls naked? Or do you still hold 100 shares? That's $80k to cover if it came to it, which it clearly won't.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 05, 2021, 12:54:52 PM
I'm using my account at IBKR, where I have lots of liquidity, especially compared to the call options I've sold.  Next time I open IBKR Trader Workstation, I'll look for it (in their "risk management" tool)

I agree WSB + fans pushed the stock to $420 once, but in my view they cannot do it again.  They GME having few sell orders, combined with cash to place buy orders.  Now, both are no longer true: they used their cash to buy call options and shares.  Hedge funds can rush in with short selling at $420/sh, meeting any buying demand (while profiting off the drop).  I think the conditions of 2 weeks ago are gone.

You're right to point out that if I didn't buy just 1 contract today, my risk of a margin call could be much greater.


I just sold one 2021 July call with an $800 strike for $6.00/share x 100 shares (total $600).

Are they letting you sell those calls naked? Or do you still hold 100 shares? That's $80k to cover if it came to it, which it clearly won't.
I applied for naked short selling of call options, and was (silently) approved.  In 2020 I bought lots of call options, which boosts my experience level, and maybe helped the decision to approve me.

If I sold an $800 strike call that expires today, and the stock was $801/sh, I really only need to come up with the difference.  The call option gives the holder the right (but not the obligation) to buy GME at $800/sh.  So to exercise the option, I have to be paid $800/share, or $80k.  I then need to provide $80.1k worth of stock, 100 shares of GME at $801/share.  (There's also cash-settled, more common in Europe, where I'd just pay $100)
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on February 05, 2021, 01:20:49 PM
The margin requirement on the naked $800 call is only $1200 at IBKR. The risk is IBKR considers the risk to be pretty low.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 07, 2021, 06:44:31 AM
bacchi - I really want to find that information, about the total margin for those positions.  When I searched, the closest I got was the "Risk Management" tool inside IBKR's Trader Workstation.  It said the "change" in margin was $1310 or so, but maybe I misread the field name.

ChpBstrd - Since the change in margin was $1300+, that suggests IBKR is locking up more than the $600 from the call option sale.  I can find my overall margin required, but that includes other investments I sold short (PUT options on Macy's and CCL, for example).

---
I read this week that people who bought PUTs on GME aren't getting as big a return as they might expect.  As GME's price falls, PUT options gain intrinsic value.  But volatility has fallen dramatically, so the time value has dropped dramatically.

I recall looking at 1 year PUT options on GME, at at the $500 level they cost just over $400-$10, breaking even in the $90-$100 range.  Right now those options are selling for about $455, roughly an increase of 10%... but this week, GME stock lost 80% of it's value.
Title: Re: GME deathwatch - how to profit?
Post by: Financial.Velociraptor on February 07, 2021, 11:48:24 AM
My GME long puts are down 28.5% since purchase on 2FEB2021.  I only bought a 1,000 bucks worth and intend to hold til the 16APR2021 expiry.  Breakeven at price of 8.95.
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on February 07, 2021, 12:40:43 PM
I viewed buying the puts as betting on a heavy favorite at the vegas sportsbook.

It looked like buying a 3-1 odds, the ones I looked at required a $7,000 purchase with an upside of $2,000 or so.  It was difficult for me to commit that much money for a capped upside
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 09, 2021, 12:16:30 AM
In general if PUT options are too expensive, so are call options.  That's why I sold $800 strike calls expiring in July for $6/sh.  My short calls can be bought for $4.50/sh now, but I'm predicting $3/sh or less by Thursday.

A successful buying attack happened on Jan 22, with the stock up and kept up for two days.  Market makers who sold call options had to buy shares at much higher prices, and eat the loss.  That didn't happen this past Friday, with Monday's closing price below Friday's.

Each Friday, call options expire, so that's the timing of attacks on GME stock.  An attack requires buying whatever sell orders are on the market, and then profiting off call options based on stock price.  I suspect the 90% of Wall Street Bets that joined recently are greedy, and might only be purchasing call options.  If nobody buys the stock - too many freeloaders - then the call options don't profit.

I will be watching the "open interest" on $800 strike GME calls.  Last Friday those open contracts hit 23k.  For Feb 12, there's 7k contracts so far.  I predict weaker attacks, with fewer contracts sold at the $800 strike.  I'll be especially interested in where that stands on Thursday, before the buying attack starts.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 09, 2021, 09:53:29 AM
A July GME strike $800 call just sold for $2.46/sh, reaching my prediction with 2 days to spare.  I plan to wait until Thursday to see how it goes.

One reason to avoid Friday: the open interest in Friday (2/12) $800 strike calls has almost doubled, to 13k contracts (yesterday it was 7k).  So while I suspect there's greedy freeloaders buying contracts - I have to assume some of them are preparing another buying attack on GME stock on Friday (when the call options expire).
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 09, 2021, 10:42:41 AM
My put options are down 4.65%, even though I bought them 5 days ago when GME was at about $105 and GME has since fallen to $50. I was 100% right on what would happen - the stonk lost over half its value within days - and I still didn't win LOL! Remember, time value increases as you move closer to in-the-money.

My theta (time decay) is about $125 a day and rising, so I'd like to make my exit with a bit of time remaining on the option. GME should be approaching breakeven price within the next couple of days unless GME announces something to do with cryptocurrency or SPACs, in which case it's all over! It'll be tempting to exit at that time with a modest gain rather than hold out until March.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 09, 2021, 11:02:15 AM
If Elon Musk announces he's creating a blockchain SPAC to acquire GameStop, I'll be closing my positions immediately!

If you don't want to reveal your exact purchase (I usually don't), could you provide an expiration date and price with similar characteristics?

Looking at 2021 Mar 19 PUTs today and 5 days ago:
$50 strike, from $19.20 to $16.39 now (-14.6%) .. $30.80/sh breakeven
$100 strike, from $59.92 to $58.22 now (-2.8%) .. $40.08/sh breakeven
$200 strike, from $155 to $153 now (-1.3%) .. $45/sh breakeven
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on February 09, 2021, 11:58:33 AM
Everyone holding onto their 1 share of GME:

(https://64.media.tumblr.com/bc0baca8b844185eb59c10720442ce76/tumblr_o2ieycMf8W1uewx7xo1_400.gifv)

(https://media1.tenor.com/images/70239905a64d78c3a1dade80389362ca/tenor.gif?itemid=17524452)
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on February 09, 2021, 05:17:19 PM
I have two shares, so I'll go twice as far!

But seriously, with almost no urgency I'm wondering if/how I want to exit. I'm in at around $230/share, and I'm not particularly hopeful on breaking even in my lifetime.

r/wsb is crazy...I guess I knew that, but it seems to have gone to the moon with craziness as a result of the viral nature of the GME story. So I'm not watching it or even GME price much anymore.

But neither am I particularly motivated to sell right now to keep $100 of what used to be $460. I might adjust my sell orders to break even just in case something happens. I no longer believe there is a plausible chance for me to have a reasonable opportunity to watch and jump on a spike for profit. Because I don't really think it will happen, and even if it does I won't be paying attention then.

Otherwise I may just let my 2 shares sit indefinitely for posterity.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 11, 2021, 07:56:21 AM
BigMoneyJim - In another thread you "rick rolled" to prove some memes last awhile, and I encouraged it by saying I think too many people are using (that song) as their GameStop investment strategy.  Could you be rick rolling yourself, in that you're "never gonna give [GME] up"?

People have a bias towards loss aversion, and tend to hold losing positions when they should sell.  One way to spot it:  if you had $100 right now, would you buy 2 shares of GameStop?  If you would rather have the $100 than buy the stock, ask yourself why you won't sell the stock to get that $100.

I would also add before Covid hit, GME traded for $4/share, so you're getting 10x more than the market valued the company 12 months ago.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 11, 2021, 08:07:43 AM
This morning I'm waiting to sell my lone July call on GME ($800 strike), but the buyers and sellers can't agree on a price.  The buyers won't pay more than $225 per contract, and the sellers are asking $340.

In my meager options experience, I pick a reasonable increment, and start my order above the lowest bid.  Maybe that's $2.30/sh ($230).  I might add $0.20/sh if that doesn't work... then another $0.20/sh.  Usually before I reach the ask price, a seller emerges out of nowhere and accepts my offer.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 11, 2021, 09:02:43 AM
Just finished this little mini experiment:

I guess nobody is using my approach of selling calls at $800 strike, so I'll have to conduct the experiment.  I just sold one 2021 July call with an $800 strike for $6.00/share x 100 shares (total $600).

I predict these call options drop back to yesterday's price (!) of $3/sh, and I expect that to happen by Feb 10.  If the options are trading above $5/sh on Feb 10, I was wrong, and I'll wait to cover my position.
On Feb 5 (last Friday), I sold a call for $600 (expiring July for $800/sh strike).  I just closed that position for $289 ($2.89/sh x 100 sh).  Of the $600 premium for selling the call option, I kept 50% as a profit, and spent 50% to close my position.

Note I opened the position on a Friday, and closed it out before the next Friday.  Options expire each week on Friday, so there's a motivation for WSB or hedge funds to push the stock price up that day, carrying their option prices up with it.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 11, 2021, 09:34:54 AM
Just finished this little mini experiment:

I guess nobody is using my approach of selling calls at $800 strike, so I'll have to conduct the experiment.  I just sold one 2021 July call with an $800 strike for $6.00/share x 100 shares (total $600).

I predict these call options drop back to yesterday's price (!) of $3/sh, and I expect that to happen by Feb 10.  If the options are trading above $5/sh on Feb 10, I was wrong, and I'll wait to cover my position.
On Feb 5 (last Friday), I sold a call for $600 (expiring July for $800/sh strike).  I just closed that position for $289 ($2.89/sh x 100 sh).  Of the $600 premium for selling the call option, I kept 50% as a profit, and spent 50% to close my position.

Note I opened the position on a Friday, and closed it out before the next Friday.  Options expire each week on Friday, so there's a motivation for WSB or hedge funds to push the stock price up that day, carrying their option prices up with it.

Nice job! I went with the herd and bought a put option at 70. Amazingly the stock fell by half and the put option still did not appreciate. Exited at a loss because I have better things to do, and because the tug of war between shorts and longs could go on longer than the time remaining on the option. Evidence of still-high short interest shook me out.

This is similar to how I tracked a 30/35 bear put spread (April expiration) on the VIX back when it hit 35 in January. VIX is now 22, but that position would be up  only 2.6% had I entered it at the time I was correct about the VIX's next move.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on February 11, 2021, 10:58:38 AM
BigMoneyJim - In another thread you "rick rolled" to prove some memes last awhile, and I encouraged it by saying I think too many people are using (that song) as their GameStop investment strategy.

What's even funnier is that 12 hours later, on another site and completely different subject, someone rick rolled me. Or at least it proved to me that some memes last quite a while.

Quote
Could you be rick rolling yourself, in that you're "never gonna give [GME] up"?

GME wasn't worth $230/share when I bought it, and I knew that. It was likely to lose nearly everything, and I knew that. I was jumping in *after* the hype, and I knew that.

Then I started hearing about the story from emails from family who don't invest in stocks, and in sports podcasts, the latter being after I had bought. I knew that probably was the time (or past) to get out.

I was right about everything, sort of. But I didn't act in my own financial interests. And I knew that.

I'm not trying to say I'm smart and acted appropriately. I'm saying I wouldn't encourage anyone to act as I did.

Holding now isn't smart, either, but it was $460 (2 shares) to be part of a meme and have a tiny chance of outsized profit. I even had the chance to double my money but missed it.

Yesterday morning I reset my sell order to $100/share. For no smart reason I decided selling at $50/share isn't worth my time, but I'll take $100/share if it hits that.

So I guess maybe I am still memeing, but I approached the whole thing as a trip to the casino where if I walk away a few hundred bucks poorer, at least I had fun. I unsubbed r/wsb and am mostly out of the daily hype, and I was never about "diamond hands", although "to the moon" was fun.

Most likely scenario is that I'll eventually sell them to get rid of the digital clutter. I had a buy order for $4, but I canceled that. These 2 shares I'll hang onto for a bit, but I figure that $460 is probably just gone now.

I did pick up 10 shares of BB, too, at around $17 I think, but I'm OK hanging on to them long term. But I'm probably done with playing with more meme stonks for quite a long time. I'm not going to monitor BB for squeeze spikes or other anomalies. I'm not watching GME close enough to act quickly, either, but just setting a 60-day sell order.

The rest of my money is in index ETFs and cash. I could certainly have spent that $460 more effectively elsewhere, but it didn't actually hurt me in any meaningful way.

I really worry if any of these folks claiming to have invested their home down payments and all available assets while still in debt were serious. When I've posted about GME I've tried to emphasize that my stake in it is near-meaningless to me so I don't encourage others to jump on the bandwagon in a self-destructive way.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on February 11, 2021, 11:11:13 AM
Some of those guys are posting screenshots of their plays.  Hundreds of thousands YOLO'd in and just gone.  Plenty of other screen shots of someone YOLOing their entire mortgage in and making millions too.  I have no idea if this is "play money" to these people, but some of the screenshots are absolutely ridiculous and I imagine there are a lot of lives that were absolutely wrecked by foolish gambling on risky stocks.  We all know it happens. 
Title: Re: GME deathwatch - how to profit?
Post by: theoverlook on February 11, 2021, 11:23:06 AM
I had yet to make my 2021 IRA contribution so I put the $6000 into Gamestop at $238/share. I knew it was dumb and that I was risking all of it, and I have no other individual stocks but it was a fraction of a percent of my liquid net worth and I thought it would be interesting. It dropped, spiked, dropped, spiked, and I sold it the next day for $320/share, almost right at market close, netting a little over $2000. The rest of my portfolio has gone up and down by way more than that in a single day both before and after but for some reason that $2000 has a special place in my heart.

I have no idea why I took the risk and why it continues to fascinate me. I know it was dumb luck that I came out intact much less made anything.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on February 11, 2021, 12:19:18 PM
I had yet to make my 2021 IRA contribution so I put the $6000 into Gamestop at $238/share. I knew it was dumb and that I was risking all of it, and I have no other individual stocks but it was a fraction of a percent of my liquid net worth and I thought it would be interesting. It dropped, spiked, dropped, spiked, and I sold it the next day for $320/share, almost right at market close, netting a little over $2000. The rest of my portfolio has gone up and down by way more than that in a single day both before and after but for some reason that $2000 has a special place in my heart.

I have no idea why I took the risk and why it continues to fascinate me. I know it was dumb luck that I came out intact much less made anything.

Congrats on your good fortune.

Dancing on the edge of the volcano is fun...... especially if you can live to tell the tale!

Possible reasons the $2000 has a special place:

1) Sticking it to 'the man': You did it! Stuck 'the man' for $2k and got away with it!
2) Afterglow of volcano dancing. It was a thrilling ride and you made the right series of decisions to come out on top. Very satisfying emotionally, and the $2000 is the 'souvenir' of the experience.
3) You participated in an epic tale of short-busting and have $2000 to show for it. One that will be studied in classrooms for years to come. Ultimately, what lessons are learned remain to be seen.
4) You're depending on the $2000 for FIRE. OK, just kidding here, but, dunno. probably there's something else that I can't think of.

Actually, I'm kinda in a similar situation. And it was extremely rewarding emotionally to come out on top--more so than the dollar value would indicate.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 11, 2021, 12:21:10 PM
ChpBstrd - Thanks, but I've decided this is my play/speculative money, so we'll see.  I took $305 and bought 2 GME calls: one at $50 and one at $55 ... expiring tomorrow!  This is purely speculative market timing with play money.

Two reasons to be this crazy with $305.  Tomorrow has as many high strike ($800) calls as last Friday, when the stock was pushed higher.  And r/WSB just sold off their cannabis stocks, sending prices tumbling there.  I think they're got cash.

I'll know if I'm right in the first hour of trading, when hopefully the stock jumps a little and I can sell my calls (before they expire 7 hours later!).  Definitely a play money move, but hopefully it keeps me from messing with my other holdings.
Title: Re: GME deathwatch - how to profit?
Post by: blue_green_sparks on February 11, 2021, 12:54:54 PM
I was working on my taxes yesterday. I play around with day-trading once in a while. Seems I bought and sold 6,000 shares of Gamestop (GME) back in September for a whopping $225 gain. $2 million would have been a little better, LOL.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 11, 2021, 01:06:04 PM
Tomorrow has as many high strike ($800) calls as last Friday, when the stock was pushed higher. 

My understanding is that short investors buy calls to hedge their short bets, so a large open interest in calls is partially a reflection of short interest. However, if the shorts got in last week, and GME lost half its value since then, maybe they won't be in a rush to cover on Friday like they were in the weeks when GME was going astronomical. Also, maybe a greater percentage of short shares are represented by call hedges than was the case in January, when the lesson about naked shorting was learned.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 12, 2021, 02:17:44 AM
ChpBstrd - Short sellers could buy $380 strike calls for $0.01/sh (3:50pm), or buy $800 strike calls for $0.02 (3:58pm).  As a hedge, the $800 strikes don't make sense for a $50-$60 stock.  But you could be right about more call options being bought by hedge funds, as protection when they short the stock.

WSB got millions of new followers, who are added guns for their attacks.  I claim they "like to sing along and likes to shoot his gun ... but he don't know what it means" to quote Nirvana.  They are repeating the same steps that worked before, unaware they won't work now.


I was working on my taxes yesterday. I play around with day-trading once in a while. Seems I bought and sold 6,000 shares of Gamestop (GME) back in September for a whopping $225 gain. $2 million would have been a little better, LOL.
If you want to blame yourself for not predicting the future 4 months in advance, you can add every market crash to that list!
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 12, 2021, 09:00:06 AM
Should have done a limit sell at the open (up +5%), but having missed that, it doesn't look like much is going to happen today.  I sold my $305 worth of options for $182, taking a $123 loss.  Still, I had a $311 profit, so net profit is $188.

ChpBstrd - Thanks, but I've decided this is my play/speculative money, so we'll see.  I took $305 and bought 2 GME calls: one at $50 and one at $55 ... expiring tomorrow!  This is purely speculative market timing with play money.

Looks like my last chance to sell some GME calls with an $800 strike price:
sold 1x March 5 call for $62 premium
sold 8x March 19 calls for $78/ea premium
sold 6x April 16 calls for 130.8/ea premium (1x 135, 5 x 130)

In total I sold 15 contracts for $1471, or about $1/share.  It looks like Interactive Brokers will require $8,000 of maintenance margin, if I'm reading their "Risk Navigator" correctly.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 19, 2021, 12:22:37 PM
Well dang, I snatched defeat from the jaws of victory. GME continues to fall and the 70-strike March 12 puts I bought and exited at a loss are now a couple percent higher than they were when I originally bought them. Shoulda held.

Lesson learned: I'm not suited to profit from greater-fool investments, even betting against the obviously doomed ones.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 19, 2021, 02:07:47 PM
Another way is to stand in front of a news-breaking freight train. I went for it, and sold unprotected, long-dated high priced call options.  If GME rises above my strike price, the holder of the option can force me to buy GME stock.  But today GME didn't even spike at the open... it just dropped and wobbled around ...

I'm prepared to lose -400% my investment.
I would take any quick profit on the naked short calls ASAP because this thing is unpredictable and not at all tied to reality. You're playing roulette with leverage there, and losses could exceed 400%.
Revisiting this, WSB claimed to attack call options, which I verified by looking at GME market data.  But the news coverage surely alerted all the institutional money managers and hedge funds, with orders of magnitude more money to invest than WSB.  Buying attacks use up cash, and push the price higher, making the next attack cost more - with less cash available.

Here's what I saw Feb 1, Monday, and what it meant:
Open at $316.56, a drop from Friday's $325 close.  WSB lacks the buying power they need to push the stock up - their strategy is starting to fail.
up 2%, a buying attack starts (from WSB)
price plummets: the hedge fund sell orders far outweigh WSB buy orders
prices moves up then down, up then down: hedge funds stringing WSB along - buy orders are met by sell orders over and over.

The market prices told a story that matched my predictions, so I measured my risk
appetite and sold call options at a $950 strike while GME traded at $250/sh.  I watched the market constantly after that, prepared to close my position if I had too much of a loss.


^^^
+1.

This is not the time to stand in front of a freight train. Shorts are still at 100% (or more), meaning that the short covering that occurred and pushed the stock to $300 was merely replaced by renewed shorting. "The squeeze hasn't squooze." is what WSB likes to say, and I kinda agree.
Revisiting the freight train - it needed gas, in the form of new cash.  The further they got, the higher the price of gas.  They couldn't sell GME stock without dropping the price.  They used up their cash, and the freight train stopped.

A short retelling might be: A number of retail investors pushed the price of GME up 100x beyond it's price a year earlier.  Every hedge fund and institutional investor learned about it through every news source.  All that institutional money overwhelmed the retail traders, pushing the price down towards it's valuation again.  An efficient market corrected a mispriced stock.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on February 19, 2021, 03:04:36 PM
Since I've commented in a couple of threads about my buying 2 GME at around $232, I sold at open Monday Tuesday for market price. So I walked away with a little over $100 left of my initial $460.

I was tired of watching GME, and it wasn't a long-term investment for me, so I took what's left of my ball and went home.

I still have 10 shares of BB bought at over $17, but I'm willing to ignore it and let it sit there for ages.

Now I'll go buy some BTC. Just kidding.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on February 24, 2021, 01:39:12 PM
Got out too early man.  GME just shot up like 60% in the last hour.  At $74/share now.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on February 24, 2021, 01:41:17 PM
Shit it went to $78 while I was making that post.   Strap in boys, next stop the moon.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on February 24, 2021, 01:52:31 PM
$92.  wtf is going on?
Title: Re: GME deathwatch - how to profit?
Post by: Davnasty on February 24, 2021, 02:09:43 PM
Looks like Reddit went down right about the same time GME started climbing.

AMC had a smaller bump.

I was not able to purchase through Vanguard.

Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on February 24, 2021, 05:48:55 PM
$182 after hours price now. Crazy!
Title: Re: GME deathwatch - how to profit?
Post by: bwall on February 25, 2021, 04:32:10 AM
$92.  wtf is going on?
$182 after hours price now. Crazy!


Yeh, this is crazy. AGAIN. What's going on? Hard to say, but let's see what we do know.

Yesterday GME traded flat, around $50 all day, until around 3 p.m. when the price and volume shot up quickly. GME closed at $91.71 after a couple of halts in the final hour. It's at $146 pre-market now, hours before open.

Average daily share volume (10 day) has dropped to about 20m shares, according to the snapshot on my brokerage screen. At the peak frenzy, it was easily topping 150-170m. Low volumes are a friend to those who seek quick spikes, perhaps induced by shorts closing out their position. Low volumes make it difficult to get access to shares, thus a buyer is being forced to take any offer.

Short interest has dropped to 30%, which is high, but not unduly high or enough to trigger a short squeeze, IMO. And, no where near the high of 140% earlier.

100,000 Calls (representing 10m shares, about 20% of the float) traded hands yesterday at 26 FEB expiration at strike prices above $50, massively outstripping the open interest. Presumably, the open interest sellers were those who were convinced that the frenzy was over and they'd be getting 'free money' by writing short dated calls. The new buyers are bulls or short Call covering. Who were yesterdays' Call sellers at the above $50 strikes? If they're covered Call writers, they left a lot of money on the table by not just selling shares outright. If they're hedge funds cowboys writing naked Calls, they had a sleepless night last night.

There were about another 15,000 Calls that changed hands between $90 and $150.

There was news on Feb. 23 that GME would replace the CFO. If that were the catalyst, the surge would've happened at open, not one hour before close.

Roaring Kitty reported bought 50,000 more shares last week (a $2m outlay in round numbers), just a drop in the bucket. But, perhaps large enough to signal a floor to true believers (or signal an idiot to those who don't believe the GME turnaround story).

The question for me is, who bought millions of shares in the last hour at prices substantially higher than the rest of the day (or week)? Who says 'I gotta have me some GME shares today, dammit! I don't care what I have to pay!! and I won't wait until tomorrow or buy in-the-money Calls (sub $50)' ?
Title: Re: GME deathwatch - how to profit?
Post by: bwall on February 25, 2021, 06:11:21 AM
Just a quick follow up; before market open today, GME Calls at the 26 FEB expiration are only showing about 50,000 open contracts between the strike prices of $50 and $150, not 100,000. So, yesterday's large volume resulted in only 50,000 open interest, not 100,000.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 25, 2021, 06:55:52 AM
My GF keeps asking why I'm not selling my GME shares.  This was purely a speculative bet for me, so my thinking here is I'll sell if the amount I get is a life-changing amount.  That would require probably a $1k+ share price for me to consider.

Still crazy what is going on, I don't think anyone really knows what is causing the spike.  IF, and a strong IF, this is anything like the VW squeeze, what we saw with GME last month was just the gamma squeeze and this could potentially go to the stars. 

Again, anyone in this stock is not investing, we're betting. 
Title: Re: GME deathwatch - how to profit?
Post by: bwall on February 25, 2021, 07:55:30 AM
My GF keeps asking why I'm not selling my GME shares.  This was purely a speculative bet for me, so my thinking here is I'll sell if the amount I get is a life-changing amount.  That would require probably a $1k+ share price for me to consider.

Still crazy what is going on, I don't think anyone really knows what is causing the spike.  IF, and a strong IF, this is anything like the VW squeeze, what we saw with GME last month was just the gamma squeeze and this could potentially go to the stars. 

Again, anyone in this stock is not investing, we're betting.

There are plenty of shares now available for shorting. So an adventurous hedge funder could short the open this morning from $150 to Kingdom Come. Already 24m shares traded hands in the first 20 minutes this morning and the price has dropped to $113. Nothing to stop it from dropping all the way to $50, other than short covering. Who's buying at these levels? It's nuts.

The longs need to keep the price high until tomorrow's close--a very, very tall order. Then they can get a boost from any naked call writers who're forced to buy to cover their sour bet.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 25, 2021, 08:44:25 AM
I've been buying GameStop... to close the calls I sold.  Plenty of losses, but at least I found the limit of my risk tolerance!

I sold calls in the midst of the last buying attack, when GME was hitting a wall of selling.  I had a thesis, looked at price movements to confirm it, and then measured how much risk I was willing to take.  That's how I want to speculate/invest/bet - using a thesis backed by data and measured risk.

Unfortunately, the next time I sold calls, I just treated all of that as a checkbox that had already been ticked.  I did not have a thesis, did not study data, and did not calculate the risk of each new bet.  A new bet/investment needs a new calculation of risk, and I failed to do that.

I did worse than that, too.  I tried to sell calls that were blocked by IBKR, telling me I couldn't have a buy order (my stop loss order) and a sell order at the same time.  So I canceled the stop loss order to buy more!  Before that, I at least had some risk control on automatic pilot - but I kicked that aside to pick up pennies in front of a steamroller.

As a hobby, selling calls on GME is very overrated.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on February 25, 2021, 09:06:05 AM
@MustacheAndaHalf ; Now that you're out of the trade can you give us? Which expirations and strikes? entry and exit prices (and dates)? 

The reason that I ask is so that interested bystanders can learn what happened when a seemingly 'can't miss' trade did just that.

FWIW: I would have also thought that GME was over. Just dead cat bounces and suckers' rallies, nothing to see here.

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 25, 2021, 09:42:22 AM
@bwall - I planned to post it over in "An experiment", but maybe it fits better here.

Here's the numbers to go with the mistakes I mentioned above:

   The Fad Fund         price      orig price      gain / loss   
   AMC $22 call 2023         $458.00      -$199.56      -129.50%   
   GME $800 call Mar 12         $1,926.00      -$144.63      -1231.67%   
   GME $800 call July 16         $5,000.00      -$229.90      -2074.86%   
   GME $950.00 call 2022         $4,713.00      -$6,799.12      30.68%   

The most dramatic first: the July 16 calls at a -2075% loss.  I canceled my stop loss to lose more... I mean buy more calls.  That's a really bad combination.

Note the strike price is $800, and GME in this run up never pushed above $200.  But the buying attack pushed volatility through the roof, which pushes time value up dramatically - and that's all these calls are, is time value.

The one profitable GME call was sold Feb 1st, when I actually did my research.  Let me add one more mistake: chasing past successes.  I needed to treat the Jan 2022 call as a success, cash it in and move on.  Although it's technically a 30% profit, I had the opportunity for a 90-95% profit and did not take it.

Given everything that happened with GME, I decided to close AMC positions as well.  I had a 200% stop loss, that I triggered manually at -130%.  (I sold it for $200, then bought it back for $458, taking a $258 loss: -258/200 = -130%)

----
An observation - not an attack - that I find interesting.  When I mentioned my investment in this thread on Feb 1st, a couple people strongly recommended against it (at a very scary time, I understand).  That time of panic and fear was the only profitable investment in the group.  Meanwhile, the worst decision was made selling calls when volatility was orders of magnitude lower, and GameStop had faded from most people's minds.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 25, 2021, 09:49:18 AM
Meanwhile, we "long idiots" are just along for the ride lol. 

I also want to point out that I stated last month that I believed it was just getting started, and more volitile days were in our future.  OK, done patting myself on the back.
Title: Re: GME deathwatch - how to lose money?
Post by: ChpBstrd on February 25, 2021, 09:54:17 AM
Well at least I'm not the only one who lost money. I'm glad I exited my 5 GME $70 March 12 puts for $29, about a week after buying them for $31.30. They are worth $15.25 now! I exited because the price of the puts was not moving even as GME fell down the stairs, so I knew there was something wrong with my thesis even if I didn't comprehend why.

Also, I doubt anyone is going to profit from knowing my exact trades. I do have suspicions that someone could profit if they consistently did the exact opposite of me, and I suppose that is Robinhood's business model.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on February 25, 2021, 11:12:48 AM
Thanks for sharing.

The GME market is absolutely crazy. Stock is trading now at $173 (up $81 on the day, after doubling to $91 yesterday). The $800 Calls you mention have already gone up another 10% from the prices you listed, so if you hadn't changed course, losses would've been even higher. Or just hodl till expiration, which might lead to sleep loss.

Another 100,000 options contracts are changing hands again today with three more hours of trading left. It remains to be seen how many of those will be open interest at the end of the day.

Any GME short position would be having a very very bad day. And that's when the DOW is down 540 points (1.7%).

GME's market cap went from $4b to $12b in less than 24 hours. I don't believe that a tweet from Ryan Cohen (?) the Chewy guy, board member, whatever, set off $8b in market cap inflows and 100m shares changing hands (so far) today. At least, I doubt the reddit crowd has that much additional firepower available to them in 24 hours.
Title: Re: GME deathwatch - how to lose money?
Post by: bwall on February 25, 2021, 11:18:03 AM
I do have suspicions that someone could profit if they consistently did the exact opposite of me, and I suppose that is Robinhood's business model.

I've shared this suspicion off and on for years. Perhaps Robinhood has managed to harness and monetize 'looking over the shoulder' of our collective trades? No wonder Citadel Capital is willing to pay so much for the 'flow of information.' :) :)
Title: Re: GME deathwatch - how to profit?
Post by: Scandium on February 25, 2021, 11:39:37 AM
My GF keeps asking why I'm not selling my GME shares.  This was purely a speculative bet for me, so my thinking here is I'll sell if the amount I get is a life-changing amount.  That would require probably a $1k+ share price for me to consider.

Still crazy what is going on, I don't think anyone really knows what is causing the spike.  IF, and a strong IF, this is anything like the VW squeeze, what we saw with GME last month was just the gamma squeeze and this could potentially go to the stars. 

Again, anyone in this stock is not investing, we're betting.

There are plenty of shares now available for shorting. So an adventurous hedge funder could short the open this morning from $150 to Kingdom Come. Already 24m shares traded hands in the first 20 minutes this morning and the price has dropped to $113. Nothing to stop it from dropping all the way to $50, other than short covering. Who's buying at these levels? It's nuts.

The longs need to keep the price high until tomorrow's close--a very, very tall order. Then they can get a boost from any naked call writers who're forced to buy to cover their sour bet.

I was ready to get out of this nonsense, with my 5 shares, "for the lols". Had a limit sell order at $95, which executed for $160 this morning. Lost a few hundred bucks, but I just wanted to get out of this. Fun while it lasted, but not interested in loosing more..
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on February 25, 2021, 12:44:58 PM
I suspect the latest squeeze was partially triggered by rising interest rates, which one can assume will affect the cost of borrowing stock.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 25, 2021, 09:40:58 PM
My approach is heavily flawed by ignoring time value.

Meanwhile, we "long idiots" are just along for the ride lol. 

I also want to point out that I stated last month that I believed it was just getting started, and more volitile days were in our future.  OK, done patting myself on the back.
I don't see anyone using the quoted phrase, and I hope they don't since insulting others is against the forum rules.  I forgot if you were investing for fun or not, so I looked at your prior post:

This was purely a speculative bet for me, so my thinking here is I'll sell if the amount I get is a life-changing amount.  That would require probably a $1k+ share price for me to consider.
...
Again, anyone in this stock is not investing, we're betting.
GME's highest value was before the news media caught the story.  Now that the situation is known to everyone, and presents a profit opportunity for hedge funds, I think the path to the moon is much farther away.  Like if you look at each week's buying attack, they get stopped at lower and lower stock prices.

Why sell into each attack, and then buy back afterwards?
Title: Re: GME deathwatch - how to lose money?
Post by: MustacheAndaHalf on February 25, 2021, 09:48:10 PM
Well at least I'm not the only one who lost money. I'm glad I exited my 5 GME $70 March 12 puts for $29, about a week after buying them for $31.30. They are worth $15.25 now! I exited because the price of the puts was not moving even as GME fell down the stairs, so I knew there was something wrong with my thesis even if I didn't comprehend why.

Also, I doubt anyone is going to profit from knowing my exact trades. I do have suspicions that someone could profit if they consistently did the exact opposite of me, and I suppose that is Robinhood's business model.
I definitely secured my premium membership in that club.  I still need to add up the damage, but IBKR displays my portfolio as rolling back 2 weeks.  I've lost all my gains for the past 2 strong weeks, which is not as bad as it could have been.

I hope I will treat things like this as an event.  When the event ends, so does my understanding of what happens next.  I need to close my position at that point, not hang on for an arbitrary profit I imagined.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 25, 2021, 10:02:37 PM
Thanks for sharing.

The GME market is absolutely crazy. Stock is trading now at $173 (up $81 on the day, after doubling to $91 yesterday). The $800 Calls you mention have already gone up another 10% from the prices you listed, so if you hadn't changed course, losses would've been even higher. Or just hodl till expiration, which might lead to sleep loss.
...
Any GME short position would be having a very very bad day. And that's when the DOW is down 540 points (1.7%).
I think it might actually be better to talk about significant losses, to get past them.  So thanks for listening, as well.

My biggest problem was IBKR rising margin requirements by orders of magnitude.  I prioritized them by how much maintenance margin each call freed up, and that's why I sold.  So I might have a $6 loss, but IBKR required $100 of maintenance margin on that loss.

I thought the stock might plunge today, hitting a wall of selling, but I couldn't keep speculating so I covered most of my positions.  It set me back about 2 weeks, which isn't as bad as I expected.  I've sold off over 90% of my positions, but have a small number left that I plan to sell next week.

When I was almost done closing my positions, the last few saw the price to close double from minutes earlier.  Given the exposure was small (similar to my Feb 1 investment), and I could afford the maintenance margin, I elected to keep them.  My plan is to wait for them to fall in value, and then close them after GME settles down again next week.

So now I'm not waiting for a profit, I'm waiting for a small number of contracts to fall dramatically in price, so I can take a smaller loss.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on February 26, 2021, 05:39:29 AM
My approach is heavily flawed by ignoring time value.

Meanwhile, we "long idiots" are just along for the ride lol. 

I also want to point out that I stated last month that I believed it was just getting started, and more volitile days were in our future.  OK, done patting myself on the back.
I don't see anyone using the quoted phrase, and I hope they don't since insulting others is against the forum rules.  I forgot if you were investing for fun or not, so I looked at your prior post:

This was purely a speculative bet for me, so my thinking here is I'll sell if the amount I get is a life-changing amount.  That would require probably a $1k+ share price for me to consider.
...
Again, anyone in this stock is not investing, we're betting.
GME's highest value was before the news media caught the story.  Now that the situation is known to everyone, and presents a profit opportunity for hedge funds, I think the path to the moon is much farther away.  Like if you look at each week's buying attack, they get stopped at lower and lower stock prices.

Why sell into each attack, and then buy back afterwards?

Sorry - I was quoting Jim Cramer in an old interview where he blatantly admitted to manipulation.  I think his actual line was "moron longs".
Title: Re: GME deathwatch - how to profit?
Post by: Financial.Velociraptor on February 26, 2021, 07:59:51 AM
I still 10 long puts at the 10 strike and 16APR2021 expiry that I bought for 1.05 a share.  I have 1,050 in capital at risk in the trade.  I am deeply underwater.  But I made sure to keep my position size small and my risk defined by the 1,050 unlike M&1/2 who chose a strategy with potentially unlimited losses.  I regularly put about 1,000 into long puts on things that are over leveraged, subject to various pressures, etc.  I've been doing about 2 years and am up 20,792 (as of last night's close) on the experiment. 

I'd be happy even if I was down several thousand as I consider these long puts a hedge and "insurance"  They sure have paid off before when the market was tanking in March and April. 
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on February 26, 2021, 09:41:56 AM
My biggest problem was IBKR rising margin requirements by orders of magnitude.  I prioritized them by how much maintenance margin each call freed up, and that's why I sold.  So I might have a $6 loss, but IBKR required $100 of maintenance margin on that loss.

At one point, the margin for the July 800 calls was $31k each.

I also had to close some short 800s at a huge loss. It sure seemed like an easy win. At any other brokerage, it probably would've been.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on February 26, 2021, 10:06:20 AM
My biggest problem was IBKR rising margin requirements by orders of magnitude.  I prioritized them by how much maintenance margin each call freed up, and that's why I sold.  So I might have a $6 loss, but IBKR required $100 of maintenance margin on that loss.

At one point, the margin for the July 800 calls was $31k each.

I also had to close some short 800s at a huge loss. It sure seemed like an easy win. At any other brokerage, it probably would've been.

OMG!!! ! That's a lot of margin. wow.

I guess the brokers weren't taking any chances.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 26, 2021, 01:13:02 PM
My biggest problem was IBKR rising margin requirements by orders of magnitude.  I prioritized them by how much maintenance margin each call freed up, and that's why I sold.  So I might have a $6 loss, but IBKR required $100 of maintenance margin on that loss.
At one point, the margin for the July 800 calls was $31k each.

I also had to close some short 800s at a huge loss. It sure seemed like an easy win. At any other brokerage, it probably would've been.
When the fear was gone, I treated the environment as permanent, which was a mistake on my part - the easy win you reference.  At least for me, though, I can point to specific failures to be disciplined and follow the same process that made me a lot of money over the past 12 months: form a thesis, check the data, determine amount I can risk losing, and invest.  I did none of that while picking up nickels in front of the steamroller.

As to brokerages, Vanguard only allows selling covered calls, so without owing the underlying stock there's no way to make this trade.  I'm not sure about elsewhere.

A key thing for me is close the position earlier, then move on.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on February 26, 2021, 11:16:33 PM
At one point, the margin for the July 800 calls was $31k each.
GME stock ranged from $101 to $185 on Thursday, or $10k to $19k to buy 100 shares.  Now that I think about it, I could have reduced margin requirements by purchasing GME shares!  Amusing, but a bad idea: the $9k difference between high and low is a hint of the potential losses, which are greater than call option losses.


I still 10 long puts at the 10 strike and 16APR2021 expiry that I bought for 1.05 a share.  I have 1,050 in capital at risk in the trade.  I am deeply underwater.  But I made sure to keep my position size small and my risk defined by the 1,050 unlike M&1/2 who chose a strategy with potentially unlimited losses.
Very true.  I expected higher margin requirements, but not exponential growth.

I thought about a lower risk approach of using bull call spreads, of buying the highest strike call and selling a lower strike call.  Unfortunately bid-ask spreads are so far apart that you wind up with a premium less than 1% of the money at risk.  I actually saw $800 calls sell for more than $780 calls, which would be a great time to close the position at a gain.. when the stock moves against you.

There might be some way to take advantage of PUT options, which have limited downside.  But everything is different with GME: the stock tripled from Feb 22 to Feb 25... and $800 strike Mar 19 calls went up in price slightly.  It can be hard to predict what will happen with put options on GME.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 02, 2021, 07:55:16 PM
First, how not to make money: sell calls at low volatility, right before GME gets heavy, volatile buying.  Another way: 2022 or 2023 spreads, with huge bid-ask spreads, offer really horrible risk-reward scenarios.

The bid-ask spreads are relatively narrow for March 12, which is where I bought a bear put spread (my first!).  I bought a $90 put, then sold an $85 put.  I speculate that GME will drop below $87.85/sh by next Friday (Mar 12).  If GME drops to $85 at any point, I'll close the position for $5/sh gain.  Gauging by the breakeven point for "at the money" puts, the market now expects GME to be near $90/sh on Mar 12.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 05, 2021, 12:00:14 PM
My bear put spread is looking doomed, since $90 and $85 puts are just $0.50 apart.  The equivalent speculation today would be selling $115 put and buying the $110 put: speculate $200 to gain $500 if GME drops below $110.  GameStop stock is just staying where it was last week, going nowhere.

The CEO could dilute the stock just 10%, and triple their cash on hand.  Two years ago GME had a 1.1B market cap.  Diluting their shares just 11%, they could raise 1.1B in cash, more than tripling the company's cash position.  I find it odd the executive team at GameStop wants to transform the company, but refuses to raise a transformational amount of cash.  As Jim Kramer put it, "their silence is deafening".
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 05, 2021, 12:17:04 PM
The Congressional hearings and possibly their own stock option conflicts of interest seem to have encouraged them to keep a low profile.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 05, 2021, 02:12:05 PM
I like the stock.

Disclaimer: Long GME, not a financial advisor.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 05, 2021, 02:13:33 PM
My bear put spread is looking doomed, since $90 and $85 puts are just $0.50 apart.  The equivalent speculation today would be selling $115 put and buying the $110 put: speculate $200 to gain $500 if GME drops below $110.  GameStop stock is just staying where it was last week, going nowhere.

The CEO could dilute the stock just 10%, and triple their cash on hand.  Two years ago GME had a 1.1B market cap.  Diluting their shares just 11%, they could raise 1.1B in cash, more than tripling the company's cash position.  I find it odd the executive team at GameStop wants to transform the company, but refuses to raise a transformational amount of cash.  As Jim Kramer put it, "their silence is deafening".

Melvin Capital said they'd been sitting on GME since 2014, at $40. So, that sorta re-sets the 'natural price' of GME from $20 to $40, at least for me. Doing the math, that'd put the market cap right at $1.1b, I think, right?

I think I also read that GME bought back $178m worth of shares sometime during 2020, thus reducing their float and leading to the short interest rising to 140%, if I understand correctly. Nothing quite like shorting shares back to the company, right?

Then Roaring Kitty, aka DFV, bought 50,000 shares around $40, post-squeeze, after/when the stock had overshot it's lower bound (see above), thus setting a floor akin to Gandalf in Lord of the Rings "YOU SHALL NOT PASS" or perhaps more like the knight in Monty Pyton's "Holy Grail" "None Shall Pass", depending on one's temperament and outlook on life.

In the meantime GME has acquired enormous quantities of free publicity. Why ruin it by issuing shares? I think it's going to be awhile before the shares drop below $100 again. YMMV.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 05, 2021, 06:52:01 PM
In the meantime GME has acquired enormous quantities of free publicity. Why ruin it by issuing shares? I think it's going to be awhile before the shares drop below $100 again. YMMV.

Gamestop should do a promo where you get a freebee if you can prove you lost money on their stock. They could build up a nice marketing database that way, and use it to launch their post-bricks-and-mortar business.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 05, 2021, 11:52:47 PM
My bear put spread is looking doomed, since $90 and $85 puts are just $0.50 apart.  The equivalent speculation today would be selling $115 put and buying the $110 put: speculate $200 to gain $500 if GME drops below $110.  GameStop stock is just staying where it was last week, going nowhere.

The CEO could dilute the stock just 10%, and triple their cash on hand.  Two years ago GME had a 1.1B market cap.  Diluting their shares just 11%, they could raise 1.1B in cash, more than tripling the company's cash position.  I find it odd the executive team at GameStop wants to transform the company, but refuses to raise a transformational amount of cash.  As Jim Kramer put it, "their silence is deafening".

Melvin Capital said they'd been sitting on GME since 2014, at $40. So, that sorta re-sets the 'natural price' of GME from $20 to $40, at least for me. Doing the math, that'd put the market cap right at $1.1b, I think, right?

I think I also read that GME bought back $178m worth of shares sometime during 2020, thus reducing their float and leading to the short interest rising to 140%, if I understand correctly. Nothing quite like shorting shares back to the company, right?

Then Roaring Kitty, aka DFV, bought 50,000 shares around $40, post-squeeze, after/when the stock had overshot it's lower bound (see above), thus setting a floor akin to Gandalf in Lord of the Rings "YOU SHALL NOT PASS" or perhaps more like the knight in Monty Pyton's "Holy Grail" "None Shall Pass", depending on one's temperament and outlook on life.

In the meantime GME has acquired enormous quantities of free publicity. Why ruin it by issuing shares? I think it's going to be awhile before the shares drop below $100 again. YMMV.
I'm not sure which audience you mean when you say free publicity would be ruined by issuing new shares.  The general public doesn't understand it, while investors find that normal - lots of companies are issuing more shares to survive without revenues.  I'll even go one step further, and say even after AMC issued +100% new shares (mid-Dec 160M, end of Jan 340M), Wall Street Bets kept buying and pushing the stock higher.

As to GME share buybacks, I think you mean 2019, when they went from 102M shares to 66M shares.  During 2020, GME shares varied between 64M and 70M, and they stand at 70M shares now.  So I'm confused by the $40/share figure, since GME hasn't pushed above $10/share from 2019 until WSB pushed the price up.  If GME falls only halfway to it's former market cap, that's still a 80-90% drop from here.

It does appear GameStop is saying "I'm not dead yet" to the hedge funds.  But Roaring Kitty (DFV)'s $2 million purchase is nothing compared to GME trading volumes.  I don't mean to put words in his mom's mouth, but "he's not the messiah", even if multitudes are following him around like in the Life of Brian.

I think there's a group with an even lower profile than the GameStop executive team.  This week started with $5.8 billion in trading volume on Monday, and ended with $4.2 billion on Friday.  Who is spending literally billions of dollars buying GME every day?  I think there's a hedge fund using WSB as cover to make their own plays against other hedge funds.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 06, 2021, 12:07:16 AM
I like the stock.

Disclaimer: Long GME, not a financial advisor.
The company or the stock?  I'd buy GME for $1/share, because that would be a great value (the GameStop company cash reserves are $450M, or over $6/share).  But at $140/share, their 27 price/book ratio looks very overpriced.  I'm still short a few call options.

When I first sold short, I watched how the news media told everyone about GME's explosive rise, and predicted hedge funds would swoop in to profit.  That came true (then I stopped using predictions, data and measured risk!)... but I'm surprised when the news media isn't covering the stock, the hedge funds ignore it.

Right now there seems to be a balance of buyers and sellers.  If the news media covers the high price of GME stock, I expect that will draw lots more hedge funds back to profiting off the stock, and push the price sharply lower.  That's the point where I plan to close my short call options.
Title: Re: GME deathwatch - how to profit?
Post by: soccerluvof4 on March 06, 2021, 03:22:03 AM
I like the stock.

Disclaimer: Long GME, not a financial advisor.
The company or the stock?  I'd buy GME for $1/share, because that would be a great value (the GameStop company cash reserves are $450M, or over $6/share).  But at $140/share, their 27 price/book ratio looks very overpriced.  I'm still short a few call options.

When I first sold short, I watched how the news media told everyone about GME's explosive rise, and predicted hedge funds would swoop in to profit.  That came true (then I stopped using predictions, data and measured risk!)... but I'm surprised when the news media isn't covering the stock, the hedge funds ignore it.

Right now there seems to be a balance of buyers and sellers.  If the news media covers the high price of GME stock, I expect that will draw lots more hedge funds back to profiting off the stock, and push the price sharply lower.  That's the point where I plan to close my short call options.


agreed! Like a broken record , The company is worth maybe a case of 25 or 26$ but if they dont change there model which will be tough to do , they will be gone and take alot of carnage with them. Doable yes but a tougher task than say a Best Buy had to. To many others stocks to like or bet on with better fundamentals.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 08, 2021, 04:58:30 AM
I'm not sure which audience you mean when you say free publicity would be ruined by issuing new shares.  The general public doesn't understand it, while investors find that normal - lots of companies are issuing more shares to survive without revenues.  I'll even go one step further, and say even after AMC issued +100% new shares (mid-Dec 160M, end of Jan 340M), Wall Street Bets kept buying and pushing the stock higher.

As to GME share buybacks, I think you mean 2019, when they went from 102M shares to 66M shares.  During 2020, GME shares varied between 64M and 70M, and they stand at 70M shares now.  So I'm confused by the $40/share figure, since GME hasn't pushed above $10/share from 2019 until WSB pushed the price up.  If GME falls only halfway to it's former market cap, that's still a 80-90% drop from here.

It does appear GameStop is saying "I'm not dead yet" to the hedge funds.  But Roaring Kitty (DFV)'s $2 million purchase is nothing compared to GME trading volumes.  I don't mean to put words in his mom's mouth, but "he's not the messiah", even if multitudes are following him around like in the Life of Brian.

I think there's a group with an even lower profile than the GameStop executive team.  This week started with $5.8 billion in trading volume on Monday, and ended with $4.2 billion on Friday.  Who is spending literally billions of dollars buying GME every day?  I think there's a hedge fund using WSB as cover to make their own plays against other hedge funds.

In the meantime GME has acquired enormous quantities of free publicity. Why ruin it by issuing shares? I think it's going to be awhile before the shares drop below $100 again. YMMV.

Gamestop should do a promo where you get a freebee if you can prove you lost money on their stock. They could build up a nice marketing database that way, and use it to launch their post-bricks-and-mortar business.

Yes, something along those lines--I'm not a marketing genius (nor do I play one on TV), but I think there is a huge reservoir of goodwill toward GME. If they can find a way to harness this goodwill, they would be well served.

I think that GME has a float of 55m shares. 70m total, but I guess the missing 15m are locked away (perhaps in Castle Anthrax, awaiting the arrival of Sir Galahad to rescue them?) and not allowed to be traded in.

Here's how I got the $40/share 'natural' valuation of GME.
Melvin Capital claims it began shorting GME in 2014.
https://www.fnlondon.com/articles/melvin-capital-says-it-was-short-gamestop-since-2014-20210218 (https://www.fnlondon.com/articles/melvin-capital-says-it-was-short-gamestop-since-2014-20210218)
Although they don't say what day they began, the price level was around $40 in 2014. Then GME reduced their float by 35% (or more??) in 2019 as you state. Thus, the 'natural' price could be $54-ish, assuming no balance sheet shocks between 2014 and 2020.

Stocks often overshoot their upper and lower bounds once they become momentum plays. I am of the opinion that Roaring Kitty has done a lot of rigorous homework in regards to GME--he did clear a few million on GME while all of us here only managed about a few thousand. Thus, putting $2m to work at once is a drop in the bucket as you correctly state. However, since it co-incided with the post-squeeze bottom (almost to the day!) metaphorically, it makes for great theatre and vivid imagery to compare it to Gandalf or the Black Knight. I'll put you i in the camp of the Black Knight, not Gandalf. :)
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 08, 2021, 06:36:46 AM
As to GME share buybacks, I think you mean 2019, when they went from 102M shares to 66M shares.  During 2020, GME shares varied between 64M and 70M, and they stand at 70M shares now.  So I'm confused by the $40/share figure, since GME hasn't pushed above $10/share from 2019 until WSB pushed the price up.  If GME falls only halfway to it's former market cap, that's still a 80-90% drop from here.
I think that GME has a float of 55m shares. 70m total, but I guess the missing 15m are locked away (perhaps in Castle Anthrax, awaiting the arrival of Sir Galahad to rescue them?) and not allowed to be traded in.
Some of my calculations rely on the outstanding shares, so I'd like to see any sources showing that 15m are locked up somehow.  According to their 2020 Q3 quarterly report, they had 65m shares at that time:
https://news.gamestop.com/news-releases/news-release-details/gamestop-reports-third-quarter-results-positive-start-fourth

But I'm relying on Y-charts for the 70m figure:
https://ycharts.com/companies/GME/shares_outstanding

The situation gets more interesting looking at Yahoo Finance data.  Their data shows 70m float, but 27.3% held by insiders (19m shares).  But they both claim only 45m shares are available, and that institutions own "122.04%", which is questionable.
https://finance.yahoo.com/quote/GME/key-statistics?p=GME

Morningstar lists 55m of institutional ownership, and since 55m / 45m = 122%, that might be where Yahoo got it's figures.
https://www.morningstar.com/stocks/xnys/gme/ownership

If I'm wrong about the outstanding shares for GameStop, I might also be wrong about other stocks, which impacts their recovery.  So I'm interested in any data that shows the number of outstanding shares isn't 70m.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 08, 2021, 06:59:35 AM
I use Etrade and they have two categories under the Fundamentals tab... "Shares Outstanding" and "Number of Floating Shares"..... how to upload a screenshot here....... perhaps someone can provide instructions or if someone else has Etrade they can provide a screenshot......

I haven't reviewed this data elsewhere and I don't know where Etrade sources their data. My offhanded guess is that insider shares do not contribute to the float, but, ¯\_(ツ)_/¯


Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on March 08, 2021, 10:30:55 AM
Anyone still holding?  Price is at $189 now and climbing. 
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 08, 2021, 11:08:11 AM
GME just cracked $200, up $60 on the day, and I have not a single share.

I suspect we are witnessing a new short squeeze. There was still 30% short, or so. Presumably from a higher cost basis, but, well, the shorts are all losing big today.

Look at the options activity; Mar. 12 expiration, top strike price of $800 has over 30,000 contracts changing hands today, price is up from 90 cents to $3.40. Insane.
The $200 strike has over 18k contracts changing hands today. If the $200 close in the money on Friday.......

Title: Re: GME deathwatch - how to profit?
Post by: dignam on March 08, 2021, 11:57:19 AM
Anyone still holding?  Price is at $189 now and climbing.

Yep, still have all my shares.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 08, 2021, 12:37:09 PM
bwall - Interesting.  So most likely, between 51m and 55m shares available.  I assume the total shares is used in market cap calculations, but I think I'll investigate it at some point to see.

Friday's $4.2 billion GME trading volume has been exceeded by today's $9.4 billion in trading volume.  I wonder who is investing billions every day.  At any rate, it's not hedge funds selling shares, so I closed my bear put spread.  I paid $215, then sold for $26, for a -88% loss (or $179 loss).

I've decided AMC is a much easier target.  Disney is releasing it's latest film on it's platform and in theaters at the same time.  That screws over movie theaters that are used to having exclusivity for 1-3 months, and Cinemark has protested by refusing to show the movie.  Other streaming services are taking movie theater customers, and then there's significant debt owed by movie theaters.  Despite this very weak position, AMC is up +80% or so from it's 2019 highs.

So I opened a bear put spread on AMC ($9.16/sh).  I bought a $9 PUT for $4.05, and sold a $6 PUT for $1.95, meaning I've invested $2.10 to possibly gain $3.00.  The options have implied volatility similar to GME, which is the biggest risk: the stock could stay above $9 and the spread expires worthless.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 08, 2021, 01:07:12 PM
bwall - Interesting.  So most likely, between 51m and 55m shares available.  I assume the total shares is used in market cap calculations, but I think I'll investigate it at some point to see.

I presume that the 'missing' shares are held by people who cannot liquidate them quickly due to insider regulations. I think that some insider stock sales have to be programed months in advance in order not to fall foul of some regulator. They still contribute to market share, but aren't available for quick sale, or for shorting, for that matter. A veritable Castle Anthrax.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 08, 2021, 01:17:41 PM
I've decided AMC is a much easier target.  Disney is releasing it's latest film on it's platform and in theaters at the same time.  That screws over movie theaters that are used to having exclusivity for 1-3 months, and Cinemark has protested by refusing to show the movie.  Other streaming services are taking movie theater customers, and then there's significant debt owed by movie theaters.  Despite this very weak position, AMC is up +80% or so from it's 2019 highs.

So I opened a bear put spread on AMC ($9.16/sh).  I bought a $9 PUT for $4.05, and sold a $6 PUT for $1.95, meaning I've invested $2.10 to possibly gain $3.00.  The options have implied volatility similar to GME, which is the biggest risk: the stock could stay above $9 and the spread expires worthless.

By the price, I'm guessing you picked up the September 2021 spread. Right now, short interest is "only" 22%, but that's still above where Tesla was in early 2020. Will you hold until Sept. even if the price pops to $30 or $40 during short squeeze round two?

https://www.marketbeat.com/stocks/NYSE/AMC/short-interest/ (https://www.marketbeat.com/stocks/NYSE/AMC/short-interest/)
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 08, 2021, 01:40:05 PM
bwall - That reminds me of another castle in that movie, but I can't figure out a way to make a joke about that and GME at the same time.


ChpBstrd - That's right, put options expiring Sept of this year.  With a put spread, my risk is the amount I invest.  I'm limiting how much I speculate in GME + AMC, which is why I closed the GME put spread to initiate the AMC put spread.

In my favor is that GME is up 10x or so, while AMC is up 2x.  There doesn't seem to be as many people interested in AMC - which has also shown it's willing to print shares... that could make it very difficult to target.

You could look at call and put options on GME to see where the market seems to think GME is headed.  There's a lot of uncertainty, reflected in wide bid-ask spreads.  I think it's hard to find profitable combinations of options after April 2021 (there's no May or June GME options at this time).
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 08, 2021, 01:50:06 PM
Anyone still holding?  Price is at $189 now and climbing.

I am still long GME. Sold some covered calls today and bought some more shares with the premium received.

I think it has a ways to run up still.

This is not financial advice, I am not a financial advisor, I just like the stock, etc.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 08, 2021, 07:30:24 PM
Anyone still holding?  Price is at $189 now and climbing.

I am still long GME. Sold some covered calls today and bought some more shares with the premium received.

I think it has a ways to run up still.

This is not financial advice, I am not a financial advisor, I just like the stock, etc.

Covered calls is the best/safest way to play GME, provided, of course, that you want to own the stock.

I'm kicking myself for not picking up a couple hundred shares back at $40 so that I could do just that. But, at the time I thought that $40 was just a bleak way-station to $30, and then $20, only to rest somewhere in a sub-$20 netherworld, among the detritus of the RMS Titanic. Little did I know that GME was bottoming at the time..... c'est la vie..... this is how I learn where the signposts are in the equities world--by stumbling into them.

The options premiums one can receive now are fantastic. If one can manage to write covered calls that expire out of the money, then you can sell the same lottery ticket a few times. Not bad work if you can get it. This merry go round could last for months. Or end tomorrow. It's a white-knuckle ride.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 09, 2021, 08:41:06 AM
(I'm still short GME calls, which is my bias)

I wonder if the pressure is building for the GameStop to issue more shares?  If they issue just 2 million shares, that dilutes by less than 3%, and nets them $237/sh x 2 million = $474 million.  They can double their cash pile with a 3% dilution.

I'm still looking for a news article that both (1) explains where the purchases of GME are coming from; and (2) uses data to back up it's explanation.  I don't believe WSB is buying billions of dollars of stock every day (over $3 billion in the first hour of trading today, for example).  Shouldn't billions be traceable?
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 09, 2021, 09:50:38 AM
(I'm still short GME calls, which is my bias)

I'm still looking for a news article that both (1) explains where the purchases of GME are coming from; and (2) uses data to back up it's explanation.  I don't believe WSB is buying billions of dollars of stock every day (over $3 billion in the first hour of trading today, for example).  Shouldn't billions be traceable?

It's gonna be a long wait.

Brokers and market makers have no obligation to say who their buyer is. It might not even be allowed for them to say, IDK.

WSB doesn't have that kind of money. Their genius in GME was alerting those with money as to the opportunity available. Then, those with money piled in, forced the shorts to cover and then that was that.

Basically, in the past two weeks, from $40, to say, $140 (or so), the only buyers were those who believed in the stock. Which is why I never bought and keep referencing Roaring Kitty's $40 line in the sand. I thought his buy was a ruse to deflect attention from his congressional hearing. Nope. He really did believe. And, he was dead right.
All those who wanted out have had great opportunities to exit the stock since $40. Only when all the sellers are gone can the stock rise. And that's what we're seeing now.

Since $140, we've got short covering and momentum buyers, I presume. Momentum will sell once the run is over, if they're not selling already. Yet, the stock is still rising b/c, well, the buyers are overwhelming the sellers. The shorts don't want to touch it, and I can't blame them--short interest is still waaaayyyy too high and the easy money shorting is gone.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 09, 2021, 10:49:46 AM
(I'm still short GME calls, which is my bias)

I wonder if the pressure is building for the GameStop to issue more shares?  If they issue just 2 million shares, that dilutes by less than 3%, and nets them $237/sh x 2 million = $474 million.  They can double their cash pile with a 3% dilution.

I'm still looking for a news article that both (1) explains where the purchases of GME are coming from; and (2) uses data to back up it's explanation.  I don't believe WSB is buying billions of dollars of stock every day (over $3 billion in the first hour of trading today, for example).  Shouldn't billions be traceable?

1) It would be very hard for GME management to know on which days they could sell stock for $200 and which days they could sell stock for $40. Given that they have to announce these issues in advance and use investment bank intermediaries, it's not simply an issue of management clicking the sell button. Thus it is hard to say we plan to sell xxx,xxx shares to raise about $xxx,xxx,xxx because they have no idea what price they'd get.

2) Investment secrecy is generally a tenet of American broker/dealers and market makers. Unless someone does an interview or press release, big positions are not publicized in real time. E.g. If I'm running a typical hedge fund and charging an enormous amount to my clients, I lose my entire edge if my investments are publicized in real time and people can just mimic my trades. We retail peons can only speculate, but I think you're right about the WSB crowd. The thing with GME is that it's as close to a sure thing to go down as anything ever has been, and so it is a constant short target, which makes it a constant short squeeze target. This yoyo might bounce all year until the news gets bad enough.
Title: Re: GME deathwatch - how to profit?
Post by: dignam on March 09, 2021, 12:01:19 PM
^ Exactly.  We will not ever know the full extent of the positions of the big players.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 09, 2021, 01:09:06 PM
The options premiums one can receive now are fantastic. If one can manage to write covered calls that expire out of the money, then you can sell the same lottery ticket a few times. Not bad work if you can get it. This merry go round could last for months. Or end tomorrow. It's a white-knuckle ride.

IDK, given that this stock could go from $200 to $20 next week selling CCs sounds like a good way to end up being a bag holder.

I've played with a few scenarios on the assumption that GME is either in squeeze-on or squeeze-off mode. A Strangle or straddle would seem to work best in this binary system, so that one makes money whether GME falls back to earth or rockets to the moon. Maximum losses are finite and maximum gains are infinite. Only problem is that it's so expensive the possible returns are relatively low. E.g. $15,292 at risk to try and earn $2,782 when the stock goes back down to $40, or $4,169 when the stock again reaches $420.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 09, 2021, 08:34:22 PM
I'm still looking for a news article that both (1) explains where the purchases of GME are coming from; and (2) uses data to back up it's explanation.  I don't believe WSB is buying billions of dollars of stock every day (over $3 billion in the first hour of trading today, for example).  Shouldn't billions be traceable?

Right, it's not WSB. Big players like the stock, or at least the squeeze.

The hedge funds aren't all, like, on the same side. They're sharks. Someone(s) clearly sees a profit to be taken from Melvin/Citadel.

Long term it'll go down from where it's at. In the short and maybe even medium term? I think it still has upside.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 09, 2021, 09:39:39 PM
Most of our attempts to profit by simply buying puts or selling calls have been thwarted because when GME is in short squeeze mode, the implied volatility is so high it is a gamble whether or not it will move far enough ITM. With puts and calls at extremely high prices, I look to spreads. But volatility also means the "spread" is spread out across all price ranges, because there is high uncertainty which spreads will be ITM and anything could happen.

If I want to buy an April 23 bear put spread at 125 and 135, it'll cost me $4.73.
At 170/180 it's $5.90.
We just moved up 36% in price, $45, and the value of a $10 spread changed by a whole $1.17. That's what extreme uncertainty looks like.

However, I doubt the squeeze can last 45 days. It didn't last time, and this time the short interest is starting out much lower, ~30% of float. The sharks will start taking profits soon enough. If I was to bet again, I'd probably play the 170/180 bear put spread with 45 days remaining.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on March 09, 2021, 10:09:16 PM
$261 aftermarket price.

Those of you that like the stock, or are just along for memes, what is your sell price?  I have a sell price set at $800.  Thinking of changing it to a real number though.

(https://media1.tenor.com/images/84626adb7618559fbaa7d167dd405202/tenor.gif?itemid=10055427)
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 09, 2021, 10:39:09 PM
I sold some covered calls on Monday morning for this Friday with a strike price of $360. I thought we'd hit 360, but next week, not this week. After two days, I think I'm wrong, and we will. So I guess that's the sell price for a good chunk of my shares.

Right now I'm thinking more timeline than price--I can see it going in a mostly upward direction through next week. All the 800 calls on the books for the 19th are interesting. And the convergence of the bonds, NSCC rule change, stimulus checks hitting, earnings call, etc. all in the next few weeks puts a lot of upward pressure, IMO.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 10, 2021, 02:27:12 AM
I don't know if companies can specify conditions in their share offerings, like a limit order does  ($200 limit sell of 2 million shares!).  I've only seen a specific date specified, and am not familiar with the rules.  But I believe GME is the exception, as other companies have used their own higher stock prices to raise capital.

I assume the target is Friday call options, so the buying pressure is likely to continue if that's the case.  If they do it right, the buying pressure remains not only through Friday, but for the 2 day settlement period (next Tues) so those who sold contracts can't buy shares cheaply before settlement.

I think the same institutional buyer has been involved for a week ($20 billion in purchases Mar 1-5), so even data that's a week old would be interesting.  The only article I read estimated retail orders by the source and order size, and said retail traders remained at a similar percentage of dollar volume compared to before the late Jan buying of GME.  So their conclusion was an institutional buyer was involved - probably a hedge fund, and probably targeting Melvin Capital.

The last buying surge involved widespread media coverage, which brought huge numbers of hedge funds to the market.  The selling pressure, plus the fact hedge funds are unlikely to hold GME shares suggests that was short selling.  What I don't get is why they left... did they cover their short positions later?  Or did they short at high enough prices to not care about $250/share?

When I've looked at long-term put spreads or call spreads on GME, they don't make sense.  Often a spread costs money to create, and then risks losing money.  Or there might be a $8000 wide spread paying $8, for a 0.1% gain of the money at risk.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 10, 2021, 07:28:12 AM
What makes you think they left?

As far as the spreads, you're trying to make it rational. There's a lot irrational here, and a lot of taking advantage of dumb money (that is, I suppose, rational itself).
Title: Re: GME deathwatch - how to profit?
Post by: dignam on March 10, 2021, 08:15:57 AM
$261 aftermarket price.

Those of you that like the stock, or are just along for memes, what is your sell price?  I have a sell price set at $800.  Thinking of changing it to a real number though.

My meme sell price is $10k.  But in reality I'd be dumb to not sell around $800-$1k.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on March 10, 2021, 08:57:03 AM
Yeah, I'm thinking I'd be dumb not to sell it in the $300-400 range.  Won't be life changing money for me even if it goes to $10k.  I have no idea what's happening, or how high it might go, but I should dip out at some point.  Definitely don't want to watch it fall back below $100 and just be holding my tiny shares. 
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on March 10, 2021, 10:16:16 AM
Welp I paper handed out at $330.   Should net me about $100 in short term capital gains.  I still have 0.12 shares in robinhood that I am letting ride.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 10, 2021, 10:24:11 AM
What makes you think they left?
In early February, every buying attack was met with a wall of selling.  There was a huge amount of money fighting whoever bought GME stock.  Things settled down for a few weeks... and now buying attacks are unopposed.  Back in early Feb, these same attempts would have gone nowhere... now in early March, they succeed.

Since I'm dramatically limiting how much I speculate in GME/AMC/etc, I closed one of my AMC spreads to open a GME spread.  There wasn't much difference between Oct, Nov and next Jan, so I went with a Jan 2022 bear put spread.

I guess I might as well reveal the details, since I'd like to mention a couple things:
buy) GME $200 strike put expiring 2022-Jan-21 : $107.10/sh
sell) GME $100 strike put expiring 2022-Jan-21 : $41.70/sh
By speculating with $65.40/sh, I can potentially gain $100/sh.

Other numbers had worse leverage, or a worse breakeven point.  The above speculation breaks even when GME hits ($200-$65.40) $134.60, and has a maximum profit at $100 ($200-$100).  So when GME hits $100, I sell - there's no point to keeping it.

I considered July, but decided I wanted more time.  And since Oct/Nov spreads weren't that different from 2020 Jan, I went with the later date.  I didn't even look at April options, as that's too high risk for me (the new me!).  I'm leaving open the very strange possibility that GME stock remains elevated for months - not likely, but possible.
Title: Re: GME deathwatch - how to profit?
Post by: v8rx7guy on March 10, 2021, 10:40:43 AM
Wow a $100+/sh drop in minutes...

Edit: $150+/sh
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on March 10, 2021, 10:55:53 AM
and then a $65 share gain in mere minutes.  looks like it tripped the breaker again?
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 10, 2021, 10:58:44 AM
and then a $65 share gain in mere minutes.  looks like it tripped the breaker again?

Something like 6 times now in 31 min.. impressive when the halts are 5m each.

Expecting volatility, but this is crazy.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on March 10, 2021, 11:01:05 AM
Owning GME be like:

(https://64.media.tumblr.com/e446d5470c715185f74bfa63806a8862/tumblr_mqvcm4Jqhp1qi6cgio1_250.gifv)
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 10, 2021, 11:34:38 AM
That short strangle idea I shared earlier went from 152.92 to 226.58. This was the way.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 10, 2021, 08:12:27 PM
The price moves in Wednesday's market remind me of the day a wall of selling arrived in early February.  There was a huge drop, then a bounce back, then a struggle where the stock price didn't go anywhere - just moved in a narrow range.

But even if hedge funds have returned to sell the stock short, I don't get why they arrived.  There's no mainstream news coverage of Game Stop.  Maybe they monitor it for certain price levels, like $300/share?

Picking stocks will always partly be about luck: an hour after I opened my bear put spread on GME, it plunged from $300 to $175.  My guess is the stock rises in pre-market trading, then gets hit again soon after the Thursday open.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 11, 2021, 07:39:21 AM


Picking stocks will always partly be about luck

Largely.

I'm still very confused why you think hedge funds left and came back.

They've been in the whole time. Just real scared at a 300-400 price level.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 11, 2021, 08:54:00 AM
Picking stocks will always partly be about luck
Largely.
It's not luck when the market is ignoring reality, like at the start of the pandemic.  The stock market was down -4% on March 10, 2020.  The situation was so urgent the Fed called an emergency meeting a few days early, and dropped rates to 0% and introduced quantitative easing.  Experts predicted widespread cases, and in every country where Covid-19 got a foothold, it expanded rapidly.  All of the data pointed in one direction, and the market got it badly wrong with a -4% net drop from Mar 9-10.  So sometimes stock picking is based on data, while the U.S. stock market is not.

I'm still very confused why you think hedge funds left and came back.

They've been in the whole time. Just real scared at a 300-400 price level.
I think the price moves on Jan 28 show hedge funds are not scared in the $300-$400 range.  On Jan 28, GME hit a high of $483 and a low of $112, closing at $194.  I view that as hedge funds seeking to profit by selling short a stock that trades far above what it's worth.  If anything, hedge funds get greedy when GME hits $300-$400/share, and begin short selling.

Back on Feb 2-4, sellers pushed GME's price lower each time: $141 ==> $90 ; $112 ==> $92 ; $91 ==> $54.  That group of sellers seemed to be absent in the first week of March, when the stock ranged from $100 to $150.  The same prices appeared, but the selling pressure didn't return.  That selling pressure was absent at the same prices where it appeared earlier... so I assume those sellers left.  And since the volumes were in the billions, I assume it was hedge funds or other institutional money.

Maybe the $300-$400 range is correct, but describes when hedge funds get greedy.  From Feb 2 - Mar 9, GME never pushed above $300... then on Mar 10, it hit $349.  That same day, selling pushed the stock dramatically lower (a $172 low, closing at $265).  But I'm not sure where those same sellers are today... much lower volume, and GME stock has gone from $242 to $282 so far ...

Earlier selling pressure was like a wall that pushed GME lower and lower.  That doesn't seem to be what's happening this week, so it seems like less selling pressure now than in late Jan/early Feb.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on March 11, 2021, 10:35:42 AM
1. every time GME surges up or down, volatility increases.
2. pick your fundamental business value, someone said 40s, someone else said 25.
3. After any big move up, sell near (2-3 week out) PUTs at your fundamental business value price.

This way you are selling volatility. I sold some 40 puts for next week, and after the price went up, they are even more expense! But I remain confident that I can hold them through next week and likely not be assigned. IF I was assigned, I'm ok holding at that price.  I might sell a few more. 

When in doubt, the strike price should be lower and the premium demanded higher.



Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 11, 2021, 11:36:15 AM
1. every time GME surges up or down, volatility increases.
2. pick your fundamental business value, someone said 40s, someone else said 25.
3. After any big move up, sell near (2-3 week out) PUTs at your fundamental business value price.

This way you are selling volatility. I sold some 40 puts for next week, and after the price went up, they are even more expense! But I remain confident that I can hold them through next week and likely not be assigned. IF I was assigned, I'm ok holding at that price.  I might sell a few more. 

When in doubt, the strike price should be lower and the premium demanded higher.

My understanding of how most options pricing systems set prices is that for an option with 30d duration, the model looks at the previous 30d, and for an option with a 5d duration, the model looks at the previous 5d, etc. Your observation about put prices going up even as the stock went up supports this view; as the previous x days showed more volatility, the option reflected more volatility, and those recent volatile days became more influential. It also suggests that betting on lower volatility might be a good choice when it appears the short squeeze has ended.

One way to do this would be a reverse calendar spread - buying a short-duration option and selling a long-duration option. This type of spread will appreciate if volatility decreases.

https://www.investopedia.com/terms/r/reverse-calendar-spread.asp (https://www.investopedia.com/terms/r/reverse-calendar-spread.asp)
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 12, 2021, 06:34:16 AM
I wonder if after Friday, there will be less motivation for buyers to push up the price (options expire Friday), while more hedge funds will learn over the weekend that GME is near $250/sh.  The last buying attack stalled over a weekend, so Monday could be interesting.

1. every time GME surges up or down, volatility increases.
2. pick your fundamental business value, someone said 40s, someone else said 25.
3. After any big move up, sell near (2-3 week out) PUTs at your fundamental business value price.
In theory, getting paid $1.09 for a $40 GME put expiring Mar 29 is less than 3% of the money at risk.  In practice, GME hasn't gone below $40 since these buying attacks began - let alone drop below $40 on days when options expire.


One way to do this would be a reverse calendar spread - buying a short-duration option and selling a long-duration option. This type of spread will appreciate if volatility decreases.
So maybe selling 2022 or 2023 $800 GME calls, for either $86 and $94, respectively.  And then buying an April ($45), July ($74) or November ($83) call.  The lowest risk calendar spread also pays the least (Nov $83 vs 2022 Jan $86), so that checks out.  I wonder when GME will have May + June options, instead of nothing between April and July.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 12, 2021, 09:57:04 AM
One way to do this would be a reverse calendar spread - buying a short-duration option and selling a long-duration option. This type of spread will appreciate if volatility decreases.
So maybe selling 2022 or 2023 $800 GME calls, for either $86 and $94, respectively.  And then buying an April ($45), July ($74) or November ($83) call.  The lowest risk calendar spread also pays the least (Nov $83 vs 2022 Jan $86), so that checks out.  I wonder when GME will have May + June options, instead of nothing between April and July.

I was thinking more short-term, like buying the April 16 and selling the April 30.
At the 280 strike, this call spread would be a credit of $11.65/share. Will the April 30 $280 call be worth less than that on April 16? My magic 8 ball says chances are good, but right now the March 26 call at 280 is selling around $90 so it's a big gamble on the timing of the short squeeze ending.

Thinking a step ahead, as soon as the April 16 option expires and IF the April 30 option is selling for more than $11.65, one could buy another April 30 call and convert that short call into a bear call spread to control the risk of holding a little bit longer. I do not like the idea of holding short calls on GME and one would likely be victimized by a margin call.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on March 12, 2021, 11:58:32 AM
1. every time GME surges up or down, volatility increases.
2. pick your fundamental business value, someone said 40s, someone else said 25.
3. After any big move up, sell near (2-3 week out) PUTs at your fundamental business value price.

This way you are selling volatility. I sold some 40 puts for next week, and after the price went up, they are even more expense! But I remain confident that I can hold them through next week and likely not be assigned. IF I was assigned, I'm ok holding at that price.  I might sell a few more. 

When in doubt, the strike price should be lower and the premium demanded higher.

My understanding of how most options pricing systems set prices is that for an option with 30d duration, the model looks at the previous 30d, and for an option with a 5d duration, the model looks at the previous 5d, etc. Your observation about put prices going up even as the stock went up supports this view; as the previous x days showed more volatility, the option reflected more volatility, and those recent volatile days became more influential. It also suggests that betting on lower volatility might be a good choice when it appears the short squeeze has ended.

One way to do this would be a reverse calendar spread - buying a short-duration option and selling a long-duration option. This type of spread will appreciate if volatility decreases.

https://www.investopedia.com/terms/r/reverse-calendar-spread.asp (https://www.investopedia.com/terms/r/reverse-calendar-spread.asp)

The problem with a calendar spread is you don't really know anything about what future implied volatility will be or price wise where GME will end up over that timeframe. This price battle has gone on for far longer than I expected.

The only thing I know for certain is that I am comfortable buying GME at 40 and holding it a while.

So I can write 5 puts at $40 for two weeks out and let the $$ decay. After they expire march 19, I will look to write another 5. If I time it right, I will get more volatility premium. If I time it wrong like I have been doing, I will make less volatility premium. I may or may not end up with a position I want.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 13, 2021, 06:41:13 AM
I've been waiting for a mainstream news outlet to comment on GameStop, and I just saw a BBC News article.  It will take more than that, but suggests I might see more mainstream news coverage before Monday's open.  The more mainstream news coverage, the more likely Monday becomes a repeat of Feb 1 for GME shares.

I think calendar spreads on GME are beyond my new, lower risk tolerance.  After the first expiration in a calendar spread, the trade turns into a selling a call without protection.  Been there, done that, have the losses to show for it...

p.s. I've asked arebelspy to demote me from Moderator to someone who can just move threads around.  I wanted to let people know it has nothing to do with our interaction in this thread.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 15, 2021, 08:39:30 AM
I've been waiting for a mainstream news outlet to comment on GameStop, and I just saw a BBC News article.  It will take more than that, but suggests I might see more mainstream news coverage before Monday's open.  The more mainstream news coverage, the more likely Monday becomes a repeat of Feb 1 for GME shares.
Not much mainstream news coverage; not much of a move with GME stock so far today.
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on March 16, 2021, 06:28:22 AM
Well, it's not GME, but I finally placed a small short on AMC.

Insane how many shares they're issuing
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 16, 2021, 07:25:54 AM
In pre-market trading, GME has dropped inside my put spread ($200-$100).

AMC does seem overpriced.  I think Disney's streaming service is a massive blow to movie theaters.  Disney movies are a huge chunk of movie theater revenue, but now those movies are on Disney's streaming service at the same time they show up in theaters.  Meanwhile AMC has restricted seating (25%?) in New York, and lots of debts to pay.

I thought I saw AMC at $18/sh in pre-market, but it's under $14/sh now.
Title: Re: GME deathwatch - how to profit?
Post by: theoverlook on March 16, 2021, 07:39:50 AM
It was pretty astonishing to see someone on Wall Street Bets YOLOing $570k into GME (he sold Tesla and bought GME) near the latest peak. $273/share and that's when he decides to get in. Well, I guess if you truly believe that it's on the way to $1000+...
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on March 16, 2021, 10:46:19 AM
In pre-market trading, GME has dropped inside my put spread ($200-$100).

AMC does seem overpriced.  I think Disney's streaming service is a massive blow to movie theaters.  Disney movies are a huge chunk of movie theater revenue, but now those movies are on Disney's streaming service at the same time they show up in theaters.  Meanwhile AMC has restricted seating (25%?) in New York, and lots of debts to pay.

I thought I saw AMC at $18/sh in pre-market, but it's under $14/sh now.

AMC will probably be fine now, they've eliminated most of their debt through share offerings and the biggest liability is the lease liability to EPR, which is a pact of mutual destruction.

AMC has quadrupled it's share count.  It's not worth 50% more than it was in 2016 with all the headwinds on theatres.  The reason I liked the short at $14 is management will issue as many shares as they can between $10-$12, they'll probably do a convertible debt offering soon to eliminate the rest of their high cost debt.

Amazing redditors have rescued this company from bankruptcy for years through buying up the share offerings.

I used to loan to this industry then consulted with a competitor of AMC, I know it well.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 16, 2021, 11:08:10 AM
According to Yahoo Finance, AMC's $4.35 billion market cap ($12.83/sh) includes $300 million in cash (under $1/sh).   Don't they have $11.4 billion (-33.63/sh) of debt?
https://finance.yahoo.com/quote/AMC/key-statistics?p=AMC

Agree with the dilution: last I checked, they went from 104M shares in April 2020 to 339M shares in Feb 2021.  I expect investors to get a big shock when they see revenue and earnings per share numbers.

---
The most optimistic GME calls (2023 strike $950) were going for $90/sh, and are now down under $45/sh.  Margin requirements dropped in half, too.  Maybe I'm just stuck with it for 2 years, until it expires... it would be nice to close the position before then.

I've now reached my new limit of 5 speculative positions on AMC/GME/similar:
2 AMC put spreads that profit as the stock drops from $9 to $4
1 AMC put at $12/sh
1 GME put spread profiting from $200 to $100
1 GME put spread I bought last week and didn't mention, from $130 to $45
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 25, 2021, 09:13:33 AM
"GameStop Corp said on Tuesday it may sell new shares this year to take advantage of a more-than 800% run-up since January ..."
https://finance.yahoo.com/news/1-gamestop-revenue-shy-estimates-204336029.html

I actually heard about that possibility first from Jim Kramer, who this week said GameStop might issue new shares (he's been criticizing them for not doing so for a long time, too).  I meant to open put options and had procrastinated, so that motivated me to finally open a put spread ($150 - $50) on GME.  I figured it was either my last chance to get in early, or a way to take advantage of the possibility.  So far, so good.

For those holding long positions, how much share dilution do you expect?

GameStop currently has a $10 billion market cap, with 70 million total shares.  Two years ago they had 100 million shares, so my wild guess is they print 30 million shares.  So instead of being worth $145/sh, they'd be worth $102/sh as they increase the number of shares by +42%.  But that's a wild guess: they could also be satisfied with printing 10 million shares, in which case the stock drops to $127/sh from +14% share dilution.

If you're holding GME stock, know I'm biased as a short seller.  But GameStop hinting at printing new shares is a significant development.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 25, 2021, 10:36:51 AM
Perhaps Gamestop will go the way Netflix went a decade ago, and invest in becoming content creators instead of just middlemen who handle physical discs. I could see them raising funds from stock dilution to buy out a game developer or to create their own in-house game brand.

This is NOT an endorsement to go long the stock, because why not just buy ATVI or TTWO, actually earn profits here and now, and enjoy a strong competitive position without the mall-store drag?
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 25, 2021, 10:59:03 AM
GameStop currently has a $10 billion market cap, with 70 million total shares.  Two years ago they had 100 million shares, so my wild guess is they print 30 million shares.  So instead of being worth $145/sh, they'd be worth $102/sh as they increase the number of shares by +42%.  But that's a wild guess: they could also be satisfied with printing 10 million shares, in which case the stock drops to $127/sh from +14% share dilution.

The delicious irony is that short sellers shorted GME stock around $20 (?) to the company in 2019 (?) which then retired the shares. Now, almost two years later the company can re-issue shares for a huge premium over their repurchase price.

I think there are regulations about companies trading in their own shares and this two year window would clearly not raise any red flags. I just love the irony of it all.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 25, 2021, 11:08:53 AM
ChpBstrd - Chewy's co-founder Ryan Cohen joined GameStop's board with 2 of his colleagues in the second week of January (GME was $20/sh).  But Chewy has about a dozen fulfillment centers and a few customer service centers - a small footprint.

GameStop, on the other hand, has 5500 locations with 14,000 permanent and 22,000 to 42,000 part-time employees.  Those are retail salespeople and store managers - not software engineers.  All of that weighs on any plans to transform into a company with a smaller footprint - they're starting behind, not from zero.

Even if GameStop focuses on digital sales, I don't see that adding +650% value to the company, especially before they've shown results.  So even in the optimistic case of a pivot (starting behind, with retail locations), the stock has room to fall.


bwall - GME seems to get selling attacks above $300/share, so maybe there's another group of short sellers waiting there?

It looks like GME is heading strongly higher today, and I assume this is part of an attack that culminates Friday.  Tomorrow seems like an interesting day to open put spreads, if the stock keeps going up (on the news of future stock dilution!).
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 25, 2021, 11:27:41 AM
I agree the stock has room to fall, even if they execute the perfect transition.

However, one of my 100% loss investments was buying puts on Netflix soon after they announced plans to invest in content creation. A firm whose core competencies are in logistics and running a website is going to produce movies? Yea right I thought. That's a completely different set of skills. My business textbook and Clayton Christensen's The Innovator's Dilemma all said they were going to fail at the transition, and I envisioned HBO, the TV networks, and Disney launching copycat services imminently. That must be why they were refusing to license content to Netflix and why everything on Netflix sucked. Plus, they were losing money at the time and it seemed like their demise was being accelerated by this desperate gambit to obtain content.

Lo and behold, Reed Hastings not only delivered, he produced multiple award-winning content series that blew away the competition's garbage in terms of quality. From the time I piled into puts, Netflix became the best large-cap investment of the decade.

No, GME is not at all likely to become Netflix circa 2010. But it is possible they raise funds to create content and hit a few home runs as rookies.
Title: Re: GME deathwatch - how to profit?
Post by: trollwithamustache on March 25, 2021, 04:29:06 PM

No, GME is not at all likely to become Netflix circa 2010. But it is possible they raise funds to create content and hit a few home runs as rookies.

Are they really rookies? Gamestop has access to a lot of market information, ie what used games will sell, that can tell them what the other market participants might be missing.

Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 25, 2021, 05:46:53 PM
I don't see gamestop as content creators, but digital online middlemen. I think their transition will work out well.

That's long term.

I also think there is lot of room to go up in the short to medium term before it settles back to a fair valuation.

I don't think the shorts ever fully covered, and the attack like on March 10th to drop the price to 170 from 344 is evidence of that.  I think the squeeze is still in play.

I like the stock.

Disclaimer: long gme, this isn't financial advice.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 26, 2021, 06:59:07 AM
I also think there is lot of room to go up in the short to medium term before it settles back to a fair valuation.
Would short to medium term cover the next few months and years?

GME is trading at $184/share right now.  It sounds like you expect GME to go upwards over the next few months and years - upwards from $184/share.

To me it looks like GME stock peaked in 2015, and has been declining since then.  Two years ago (Mar 25 2019) the stock was $10/share, and a year ago GME was $4.22/share.  The current price ($184/sh) reflects an +1700% gain in 2 years, or +4200% gain in 1 year.  I don't see any assets or actions that justify 43x in one year.  I see a declining retail store with a 400 P/E ratio.

I'll claim that Stream is the leader in selling games online (feel free to challenge that).  That online hub is owned by private company Valve, with a total company value of $10 billion.  GameStop's current market cap is $13 billion - is GameStop more valuable than Valve?  Is a retail chain that hasn't started to compete more valuable than the industry leader?
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 26, 2021, 07:39:59 AM
To me it looks like GME stock peaked in 2015, and has been declining since then.  Two years ago (Mar 25 2019) the stock was $10/share, and a year ago GME was $4.22/share.  The current price ($184/sh) reflects an +1700% gain in 2 years, or +4200% gain in 1 year.  I don't see any assets or actions that justify 43x in one year.  I see a declining retail store with a 400 P/E ratio.

Is a retail chain that hasn't started to compete more valuable than the industry leader?

It looked like GME peaked in 2015 b/c that's when the shorts really got going and unnaturally depressed the price--Melvin stated they began shorting in 2014. In 2019 the float was reduced by 30%, further increasing the 'natural' price. So, any share price in 2019 or 2020 was unnaturally low due to shorting, not due to Adam Smith's invisible hand of the market.

The way to get a read on the natural price of the stock is to go back to the pre-big-short price and see where the price was at that time. Then, review the annual balance sheet reports to see if they were profitable (or not) in the intervening years. If yes, then the 'natural, pre-short' is still today's 'natural, post-big-short price', adjusted for profits earned in the intervening years. If no, then subtract the losses from the pre-big-short market cap.

We won't get to the post-big-short natural price until everyone who wants to short GME has done so. in other words, how can GME ever fall below $100 if all the short positions opened above, say, $200, are closed out once GME hits $100? To me, GME appears to be a pinball driven up and down by shorts closing and opening positions.

In the meantime, if GME can raise some much needed cash to shore up their balance sheet by issuing shares at a much higher price than they bought them back for, then they have a fighting chance to live and fight another day.

Re; valuation: TSLA shows that insurgent companies (or companies viewed to be insurgent) can be valued much, much greater than industry leaders. I think that we can all agree that GME has shown the flaws in the 'rational market' theory.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 26, 2021, 08:19:30 AM
Re; valuation: TSLA shows that insurgent companies (or companies viewed to be insurgent) can be valued much, much greater than industry leaders. I think that we can all agree that GME has shown the flaws in the 'rational market' theory.

Funny thing is, GameStop has yet to articulate how they plan to be that insurgent (perhaps the money must come first?). We and everyone watching are speculating that they might manage to extract a few billion from their own short squeeze and use those funds to launch a new line of business that isn’t in a state of rapid collapse. We’re speculating on their speculations, and the success of their timing.

Worst of all, it’s not like we ran a screener for companies that are raising funds to expand or launch promising new lines of business, and found GME to have the best prospectus. Most of us are only aware of GME because of the short squeeze, and our speculations are post hoc.

The world is full of companies that have found ways to borrow or issue shares and earn 15%-25% margins on those funds. These companies typically have strong existing businesses that can be scaled and expanded. GME owns a money pit and doesn’t even have a plan yet.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on March 26, 2021, 08:24:10 AM
All good points.  Counterpoint: me waiting to retire on my 0.12 shares

(https://i.pinimg.com/originals/8d/30/3e/8d303e65cc308b08efd2bd3430a6ce5c.jpg)
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 26, 2021, 09:04:52 AM
@ChpBstrd : I also agree that GME presents an attractive trading opportunity and an unattractive investing opportunity.



GME offers great case studies by proving clear lines of demarcation in  trading vs. investing, companies vs. stocks, rational market theory,  hazards of shorting (or over-shorting), and a clear display of the value and meaning of the saying 'markets can remain irrational longer than you can remain solvent.'
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 26, 2021, 10:42:29 AM
bwall - Where is the evidence GameStop's stock price is entirely driven by short interest?  GME had $9.3B in sales in 2015, and $6.5B in 2019.  Customers didn't stop going to GameStop because of the short interest.

I disagree that GameStop is related to Tesla - I think that's a stretch.


frugalnacho - Hilarious!  I imagine that's got WSB approval, with the whole "to the moon" theme plus some interest in primates.

ChpBstrd - Thinking about online game sales, the industry leaders are already established.  Steam is the leader, with maybe Good Old Games and Amazon trailing behind.  And they could be losing ground to cell phone games, where Apple and Google have a huge moat: both wrote cell phone operating systems that now dominate the market.  Each has a monopoly over their app store.  None of which leaves a lot of room for GameStop to make money by being really late to opening an online store.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 26, 2021, 11:25:20 AM
bwall - Where is the evidence GameStop's stock price is entirely driven by short interest?  GME had $9.3B in sales in 2015, and $6.5B in 2019.  Customers didn't stop going to GameStop because of the short interest.

hmmm....... I'd posted a link earlier somewhere about Melvin Capital opening their short position in 2014.... let me look for it again....

https://www.wsj.com/articles/melvin-capital-says-it-has-been-short-gamestop-since-2014-11613593854 (https://www.wsj.com/articles/melvin-capital-says-it-has-been-short-gamestop-since-2014-11613593854)

Ok... there it is.... Plotkin testified before Congress that they'd been shorting GME since 2014. I think in 2019 the short interest hit 100% and then went to 140% due to the share buyback. That's when Roaring Kitty began banging the drum on WSB about GME. During that same time, the stock price dropped from $40 on July 1, 2014 to $5 on July 1, 2019. So, to me I'm making (perhaps incorrectly) the logical conclusion that the share price from from $40 to $5 occurred due to the increase in short interest from 5-10% to 140%.

What was GME's profit in FY2015? and in 2019? and in the intervening years? I have no idea. A quick glance at their income statement tells me they netted about $400m during those years, but that's by doing the math in my head. I might be off a few hundred million in either direction.

My point being: there was correlation to the increase in the short interest and the drop in the stock price. But was there also causation? I believe so. But, a reasonable person might look at the data and draw another conclusion, as is always the case in analyzing stocks.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on March 26, 2021, 11:26:41 AM
GME reminds me of TSLA in that it seems to be ridiculously overvalued based on fundamentals, but at least I get why TSLA has hype. I have hype about Tesla and its future as a company and business, too.

I have no idea if TSLA is a good investment at any particular price, but I think they're poised to do really well in consumer auto, commercial trucking, and in multiple industries related to their battery tech.

It's interesting to see these GME "what ifs" and be on the naysayer side. I'm not betting money that GME won't do really well, but I see no reason to expect them to prosper going forward.

I held a couple of shares of GME for a couple of weeks and sold at a 75%+ loss. I currently have no direct financial interest unless there are some shares hiding deep in one of my total-market index ETFs.

Reasons to doubt GME:

- App markets
  - Steam
  - iPhone app store
  - Google Play store
  - Steam wannabes like Epic, EA, Origin, GoG
  - Each gaming console has digital downloads in a locked-in market
  - Assorted digital entertainment appliances trying to tack on game downloads
- Automated kiosks like RedBox
- Other used physical product markets
  - eBay
  - Amazon
  - Craigslist
  - Facebook Marketplace
  - Nextdoor
  - Anyone who can throw up a Shopify store and manage inventory
  - Local boutique specialty shops (e.g. Pink Gorilla in Seattle)

I guess all the above boils down to the lack of barrier to entry to reselling used games or offering new games. Not only the lack of a barrier, but the proliferation of locked-in competitor markets on platforms where the consumer is already gaming or already spending time for other reasons (FB, etc.).

As far as "but they can start a new business model with their knowledge...": Ok, maybe, but I have no way of quantifying that outlook. And I'm not sure what GME's advantage is. I rather doubt GME has better consumer data than Apple, Google, and Valve, for example.

Edit: A tiny counterpoint: I just ordered a game from GameStop. It may arrive today. I got an old XBox 360 game for $10 plus another $5-$7 for shipping, taxes, and other microcosts. I already have this game on PC Steam, but the original console version is said to work better, and I have the console. I went to GameStop (online) partially because it was on my mind from all the GME talk and driving by a GameStop store on my way to grocery pickups. Also I feel reasonably confident they'll get a usable-quality game to me with little hassle and plenty of recourse if something goes wrong.

Counter-counterpoint: If not for the pandemic I would have driven to Pink Gorilla games to get it instead as I find the store and its varied inventory fun to visit.
Title: Re: GME deathwatch - how to profit?
Post by: Psychstache on March 26, 2021, 11:39:05 AM

I'll claim that Stream is the leader in selling games online (feel free to challenge that).

I accept the challenge and argue that Steam is the leader in selling games online =P
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 26, 2021, 11:51:39 AM
I also think there is lot of room to go up in the short to medium term before it settles back to a fair valuation.
Would short to medium term cover the next few months and years?

Good question. Years is long term to me. Short meaning days, medium meaning weeks and months.

GME presents an attractive trading opportunity and an unattractive investing opportunity.

This is a good way to put it.

I think it's overvalued at the current price based on fundamentals of what the company is/does/will do in the future.

I also think it will go up from its current price, and I am long GME due to this.

All good points.  Counterpoint: me waiting to retire on my 0.12 shares

(https://i.pinimg.com/originals/8d/30/3e/8d303e65cc308b08efd2bd3430a6ce5c.jpg)

Hahaha. That ape is going to the moon.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 26, 2021, 11:51:05 PM
My point being: there was correlation to the increase in the short interest and the drop in the stock price. But was there also causation? I believe so. But, a reasonable person might look at the data and draw another conclusion, as is always the case in analyzing stocks.
I'm taking the opposite view: declining companies attract short sellers, who would lose money if they picked a random company to short (and pay interest).

It sounds like the bull case for GME claims that short interest squeezes will push the stock higher, but Friday and the past 2 weeks just show slow declines.

@frugalnacho - Still funny, but the chimpanzee "Ham" rode a 20 min test flight and fell back to earth - never reaching the moon.
https://en.wikipedia.org/wiki/Ham_(chimpanzee)

Tesla makes money off electric cars they make, with a protective moat of their car design, battery tech, and charging stations.  Being worth more than the rest of the car industry is probably hype, but some of their +486% 12 month gain is real growth (12 month gains start with the pandemic, for context).

GameStop leads because nobody wants to sell games in brick-and-mortar stores.  They're still stuck in the past, and closed 20% of their stores in the past 5 years.  Meanwhile app stores and console downloads are the future, where they don't have a presence.  That doesn't add up to +4000% in 12 months, in my view.

Solvency concerns can be avoided with buying put options, which offer a fixed investment with the option to profit off a decline.  Even better is a put spread, where reduced cost comes from selling a put on the low end of your expectations.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 27, 2021, 12:08:06 AM
It sounds like the bull case for GME claims that short interest squeezes will push the stock higher

Indeed.

Quote
but Friday and the past 2 weeks just show slow declines.

Indeed.

For the moment.

Early to mid-Feb wasn't looking so great either.

You're focused a lot on the company as a long term investment. I'm focused on it as a short term trade.

Do you see the activity around GME being totally done, and just continuing to decline in price? I don't.

As I said earlier, I think the March 10 massive selloff from 344 to 170 was evidence of short sellers still being quite interested in suppressing the price (someone who had a lot of shares and wanted to sell would have sold slower to maximize the price they got, no?).

I am willing to be totally wrong here, but I think there's a reason it's priced what it is, and I think there's reason to think it can go higher in the short term.
Title: Re: GME deathwatch - how to profit?
Post by: ender on March 27, 2021, 07:36:08 AM
Everyone talking about Gamestop being dead makes me think of Best Buy.

Sure, some places died in this digital transition. But Best Buy managed to thrive.
Title: Re: GME deathwatch - how to profit?
Post by: Psychstache on March 27, 2021, 01:31:38 PM
Everyone talking about Gamestop being dead makes me think of Best Buy.

Sure, some places died in this digital transition. But Best Buy managed to thrive.

That's because BB came up with an effective strategy to reposition themselves and create value for their consumers. I don't think either plan floating out there (become a direct competitor to Steam/XBox Gamepass/Nvidia GeForce, or become the Amazon of used/vintage video games) is very promising, but I not a business strategist.

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 28, 2021, 02:55:00 AM
Everyone talking about Gamestop being dead makes me think of Best Buy.
Everyone?  That's not accurate - how many posts in this thread say GameStop is "dead"?

Sure, some places died in this digital transition. But Best Buy managed to thrive.
Best Buy has gotten slightly more valuable in the past 3 months, returning +17%.  GME stock has gone up +800% in 3 months, making the company 9x more valuable.


I think it might be interesting to sum up GameStop's pro/con (as I know them):
+ Ryan Cohen, Chewy co-founder, joined the board with 2 co-workers
+ the board may pivot to digital sales, transforming the company
+ short squeeze may occur again
+ one stock analyst put a $175 price target on GME

- GameStop is up over 40x in one year, without doing anything
- overpriced relative to Steam, the leading seller of games online
- phone and consoles have built-in stores that are monopolies
- closing stores, declining sales, and no online presence
- requires buying pressure from WSB and others to stay at current price

My most recent GME put spread was $150 / $50, which means I think GME will fall to $50/share, but I lack confidence it will fall below that price.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 28, 2021, 05:46:08 AM
Two years ago (Mar 25 2019) the stock was $10/share, and a year ago GME was $4.22/share.  The current price ($184/sh) reflects an +1700% gain in 2 years, or +4200% gain in 1 year.  I don't see any assets or actions that justify 43x in one year.

Best Buy has gotten slightly more valuable in the past 3 months, returning +17%.  GME stock has gone up +800% in 3 months, making the company 9x more valuable.

- GameStop is up over 40x in one year, without doing anything

The statistics about GME, while mathematically correct, are useless for the purpose of stock evaluation. Normally, the observation of  'price going up $X in a year', or "X% in this time frame", assumes that at the beginning of that period the stock price was in equilibrium with the fundamentals, or in a state of near equilibrium.

With 140% short interest at the beginning period of your analysis (one year ago and three months ago), I suggest that the stock was no longer trading in near equilibrium to the company's performance and/or fundamentals.

In order to adjust for the dislocation to the stock price caused by the 140% short interest, one must go back to a time before the shorts began crushing the stock. I provided a link upthread showing this was in 2014 when the stock was trading at $40, pre-30% share buyback.

Adjusting for the 30% share buyback would put an equilibrium price of $60 on GME stock. So, what are the observations with a base price of $60, instead of $4 or $5? : The stock has tripled as of right now ($181 closing price), but has pinballed between $120 and $240 in the past few weeks (or so) as the stock price seeks a new equilibrium, similar to 2014.

It will take months for GME to reach equilibrium again as the shorts, longs and options traders have fun earning and losing fortunes. They live for this kinda stuff and GME is the best rodeo they'll probably ever see in their entire lives, and they all know it.

In other words, since January, 2021, GME stock has traded based on the supply and demand of stock, and not based on fundamentals of the company. This state will remain much, much longer than any non-professional stock trader believes is possible.

This type of occurrence, where the stock becomes dislocated from the company, has been chronicled from time to time. I first read about it in Jim Cramer's "Confessions of a Street Addict". It's a highly informative (and entertaining) read. I can recommend it. Also: Jessie Livermore's "Reminisces of a Stock Operator".
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 28, 2021, 08:49:12 AM
Bingo. As I said, right now trades aren't based on the fundamentals. Long term the stock market is a weighing machine. Short term it's a voting machine.

You're trying to weigh, M.5
Title: Re: GME deathwatch - how to profit?
Post by: ender on March 28, 2021, 09:00:37 AM
Best Buy is up 10x or so since their low in 2012 vs an overall market return of about 2x.

GME's fundamentals are way better than Best Buy's were at that point (where Best Buy was hemorrhaging money).

My point in bringing up GME and Best Buy comparison is that in the 2012 timeline, people assumed that BB was dead for nearly exactly the same reasons. What you listed applied almost exactly to Best Buy in that timeline.

Even @bwall said applies too, because the multiplier factor in the timeline can make data here result in whatever outcome you want.

If you see GME paralleling Best Buy's recovery and pivot in the future, it's entirely reasonable to expect a forward looking price point that is 10x what they were at their low point. If you see that low point as $4 then it's overpriced. But if $4 was artificially deflated for non-fundamental reasons, it's still cheap if you expect the same growth trajectory a company like Best Buy did.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 28, 2021, 10:10:22 AM
BestBuy kept doing exactly what it had done before.  Who is claiming GameStop will be worth an order of magnitude more from just retail gaming stores?  And again, if it's such a great business, why are sales down and why did they cut 20% of their stores?

The price run up is not based on anything GameStop has done.


I provided a link upthread showing this was in 2014 when the stock was trading at $40, pre-30% share buyback.

Adjusting for the 30% share buyback would put an equilibrium price of $60 on GME stock.
That's not how stocks work.  You can't take the 2014 price and pretend that's what the price should be in 2021.  Your reference to the 2014 price as a fact is a distraction from your next step, extrapolating over 7 years, and assuming the price should not have changed in 7 years.  That's the problem.

It will take months for GME to reach equilibrium again as the shorts, longs and options traders have fun earning and losing fortunes. They live for this kinda stuff and GME is the best rodeo they'll probably ever see in their entire lives, and they all know it.
You think hedge funds are in the market for "the best rodeo"?
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 29, 2021, 05:46:10 AM
I provided a link upthread showing this was in 2014 when the stock was trading at $40, pre-30% share buyback.

Adjusting for the 30% share buyback would put an equilibrium price of $60 on GME stock.
That's not how stocks work.  You can't take the 2014 price and pretend that's what the price should be in 2021.  Your reference to the 2014 price as a fact is a distraction from your next step, extrapolating over 7 years, and assuming the price should not have changed in 7 years.  That's the problem.

You think hedge funds are in the market for "the best rodeo"?

How else would you determine the 'natural' price for GME stock that can compensate for the 140% short interest? If you have a better method, please share.

The statement, 'GME is up 40x in a year, without doing anything' implies that the 40x stock price is somehow out of balance in regards to the previous price. I believe that with 140% of the float sold short, it was the year-ago stock price that was waaaay out of balance (and evidenced by the ensuing short squeeze), much more than the current stock price.

Rodeos: Yes. I believe that hedge funds want to make as much quick, easy money as fast as possible. They envision themselves as cowboys, bucking broncos on the wild west, taking enormous risks that no sane person would take in order to achieve their goals and having insane emotions that are hard to control (how would you react if your decisions led to $100m gains? Or losses?). I believe this because they say as much in books that they have written.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 29, 2021, 08:25:30 AM
I provided a link upthread showing this was in 2014 when the stock was trading at $40, pre-30% share buyback.

Adjusting for the 30% share buyback would put an equilibrium price of $60 on GME stock.
That's not how stocks work.  You can't take the 2014 price and pretend that's what the price should be in 2021.  Your reference to the 2014 price as a fact is a distraction from your next step, extrapolating over 7 years, and assuming the price should not have changed in 7 years.  That's the problem.
How else would you determine the 'natural' price for GME stock that can compensate for the 140% short interest? If you have a better method, please share.
Look at the stock price.

Claiming 7 years of stock market prices are wrong still leaves the burden of proof on you.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on March 29, 2021, 08:38:46 AM
I think you guys are talking past each other.  Should I be using the sale price of my house from 2008, or should I be using the sale price from when I purchased in 2010 as the basis for determining how much my house has appreciated relative to a fair market price?  One method shows 24% appreciation and one shows 149% appreciation.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 29, 2021, 09:13:28 AM
@frugalnacho ; I think you're right.

Not every discussion has to end with agreement, I guess. It's what makes the world go round, after all.

Every day bears and bulls look at the same information and reach different conclusions. 
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 29, 2021, 01:03:51 PM
I think you guys are talking past each other.  Should I be using the sale price of my house from 2008, or should I be using the sale price from when I purchased in 2010 as the basis for determining how much my house has appreciated relative to a fair market price?  One method shows 24% appreciation and one shows 149% appreciation.

Good post, FN.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 30, 2021, 09:10:02 AM
Maybe I read Jim Kramer's book too long ago, because I mostly just remember he thought his wife was a better hedge fund manager than him.

To me, I think the stock market data needs to be considered accurate unless there's very strong proof otherwise.  I find it hard to believe a stock can diverge from fundamentals for 7 years - that buyers and sellers would be trading at the wrong price for that long.  Do you have examples of stocks that diverged from fundamentals more than say, 5 years?

If I need to prove something happened in January, I've got every news source in the world backing my claim - and Congressional hearings, too.  That's why I compare GME performance YTD and 1 year ago - because of widespread news coverage of what happened.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 30, 2021, 12:11:41 PM
To me, I think the stock market data needs to be considered accurate unless there's very strong proof otherwise.  I find it hard to believe a stock can diverge from fundamentals for 7 years - that buyers and sellers would be trading at the wrong price for that long.  Do you have examples of stocks that diverged from fundamentals more than say, 5 years?

The dot-com bubble comes to mind, but even it only lasted for 5-6 years at most. Yahoo.com went public in '96, so that was only a 4 year run. Qualcomm might be a better example - they went public in '91. All the Nasdaq stocks of the late 90's reflected erroneous estimates about earnings growth to occur several years in the future. Perhaps the market was still efficient because those erroneous estimates still incorporated all information available at that time?

The 7-year period of 1922-1929 also reflected erroneous estimates about the future. Almost nobody at the time foresaw how a collapse in margin loans would cause a banking crisis. The market, with all available information priced in, thought a different outcome would occur.

So I guess the question is, was the stock market wrong if the estimates about future earnings that supported its price were wrong? I'd say yes.

If a few tens of thousands of people think GME is going to earn $100/share five years from now, they alone can prop up the price, even if they are wrong. Therefore they and the price are both wrong. Stated another way, they are the market that is wrong (unless it turns out GME does earn $100/share five years from now, perhaps in a combo hyperinflation and vintage game collectible frenzy scenario?).

By now we should be used to the idea that many millions of people can believe incorrect / foolish things and predict the future poorly. They are the market. Anyone who hasn't sold out of any particular market is the market.

Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 30, 2021, 12:30:36 PM
The question being does the market being efficient imply the market is correct?

Regardless of the answer though, probably the larger concept relates to it being irrational longer than your solvency and it doesn't matter if the market is correct or not, you can't be more correct than it profitably, regularly.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on March 30, 2021, 01:42:35 PM
I know the task was to name stocks whose prices had diverged from fundamentals for more than 7 years, but the markets for these products come to mind:

The market for gold traded without regard to fundamentals from 1944 to 1973 and there was no illicit market for gold.
The currencies of western countries (USD, GBP, FFR, DEM, ITL, CAD, JPY) also traded without regard to market fundamentals during this time and there was no black market for currency.
Communist bloc countries' currencies also traded without regards to fundamentals and a black market for other currencies did exist.

The market for crude oil also traded without regards to fundamentals until 1973. So much so that there was no futures market for oil until 1982 (!). For reference, coffee, sugar and cocoa futures began trading in the early 20th Century, and orange juice futures began trading in 1945.

I think that it's a great thought exercise. 

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 31, 2021, 06:07:12 AM
I know the task was to name stocks whose prices had diverged from fundamentals for more than 7 years, but the markets for these products come to mind:
I'd still be curious if there are examples of stocks that diverged from fundamentals for over a year.

The market for gold traded without regard to fundamentals from 1944 to 1973 and there was no illicit market for gold.
During the years you mention, it was illegal for Americans to own or trade gold.
https://en.wikipedia.org/wiki/Gold_Reserve_Act
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 31, 2021, 06:30:02 AM
There's a lot of historical data to support the efficient market hypothesis, but the market keeps changing, so no theory of the market can ever be complete.  To me, the week after GameStop's January price spikes showed an efficient market at work.  The stock plunged as institutional money took advantage of inflated prices.

Note that to avoid solvency risk, people can buy "put options", which involves a fixed investment.  That's the maximum loss, which is what I've done in March (having learned the hard way in February).


@ChpBstrd - My focus was on one stock diverging from fundamentals for years.  With the dot-com bubble, there was real uncertainty over what the internet would be worth - and for whom.  Nobody got Amazon right - those who bought everything didn't invest enough, and those who stayed away missed it entirely.

But I think there might be a bubble involving one company: the East India Company, formed hundreds of years ago.  They had a trade monopoly, which helped ensure the bubble couldn't happen in other stocks.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 31, 2021, 09:40:42 AM


There's a lot of historical data to support the efficient market hypothesis, but the market keeps changing, so no theory of the market can ever be complete.  To me, the week after GameStop's January price spikes showed an efficient market at work.  The stock plunged as institutional money took advantage of inflated prices.

Efficient, but maybe not correct.

What if short interest was still 100%+ at that point, and if prices stayed inflated margin calls come and it shoots up even more until it settles back to its natural price? That would have also been efficient, and perhaps more correct.

The problem is we don't have full information. A market can be correct or not only in hindsight--see your comment about Amazon and everyone getting it wrong. Amazon's price was efficient, was it correct? Who know e-commerce would be what it is, etc.

Gamestop settled into mid 40s for much of Feb. That was efficient. It's settled into upper 100s now. That is efficient. No?

Which is correct? Both? Neither?

And even if one is correct, the market can stay irrational. Maybe a correct short term price is 1000 when the shorts have to cover because they get margin called. Maybe a correct long term price is 30 based on book value. Or maybe it's 80 based on future cash flows.

That's the interesting thing, we're all making our own bets on what we think it's worth.

Or throwing our hands up and saying I'm not gonna try that game and buying index funds.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 31, 2021, 12:00:48 PM
The question being does the market being efficient imply the market is correct?

@ChpBstrd - My focus was on one stock diverging from fundamentals for years.  With the dot-com bubble, there was real uncertainty over what the internet would be worth - and for whom.  Nobody got Amazon right - those who bought everything didn't invest enough, and those who stayed away missed it entirely.

But I think there might be a bubble involving one company: the East India Company, formed hundreds of years ago.  They had a trade monopoly, which helped ensure the bubble couldn't happen in other stocks.
There's a lot of historical data to support the efficient market hypothesis, but the market keeps changing, so no theory of the market can ever be complete.  To me, the week after GameStop's January price spikes showed an efficient market at work.  The stock plunged as institutional money took advantage of inflated prices.
...
@ChpBstrd - My focus was on one stock diverging from fundamentals for years.  With the dot-com bubble, there was real uncertainty over what the internet would be worth - and for whom.  Nobody got Amazon right - those who bought everything didn't invest enough, and those who stayed away missed it entirely.

Perhaps this is the gist of the question:

The efficient market hypothesis says that stock prices reflect all available information at the time. However, this would be true even if the information was incomplete or wrong. There exist facts and cause-effect destinies which are not available to us as information, and these hidden facts and destinies create the future at least as much as the information available to us.

In the 1920's it appeared that corporate earnings were going exponential, driven by the expansion of modern manufacturing, transportation, and management technologies. Information about the extent of investor leverage or the extent of bank vulnerability was not available to most investors, so that part of the story was incomplete. Buying stocks in 1928 was the wrong choice to make, but an incorporation of all available information would have led a person to that wrong choice. It was the same story for tech stocks in the 1990s or financial stocks in 2007.

Enron and Worldcom made sense until the information about them was shown to be incorrect.

When we say prices "diverge from fundamentals", the implication is there is information available that shows the price should be something different than it is. This could be a disagreement between the individual making that claim and the market over which specific bits of information should be emphasized or disregarded. I do not count such disagreements as violations of the EMH because I see the EMH as accounting for differences in individual psychology, constantly making some people buyers and other people sellers depending on their biases for various information types. Yet throughout the daily debates, the market arrives on a price that in the aggregate reflects the collective mind's estimation of value - given the available information. Thus there are stocks I wouldn't touch with a long stick which are being aggressively bought by other people, and vice versa.

What's tricky is that the market for a given asset only consists of those people who already own the asset (potential sellers) or want to own the asset (potential buyers). People who neither own or want the asset are out of the market and do not affect supply or demand for the asset. For example, there are zero dividend growth investors buying GME and AMC, so the market for these stocks consists of people who are emphasizing different types of information than dividend investors emphasize. Likewise, there are zero short-squeeze-targeters buying stocks with very low, or zero, short interest. Thus, the subset of investors who are buyers or sellers of a particular asset are comprised of people who are emphasizing different bits of information than the rest of the worldwide stock market's participants who are not buying or selling that specific asset. So it is possible that all the holders, or sellers, of an asset may be emphasizing the wrong information or information that will prove to be incorrect.

In this analysis, the definition of a bubble or an under/over priced stock would be an environment containing information which will later prove to be incorrect, or a marketplace comprised of investors who are emphasizing or disregarding the wrong information. Either way the investors can be wrong about future returns. They are the market, so the market is regularly wrong too (unless the market is right and then becomes wrong in a way that causes a loss for investors who made logical choices based on information). Any time the market drops, the decisions of millions of investors have proven to be incorrect, and yet they (mostly) made their decisions based on all available information.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 31, 2021, 12:20:42 PM
Really good summation post Bstrd.

Any time the market drops, the decisions of millions of investors have proven to be incorrect, and yet they (mostly) made their decisions based on all available information.

Perhaps.

Of course, there are caveats (like new information coming to light).

They could have been right at the time.

Unknown unknowns.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 01, 2021, 07:32:58 AM
Billions of dollars of GME stock are traded every day - sometimes more than the entire value of the company (which makes it easy to get out for short sellers, BTW).  I'm convinced WallStreetBets doesn't have that kind of money, so I believe there's some unknown hedge funds (or institutional money) trading GME.  Without knowing more about those hedge funds, it's hard to know where GME goes next.

In theory, only buyers and sellers determine the price of a stock.  But a market maker, according to a random post a read, can short a stock and spend up to 3 weeks finding stock to cover their short sale.  That was one of WSB complaints, that market makers could effectively create shares out of thin air.  There could also be institutional investors who normally just hold the stock, but are willing to loan it out to short sellers (and use derivatives to retain 100% exposure to the market).

And a crucial point that came up last week: the company itself can print more shares.  GameStop planned to do that back in December, and I can't imagine the reasons they'd be willing to sell shares at $15 but not at $150.  So an added risk is that all existing shareholders get diluted as more shares come to market.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on April 01, 2021, 11:23:41 PM
Billions of dollars of GME stock are traded every day - sometimes more than the entire value of the company (which makes it easy to get out for short sellers, BTW).

It makes it easy for the shorts to get out if and only if it's not those short sellers already doing the trading by selling more short to suppress the price.

In other words, if they're constantly on the sell side of the equation, if they flip to the buy, the price rockets.

There's the normal day trading activity, but the shorts can't suddenly start to buy without the price going way up.

Quote
I'm convinced WallStreetBets doesn't have that kind of money, so I believe there's some unknown hedge funds (or institutional money) trading GME.  Without knowing more about those hedge funds, it's hard to know where GME goes next.

Right. There's almost definitely hedge funds on both sides, and the idea is that the shorts keep kicking the can down the road by shorting via synthetic shares (and hiding failure to delivers inside deep ITM calls, as you alluded to in your last post), but as they continually have to pay interest and pay for the options they're trading, the long hedge funds (like Blackrock) are bleeding them dry, especially by keeping the price near maximum pain (http://maximum-pain.com/options/GME) so the shorts can't profit off of their calls and puts.

And then, eventually, the shorts have to cover.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 02, 2021, 03:40:15 AM
Let's go to the data!

https://finance.yahoo.com/quote/GME/key-statistics?p=GME
Shares Short (Mar 14, 2021) 4   10.19M
Short Ratio (Mar 14, 2021) 4   0.25
Short % of Float (Mar 14, 2021) 4   44.60%
Short % of Shares Outstanding (Mar 14, 2021) 4   15.60%
Shares Short (prior month Feb 11, 2021) 4   16.47M

What I see is a significant decline in "Shares Short", dropping 38% from Feb 11 to Mar 14.  It looks like hedge funds are reducing their short positions.


Billions of dollars of GME stock are traded every day - sometimes more than the entire value of the company (which makes it easy to get out for short sellers, BTW).
In other words, if they're constantly on the sell side of the equation, if they flip to the buy, the price rockets.

There's the normal day trading activity, but the shorts can't suddenly start to buy without the price going way up.
Does it have to be all or none?  Many hedge funds could be involved, and one of them could decide to reduce their position slightly.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on April 02, 2021, 10:03:51 AM
There is significant reason to think those numbers do not accurately represent the actual amount of short shares.

The SEC has a paper about how the Hedge Funds can reset failure to delivers.

https://www.sec.gov/about/offices/ocie/options-trading-risk-alert.pdf

Essentially the short Hedge Funds (SHF) can "close" their shorts, say they've closed them, then have a certain amount of time to deliver those shares. If they take too long, it becomes a "failure to deliver" (FTD) (iirc after 3 weeks?).

What they can do--per that paper (and evidence we've seen)--is then reset the clock on the FTD so that they have a new gap of time to deliver. And then repeat that X amount of time later (again, I think around 3 weeks, but you can look this up).

It's been discussed a lot on Reddit, I literally just threw out two links from the last day or two at the bottom of this post that I'm copy/pasting from to save time, but there's a lot more explanation over the last few weeks if you want to go dig it up.

What the SHF can do, per that paper, is either of these type of options trades:
"- A buy-write trade, i.e. selling deep ITM call + buying a synthetic long share from MM
- Buying a married put: buying an option put with a synthetic share."

Why would you buy these calls instead of shares, what's the difference? -- Calls don't change the share price and calls can reset the FTD. You immediately exercise the calls via synthetic short shares on the other side of the trade, and now you use these executed shares to show you've "covered" your short. Weeks later you have a FTD on your synthetic shorts you used to make the trade, so you do it again.

We've seen this actually happen. A whole bunch of calls were bought for $14, 15, 16, 17, 18, etc. just this week for an April 16 expiration. Who is buying millions of dollars of deeply ITM calls?

For the last few months, on a very cyclical pattern, we've seen this happen, deep ITM calls to be immediately exercised to hide FTDs. Indicating there are a LOT more shorts out there than being reported, because they don't have to report those numbers, they just keep kicking the can down the road.

Another example--Melvin Capital revealed 6,000,000 puts in their SEC filing from February--quite likely to have been used for this method.

The SEC put out that paper for regulators to look for activity like that, but the SHFs can and are use it as a playbook.

In my opinion, there's reason to think the short positions are much higher than the data you quoted.

Sources:
https://www.reddit.com/r/GME/comments/mi31m6/deep_itm_calls_activity_pt2_april_1st_708000_ftds/
https://www.reddit.com/r/GME/comments/mibedc/the_moass_wont_happen_until_options_are_not/

I think the reported numbers don't tell the whole story. Anyways, I doubt I'll defend this much, so if you disagree, all good. If the evidence isn't compelling to you, sure, I can see that. We'll agree to disagree for now, and see what happens. :)
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on April 02, 2021, 11:02:24 AM
Some hedge funds are going short and other hedge funds are buying their shares and selling them the options they need to hedge or delay delivery. In terms of "how to profit" as a retail investor, this is a tough nut to crack. I'd rather be the later hedge funds, because they can basically set their price while the short hedge funds can only kick the can. But what would that involve? Selling naked calls or synthetic shorts to the short HFs might only be a rational decision when one is contemplating suicide anyway.

I suppose the compression of option prices across the strikes makes it attractive to do bull call or bear put spreads, because the price of debit spreads is low relative to the odds of winning the spread. I.e. an at-the-money April 23 bull call spread at the 190/192.5  could be had for about $0.95. That's a 163% return for a bet we can all probably agree has close to a 50/50 chance of winning.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on April 02, 2021, 04:27:51 PM
A tiny counterpoint: I just ordered a game from GameStop. It may arrive today. I got an old XBox 360 game for $10 plus another $5-$7 for shipping, taxes, and other microcosts. [...] I went to GameStop (online) partially because it was on my mind from all the GME talk and driving by a GameStop store on my way to grocery pickups. Also I feel reasonably confident they'll get a usable-quality game to me with little hassle and plenty of recourse if something goes wrong.

Ugh, I still don't have the game I ordered. Their website has been showing it shipped for over a week but "awaiting carrier pickup" with UPS. Sure enough UPS has no info on the tracking number.

I tried to submit a "contact me" email, but the form never did anything. Just now I used the online chat since it's business hours, and the chatter just gave me the info I already had except they said it was USPS even though their page says UPS. Same tracking number. USPS has no info on that number, either.

I told them there was no info on the site. They said there was.

So much for a low-hassle delivery and recourse!

On the bright side, I've lost far less on this used game order than I did investing in their company.

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 02, 2021, 11:45:11 PM
... calls can reset the FTD. You immediately exercise the calls via synthetic short shares on the other side of the trade, and now you use these executed shares to show you've "covered" your short. Weeks later you have a FTD on your synthetic shorts you used to make the trade, so you do it again.

We've seen this actually happen. A whole bunch of calls were bought for $14, 15, 16, 17, 18, etc. just this week for an April 16 expiration. Who is buying millions of dollars of deeply ITM calls?

For the last few months, on a very cyclical pattern, we've seen this happen, deep ITM calls to be immediately exercised to hide FTDs. Indicating there are a LOT more shorts out there than being reported, because they don't have to report those numbers, they just keep kicking the can down the road.
...
In my opinion, there's reason to think the short positions are much higher than the data you quoted.
Thanks, that's really interesting - especially the idea call options could hide a failure to deliver (FTD, for others reading this).  I guess we both need to consider the source, Reddit, but I also learned something there months ago: someone's explanation of FTD said market makers have 3 weeks, but everyone else has 3 days...

If hedge funds only have 3 days, but there's a loophole to get 3 weeks... they'll probably figure a way to exploit that loophole.  I wonder if we can find a list of market makers in GME stock?  If market makers really do have different rules, then there has to be a list of them somewhere.  And that list would reveal all possible hedge funds using the FTD approach to short GME stock.  Hmm.

As to the data, Melvin Capital supposedly exited their short position in late January, while the data I posted starts in mid February - so it's probably other hedge funds closing 6 million shares of short interest.  I looked for data on a few other websites (Y-charts, Morningstar) but came up empty.

I expect hedge funds have learned to stay away.  So by that theory, the short interest is lower because hedge funds are leaving.  The elevated price since late February represents a lack of interest by hedge funds.  And under this theory, FTD should be declining.

Let's say I'm wrong.  Hedge funds are trying to trick investors, and are actually shifting their short positions into FTD type borrowing.  The ongoing purchase of deep ITM calls are an attempt to hide FTD positions.  The elevated stock price represents hedge funds who are reaching their limit of shorting, and can be broken by driving up the price further.  Under this theory, FTD should be increasing.

So the key things I find interesting now: can searching online reveal the list of current market markets for GME stock?  Can searching online reveal the FTD levels for GME over the past few months?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 03, 2021, 09:56:46 PM
I found "failure to deliver" (FTD) data on SEC.gov, and also see that someone has nicely formatted it on Reddit for just GME.  I spot checked several entries, and all were an exact match, so I'll trust the reddit image:
https://i.redd.it/2cm2kbhldgq61.jpg

I calculated the median as the middle value in a 5 day week, or averaged the two middle values in a 4 day week.  For completeness, I also included the lowest and highest FTD days of each week:

start .. low .. median .. high
1/4  182k .. 556k .. 799k
1/11 288k .. 663k .. 893k
1/18  274k .. 1.2M .. 1.5M (holiday, 4 day week)
1/25  138k .. 1.0M .. 2.1M
2/1  11k .. 48k .. 159k
2/8  99 .. 2k .. 23k
2/15 5k .. 13k .. 53k (holiday, 4 day week)
2/22  2k .. 29k .. 298k
3/1  15k .. 26k .. 83k
3/8  2k .. 17k .. 156k
(late March data is not yet available)

Compared to January, FTD has fallen dramatically by every measure.

Also note that in the first week of January, GME stock was in the narrow range of $17-$18 per share, yet median FTD was 556k.  Now compare that to the week of 2/22 when GME's price doubled in one day (2/24): FTD peaked at 298k, below the median value of when the stock wasn't moving in January.

I think the declining short interest and declining failure to deliver (FTD) both show hedge funds have reduced their exposure to GME.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on April 03, 2021, 10:43:32 PM
FTDs decreasing fits exactly with the ITM calls--that's why they're doing it, to reset the clock on the FTDs. That would lead to less FTDs, because they can show the exercised calls as covering, and then it's not FTD. Then a few weeks later, when the synthetic shorts they created to deliver on those calls are going to be FTD, they repeat so they aren't FTD.

I'm not quite tracking why you think FTDs would increase.

I'm wondering what alternate explanation you might have for the deep ITM calls? Aside from the proposed theory that they're being used to hide FTDs, as described in the SEC document linked.

(Thanks for engaging in this discussion. Appreciate your thoughts.)

Edit: Also look into how many shares are available to borrow to short. If short interest has declined so much, there should be plenty.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 04, 2021, 10:33:29 AM
On deep in the money GME calls, do you have some specific expiration dates and strike prices?  I'm curious about the "open interest" and daily activity.  In my experience, deep ITM calls are expensive and give low leverage.  I like them because of certainty, forced savings, and equal leverage on gains & losses.  I would be surprised if a professional used them, because of their expense and lack of leverage.

As to high FTD rates, if FTD had been similar to January, or growing vs January, that suggests more trouble for the hedge funds.  That's why I was thinking increasing FTD would favor your thesis that hedge funds might be in trouble.  It would also show the short interest was hiding in FTD numbers.  With both FTD and short interest lower, I don't see where the hedge fund positions could be hiding.

I've grown more convinced hedge funds only have 3 days before FTD.  The January spike in price showed a rapid FTD spike, suggesting hedge funds don't have much time before FTD kicks in.  It's even more clear on the Feb 24 price spike, where FTDs spiked on both Feb 24 and even higher on Feb 26.  To me that's very strong circumstantial evidence they have 1-3 days before FTD.

To shorten my prior post, I dropped a paragraph about short positions and call options.  Together, they cancel any profits.  Deep in the money calls are expensive, and neutralize profits on the short position.  If the stock drops, the short position's profits exactly match the losses on the call option.  So it would be strange to tie up a lot of money on the call, and pay interest on the short, and get no possible profit.

GME isn't my favorite hype/WSB stock - I prefer to bet against AMC.  With AMC, I have predictions for specific events (summer crowds will look great... then the revenue numbers will arrive, and the stock will crash).  Competition is significant for AMC, as is their corporate debt.  Buying attacks on AMC have run into large share offerings, which deposit those purchases into AMC's bank account.

With GME, I'm less confident what happens for the next few months - spikes and drops, maybe.  Maybe Ryan Cohen gains more influence, and the stock spikes again.  I'm estimating two possible times when I could cash in on put spreads: (1) GME offers new shares, diluting the stock and sending the price tumbling.  Each buying attack meets printing new shares.  (2) Reopening causes WSB and retail traders to lose interest and want to use their money elsewhere.  Hedge funds lose WSB as cover for buying GME, and move on... so GME falls to it's fundamental value based on earnings.

What events do others expect in GME's future, over the next few months?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 05, 2021, 07:50:31 AM
GameStop announced it may sell up to 3.5 million shares "at the market", meaning the company decides the timing.
https://apnews.com/article/business-video-games-games-fae4fbae46ed05c8c4c06223db525fa5

That's confusingly small, just 5% dilution.  That's enough to pay off their debts according to Y-charts, but I don't see how they compete online with $200 million.  CNBC knows more about this than I would, and they estimated it costs billions to compete in online game sales.

At this point, my earlier guess of 30 million shares is way off.  But the market dropped GameStop -8% to -12% (keeps changing), as if there could be more share offerings after this 5% dilution.  Given how long GameStop waited to do anything (Jan to Apr), maybe they're trying out 3.5 million shares, and plan on offering more later.  That would fit their slow reactions, and the market's greater than 5% drop.

So maybe another share offering by the end of June (this quarter)?
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on April 05, 2021, 09:39:29 AM
^ They are trying not to burst their own bubble. Dumping shares on the market weakens the leverage of those holding the short squeeze play. But the short squeeze play has to end someday, and the company should have grabbed all the money they could from this once-in-a-lifetime economic imbalance. The fact they are only grabbing a little bit implies the new board doesn't have a clear plan yet, or is in conflict and had to compromise. That's not a happy sign for the stock - potentially worse than if they were aggressive with share issuance.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on April 05, 2021, 11:31:27 AM
Nah guys, this is super bullish.

They didn't announce something new. They amended a previous announcement to basically say they're gonna sell LESS shares at a HIGHER price.

In Dec 2020 they filed that they could sell  shares capped to raising $100MM (at the time about 6MM shares)

Today they amended that to say they'll only sell up to 3.5MM shares (up to-- they may sell 0.. they just want the right to fundraise off the squeeze) but that they can make up to 1B off of it.

They always had the right to sell these shares since December (and note that they didn't sell any, at price points of 300, 400, 500), now they just said "oh, we actually will raise the cap on what we can make on it, and guarantee a cap on the number of shares sold."

When the price rockets, they'll be able to make some cash on it.

None of that is a bad thing for people long the squeeze.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on April 06, 2021, 04:32:21 AM
@arebelspy : Wow. That's eye-opening, the whole short reporting and FTD work around. Thanks for sharing.

It makes total sense, although that's not to say that is what's happening. The only people who really know are the ones who engage in this activity and they have every motivation to keep quiet.

I'd often wondered who'd buy a bunch of  ITM Calls at $15 or $20 shortly before expiration. Why not buy them at, say, $50? Why tie up all that extra money when the time decay premium is the same when you're that deep ITM? Well, if the buyer is hoping the stock drops below $50, that's one possible logical explanation. Contrary to the common understanding of the motivation of buying Calls, and that's the head-twisting thing about it.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 06, 2021, 06:25:55 AM
ChpBstrd - You're right that there's a conflict.  I'll quote the end of a letter to GameStop's board of directors:
"We want GameStop’s leaders to do their jobs and implement a strategy for bringing the Company into the 21st century.
Sincerely,
Ryan Cohen"
https://www.sec.gov/Archives/edgar/data/1326380/000101359420000821/rc13da3-111620.pdf

Ryan Cohen has joined the board with two colleagues.  His company owns 13% of GameStop, up from 9.9% when he sent that letter.  The CFO left, and several board members are leaving this year... so it looks like Ryan Cohen will take it over.


arebelspy - It's definitely a let down for put spread holders like me!  GameStop's annual shareholder meeting is June 2021.  My guess is Ryan Cohen installs more friends on the board, and tries to become Chairman.  And my guess on top of that guess would be GME spikes up on the news, with WSB and hedge funds buying.
Title: Re: GME deathwatch - how to profit?
Post by: lemonlyman on April 06, 2021, 09:33:38 AM
I don't understand GME's valuation and stand by my original contribution to the thread.

I just wanted to add that I think EMH is complete nonsense. It takes a whole lot of mental gymnastics to reconcile EMH and GME.
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on April 07, 2021, 04:58:13 AM
@MustacheAndaHalf - I agree on AMC, *that* is a company that'll flood the market with shares when they have a chance.

I hold a bunch of stock in their major landlord, I'm happy WSB kept them from bankruptcy!   I'll happily short AMC when it gets above $13.

They'll be fine long term if WSB keeps letting them issue equity to retire debt
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 07, 2021, 06:23:00 AM
I just wanted to add that I think EMH is complete nonsense. It takes a whole lot of mental gymnastics to reconcile EMH and GME.
It's a bit like saying accounting is nonsense because Enron cheated at it.

The weakest form of EMH says you can't predict future stock prices from past prices.  That sounds accurate to me.
https://www.investopedia.com/terms/w/weakform.asp


@MustacheAndaHalf - I agree on AMC, *that* is a company that'll flood the market with shares when they have a chance.

I hold a bunch of stock in their major landlord, I'm happy WSB kept them from bankruptcy!   I'll happily short AMC when it gets above $13.

They'll be fine long term if WSB keeps letting them issue equity to retire debt
AMC is the strongest bear case I have.

According to Yahoo Finance, they have $300 million in cash and $11.4 billion in debt.  From Dec to Feb, AMC almost tripled the number of shares.  It does seem like they both need cash and are willing to issue more shares.

AMC did reach $13 in Mar 15-19, but I think lower strike options are a better approach.  If AMC recovers to it's 2019 market cap, that leaves it at $2-4/share... I think it's worse than that.  So it's safer to buy $10 or $12 strike puts, and break even faster... but if AMC drops below $3, the lower strike puts are best.
Title: Re: GME deathwatch - how to profit?
Post by: lemonlyman on April 07, 2021, 07:38:26 AM
I just wanted to add that I think EMH is complete nonsense. It takes a whole lot of mental gymnastics to reconcile EMH and GME.
It's a bit like saying accounting is nonsense because Enron cheated at it.

The weakest form of EMH says you can't predict future stock prices from past prices.  That sounds accurate to me.
https://www.investopedia.com/terms/w/weakform.asp


As an accountant, that simile doesn't make any sense.

Have you read any of Richard Thaler and Robert Shiller's work? From reading the forums, it seems like you active trade often. Do you believe you have any chance of beating the markets or just do it for fun? If it's the former, I'm not sure how you reconcile yourself with EMH.

Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on April 07, 2021, 08:06:46 AM
@MustacheAndaHalf - I think the balance sheet numbers are a little aged, some of the debt was convertible and that's led to the share count offerings.  Shares actually got as high as $14, that was my threshold to short.

I give their management credit - Survival is more important than dilution. 

I still worry about their model long term, I don't think they sell enough "stuff" on top of movie tickets.   I did some consulting in this industry for a friend's company, movies have to be a traffic anchor them you capture a bunch of other revenue.  Their company is actually break even YTD even though there have only been two major movie releases so far.

It'll be a great nine month run for the theatres starting in June...the question is what happens after the Holidays.  Will studios pull back on budgets now that they've been hit with tail risk.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on April 07, 2021, 08:29:53 AM
It'll be a great nine month run for the theatres starting in June...the question is what happens after the Holidays.  Will studios pull back on budgets now that they've been hit with tail risk.

My question is whether theaters can offer studios enough money to incentivize them to release movies to theaters before streaming. If this model no longer makes sense in the era when there are dozens of streaming services, and the studios won't take any amount the theaters are willing to bid, then the theaters will lose the one advantage that has kept them alive in the earlier Netflix / pay-per-view era.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 08, 2021, 07:58:07 AM
I just wanted to add that I think EMH is complete nonsense. It takes a whole lot of mental gymnastics to reconcile EMH and GME.
It's a bit like saying accounting is nonsense because Enron cheated at it.

The weakest form of EMH says you can't predict future stock prices from past prices.  That sounds accurate to me.
https://www.investopedia.com/terms/w/weakform.asp


As an accountant, that simile doesn't make any sense.

Have you read any of Richard Thaler and Robert Shiller's work? From reading the forums, it seems like you active trade often. Do you believe you have any chance of beating the markets or just do it for fun? If it's the former, I'm not sure how you reconcile yourself with EMH.
What about the rest of my post?  I cited one form of EMH, and you ignored it.
https://www.investopedia.com/terms/w/weakform.asp
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 08, 2021, 08:20:47 AM
@MustacheAndaHalf - I think the balance sheet numbers are a little aged, some of the debt was convertible and that's led to the share count offerings.  Shares actually got as high as $14, that was my threshold to short.

I give their management credit - Survival is more important than dilution. 

I still worry about their model long term, I don't think they sell enough "stuff" on top of movie tickets.   I did some consulting in this industry for a friend's company, movies have to be a traffic anchor them you capture a bunch of other revenue.  Their company is actually break even YTD even though there have only been two major movie releases so far.

It'll be a great nine month run for the theatres starting in June...the question is what happens after the Holidays.  Will studios pull back on budgets now that they've been hit with tail risk.
This AMC quarterly report is dated March 10, 2021, and cites $5.7 billion in debt.  I can't explain the difference between that and Yahoo Finance's higher number:

"(dollars in millions)"
"Corporate borrowings 5,715.8"
https://s25.q4cdn.com/472643608/files/doc_financials/2020/q4/FINAL-4Q-2020-earnings-press-release-20210310-1435-clean-v.f.pdf#page=8

My question is whether theaters can offer studios enough money to incentivize them to release movies to theaters before streaming. If this model no longer makes sense in the era when there are dozens of streaming services, and the studios won't take any amount the theaters are willing to bid, then the theaters will lose the one advantage that has kept them alive in the earlier Netflix / pay-per-view era.
Disney was 40% of box office revenues in 2019.
including releasing movies on Disney+ the same day they appear in theaters.
https://www.cnbc.com/2019/12/29/disney-accounted-for-nearly-40percent-of-the-2019-us-box-office-data-shows.html

Disney's movie "Black Widow" will come out on their streaming platform the same time it appears in movies.  Disney holds the marvel and Star Wars franchises, so they can do something similar for those movies as well.  In my view, Disney is doing more damage than the other streaming services, because they have been vitally important to movie theaters.  I think Disney will decide the fate of movie theaters... while it tries to promote it's own streaming service.
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on April 08, 2021, 02:01:36 PM
@ChpBstrd

Movies aren't a bid process anymore.  The theatres just pay a percentage of sales.

In the case of my friend/theatre owner, he's a little irritated but also kind of indifferent on these dual releases now.  He'll still show them and happily pay the 50-65% in royalties instead of the theatre sitting empty.   There's tons of content at home.  Godzilla vs. Kong did well in his markets.  Now, if it's a 25yr old theatre with poor seating in a market with a bunch of other stuff to do?  They'll be disproportionately hurt. 

Disney has to decide how they're going to recoup their investment, right now the market is valuing their stock based on streaming subscribers.  Does that change later?  I'm not sure.  The economics of the major theatre release is still overwealming compared to all else.  My guess is there will be a high price point rent at home option for most movies ten years from now at the same time as the theatre release, then it'll hit the subscription based services 45 days later.

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 09, 2021, 10:31:03 AM
arebelspy - What do you think of this week?   Ryan Cohen announced he will become Chairman of the Board at GameStop... which I expected to send GME soaring, as it makes the transformation of GameStop more certain at a sooner date.  And yet... GME stock just dropped a little, and didn't do much else.  On a Friday, no less.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on April 11, 2021, 05:04:48 PM
Yeah, you'd think that would be positive news, a drop is unexpected. You could view it as short hedge funds still trying to drop the price, especially on news like that, trying to get retail to sell.. or you could view it as it was already priced in/expected, and people are just losing interest. Who knows.

Seems like the next catalyst, if there will be one, could be in the next few weeks, if shares are recalled for the shareholders meeting (though the big institutions lending them out don't have to recall them, they could just not vote). Otherwise hard to imagine what could drive this up in a squeeze type scenario, and then it becomes what do you expect it to be worth based on this transition?

I'm still tempted to increase my position in a yolo move, but it's hard to justify. The volume certainly has disappeared.

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 12, 2021, 09:17:42 AM
I'm still tempted to increase my position in a yolo move, but it's hard to justify. The volume certainly has disappeared.
I hope that's fun money.  In my experience emotions are bad for investing.

I don't invest on luck, but I note when luck is involved.  Vanguard locked up cash proportional to a maximum loss on my short positions.  To free that cash, I closed my short GME positions at Vanguard.  If GME keeps falling (-10% today?), that's a lucky move on my part.

Last I checked, Ryan Cohen owned 1/8th of GameStop.  Maybe his significant stake also means he doesn't want to see the stock diluted.  He's probably a good sign for GameStop's future and for current holders of the stock.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on April 26, 2021, 08:45:02 PM
Nah guys, this is super bullish.

They didn't announce something new. They amended a previous announcement to basically say they're gonna sell LESS shares at a HIGHER price.

In Dec 2020 they filed that they could sell  shares capped to raising $100MM (at the time about 6MM shares)

Today they amended that to say they'll only sell up to 3.5MM shares (up to-- they may sell 0.. they just want the right to fundraise off the squeeze) but that they can make up to 1B off of it.

They always had the right to sell these shares since December (and note that they didn't sell any, at price points of 300, 400, 500), now they just said "oh, we actually will raise the cap on what we can make on it, and guarantee a cap on the number of shares sold."

When the price rockets, they'll be able to make some cash on it.

None of that is a bad thing for people long the squeeze.
And regarding this...

They finished the sale.

https://finance.yahoo.com/news/gamestop-completes-market-equity-offering-203900459.html

Raised 500M, so extra cash on their  books, and no debt (more than makes up for the 216MM debt they paid off early recently).

Not a financial advisor, but I like the stock.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 28, 2021, 07:52:16 AM
They finished the sale.

https://finance.yahoo.com/news/gamestop-completes-market-equity-offering-203900459.html

Raised 500M, so extra cash on their  books, and no debt (more than makes up for the 216MM debt they paid off early recently).

Not a financial advisor, but I like the stock.
The announcements of stock offerings sounded bearish when I heard them... now they announce after diluting just 5%, they're done.  Earlier in this thread I was expecting closer to 42% dilution, giving them billions to transform the company.  So this makes a nice dent in one of my favorite bearish points for GME.

But GME is still very overpriced compared to the underlying company.  It's a retail chain with a 25 price/book, as if they're online meeting leader Zoom.  Revenue growth, return on assets and profit margins are all negative.  The numbers suggest a bear case long term.

They don't even rank in the top 10 for online game selling ... yet their market cap puts them as more valuable than the leader, Steam.  And Steam is a website owned and run by Valve, which also makes games.  I don't see any way for them to break into the Apple or Google store market - those are monopolies.  I think most consoles have their own built-in online store, making competition harder.  To me, their prospects as a leading website for selling games look bleak.

That said, I still want to see what happens to GME stock in June, when Ryan Cohen takes control of the board.  I believe the big January buying attack was motivated by the takeover story, so I expect more activity like that as the story unfolds.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on April 28, 2021, 08:37:39 AM
@MustacheAndaHalf : If you think GME is overpriced, you could always short it. :) :)

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 29, 2021, 08:40:58 AM
Anyone reading my posts on GME should know my up/down with GME.  When people were still panicking in the first GME wave (late Jan), I sold calls right as hedge funds applied selling pressure.  I used proper risk assessment, checked that predictions matched the moves of the stock price, and had a very profitable move.  After that, instead of cashing in, I ignored risk assessment and stopped caring if predictions mattered.  And then late February I closed lots of GME positions at big losses (2000% type losses).

I hope my views on GME aren't shaped by my losses - because that's dangerous.  Back then I blamed GME for a day or three, then realized I can't make this personal with a stock.  It could care less.  Focusing on GME rather than my own mistakes is also the wrong perspective - I'm to blame, not the stock.  I had a great approach, and I ignored every aspect of it.  And it's not even the best stock to short - I think AMC put options are much more likely to do well, for numerous reasons.  Focusing on GME clouds judgement and thwarts the search for better targets.


@bwall - I have a few negative calls on GME, so I'm still short the stock.  I will not be adding to my short position, per mistakes made.  But when the calls are in a cheap range I'll close the position.  Besides that, I have bear put spreads on GME, and some put options.  I'm essentially leaving GME alone at this point, and waiting to see what happens with what I've already got.

Also, I think I was too subtle:
That said, I still want to see what happens to GME stock in June, when Ryan Cohen takes control of the board.  I believe the big January buying attack was motivated by the takeover story, so I expect more activity like that as the story unfolds.

What I meant was I might buy call options on GME.  I expect volatility and a price spike in June, when Ryan Cohen takes over the company.  So if GME and short term call options are cheap enough in May, I might buy a small number to see if I'm right.  Then when the June spike arrives, it will be time to cash in and switch to put options.

So... short term bullish, medium/long term bearish.  But I should really start another thread about my other bear picks, as I'm much more interested/invested in those.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on April 29, 2021, 10:03:27 AM
I just can't foresee what digital transformation Ryan Cohen has in mind for GME when he takes over. He wouldn't be doing this if he didn't have some sort of plan, but what makes sense?

Middleman role? Won't work. Too many closed ecosystems.
Internet gaming cafe model? Won't work. Go to a mall to play a video game? This isn't 1985.
Game developer? Starting from scratch with zero expertise?
Intellectual property license resale brokerage? Against the interest of external stakeholders who can torpedo any such plan.
Subscription service for online gaming? Maybe, but even Netflix eventually had to start producing their own content b/c content owners asked for so much.

If Cohen comes out and says phase 1 is to re-create Ebay for old disc games, or comes up with some plan that requires the cooperation of external entities against their best interests, the stock will die. It all comes down to one's assessment of whether Cohen is a genius or an egomaniac intent on reinventing the wheel and claiming credit for it.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 30, 2021, 01:53:34 AM
I just can't foresee what digital transformation Ryan Cohen has in mind for GME when he takes over. He wouldn't be doing this if he didn't have some sort of plan, but what makes sense?

Middleman role? Won't work. Too many closed ecosystems.
Internet gaming cafe model? Won't work. Go to a mall to play a video game? This isn't 1985.
Game developer? Starting from scratch with zero expertise?
Intellectual property license resale brokerage? Against the interest of external stakeholders who can torpedo any such plan.
Subscription service for online gaming? Maybe, but even Netflix eventually had to start producing their own content b/c content owners asked for so much.

If Cohen comes out and says phase 1 is to re-create Ebay for old disc games, or comes up with some plan that requires the cooperation of external entities against their best interests, the stock will die. It all comes down to one's assessment of whether Cohen is a genius or an egomaniac intent on reinventing the wheel and claiming credit for it.
I doubt anyone stands in his way, since he's the largest shareholder (13%), with most others being index funds (Fidelity, Vanguard, iShares, etc).
https://news.gamestop.com/stock-information/institutional-ownership

I'm also curious about his plan for GameStop:

"But now Cohen has to deliver. The company is seeking a new chief executive officer, with the goal of going head-to-head with Amazon.com Inc. and other e-commerce sites. And Cohen looks to forge new partnerships with video-game publishers and tech giants, potentially increasing the number of services GameStop can offer online."
https://news.yahoo.com/gamestop-turnaround-artist-ryan-cohen-110014940.html

At Chewy he focused on customer service and selection.  But with computer games, a specific game is only available from one company.  So selection requires he establish relationships with companies that already have their own platforms for online sales.

I expect 0% market share in smart phone gaming.  Google and Apple are not sharing their respective monopolies, and will warn users against possible viruses from third party stores/websites.

Consoles from Nintendo and Microsoft presumably have their own store built into the console, and also their own online store.  Right now they view GameStop as a way to make additional money from people who like to buy games in retail stores.  As GameStop mostly/totally closes those stores, they turn from partner to competitor.  Nintendo and Microsoft will see a drop in retail sales, and then the cause of that loss will ask for their help competing with them.  I don't expect that to work out well.

Steam, gog.com (Good Old Games) and Amazon have all been doing online game sales for years.  Someone with a library of steam games will want to buy their next game on steam, to have everything conveniently in one place.  Same with Good Old Games and their library.  Although Amazon is last in that list, they are planning a big push, which will probably crowd out GameStop's entry into the market.

If GameStop manages to have some new games, why won't people just keep buying games at Steam / gog / Amazon?  Why split their library between a hundred games on steam, and buying a new game on GameStop?  There is a real switching cost to those who built up libraries at existing websites, and I think that will translate to customers who are reluctant to switch.  Pet owners don't have to do anything to switch, so I think it will come as a surprise to outsiders trying to compete in the gaming industry.

Having reviewed my bear positions, I actually think GameStop is in my top 5.  But it might take longer for people to see that GameStop's long term prospects are bleaker than expected.

@arebelspy - Serious question - If GameStop does nothing, how long will you be enthusiastic about the stock?  If Ryan Cohen announces interesting things, but there's no money coming in or no customers, what is your time frame?

I guess I should do more research than just asking one person, but it's a start!  :)
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 04, 2021, 08:25:12 AM
@arebelspy - Serious question - If GameStop does nothing, how long will you be enthusiastic about the stock?  If Ryan Cohen announces interesting things, but there's no money coming in or no customers, what is your time frame?

You mean the stock doing nothing (flat) or the company doing nothing?

I don't really see the latter happening. They're already making moves, such as yesterday announcing they're leasing a new 700,000-square-foot fulfillment center for their online transition: https://www.msn.com/en-us/entertainment/gaming/gamestop-opening-fulfillment-center-in-e-commerce-transformation/ar-BB1gjwa4

They're clearly making a transition, not just sitting.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 04, 2021, 09:37:29 AM
@arebelspy - Serious question - If GameStop does nothing, how long will you be enthusiastic about the stock?  If Ryan Cohen announces interesting things, but there's no money coming in or no customers, what is your time frame?

You mean the stock doing nothing (flat) or the company doing nothing?

I don't really see the latter happening. They're already making moves, such as yesterday announcing they're leasing a new 700,000-square-foot fulfillment center for their online transition: https://www.msn.com/en-us/entertainment/gaming/gamestop-opening-fulfillment-center-in-e-commerce-transformation/ar-BB1gjwa4

They're clearly making a transition, not just sitting.

Seems they are doubling down on hardware and physical accessories for PC gaming. I wonder if the next generation of gamers will be sitting in a gaming chair, at a gaming desk, running a water-cooled desktop PC, with controllers, big curved 4k monitors, etc. ... or if they will be using cell phones, tablets, or Facebook's Occulus VR? I suppose they could find a niche as a competitor to Newegg or Tiger Direct, but there's something old school feeling about building a $2500 custom gaming desktop computer every 3 years.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 05, 2021, 09:00:31 AM
"... it will open a more than 630,000 square foot distribution center (DC) in Shepherdsville, Kentucky ... The DC will also be used as a fulfillment center for its e-commerce orders and for the repair and refurbishment of pre-owned video game hardware and software, and electronic products that customers trade-in at any GameStop store."
https://news.gamestop.com/news-releases/news-release-details/gamestop-open-new-distribution-center-kentucky

Wow, doubling down on physical fulfillment (literally: going from about 270k sq ft to over 630k sq ft).  Now it all makes sense: Ryan Cohen took over GameStop because he wanted more of what GameStop already did, with greater efficiency.  On the plus side, Microsoft and Nintendo will see this as helping their sales in a non-competitive way.  So GameStop can keep using it's existing approach and relationships.

On the negative side, they are going to miss the switch from physical to digital.  A growing percentage of laptops don't have CD-ROM drives, because people download software instead of physically putting a CD in the drive.  I believe consoles have their own online stores, which are more convenient than shopping online and waiting for the physical CD to arrive.

Target adapted to online sales very well, and it's stock has gone +65% above it's pre-pandemic high.  Since early 2019, it's stock has almost tripled.  GameStop has done far less than Target, and since early 2019 it's stock has risen +1300% (thirteen hundred percent, not a typo).  Seems overvalued for where it is, and even where it's headed.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 05, 2021, 09:16:49 AM
@arebelspy - Serious question - If GameStop does nothing, how long will you be enthusiastic about the stock?  If Ryan Cohen announces interesting things, but there's no money coming in or no customers, what is your time frame?

You mean the stock doing nothing (flat) or the company doing nothing?

I don't really see the latter happening. They're already making moves, such as yesterday announcing they're leasing a new 700,000-square-foot fulfillment center for their online transition: https://www.msn.com/en-us/entertainment/gaming/gamestop-opening-fulfillment-center-in-e-commerce-transformation/ar-BB1gjwa4

They're clearly making a transition, not just sitting.
That's a lease agreement.  It's not nothing, but it's not much.

I expect GameStop to be judged on their online success.  How many additional customers will shop on GameStop's website and Google store app?
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 05, 2021, 09:31:33 AM
Target adapted to online sales very well, and it's stock has gone +65% above it's pre-pandemic high.  Since early 2019, it's stock has almost tripled.  GameStop has done far less than Target, and since early 2019 it's stock has risen +1300% (thirteen hundred percent, not a typo).  Seems overvalued for where it is, and even where it's headed.

The justification for software companies to have higher valuations is that the software business model has very low variable costs. Once they pay their fixed costs, the additional cost to sell and distribute the next 1,000 units of product is nearly nothing. Thus, their net margins could continually increase as their sales go up.

If GameStop's business model is to run warehouses doing refurb work on vintage hardware and software discs, and direct shipping from an online catalog, that's a model where variable costs would go up 1:1 with sales volume. It might be a great business, as many smokestack industries are, but there's not the potential for surprising, explosive, exponential growth to justify the high valuation. Had they gone a more radical direction, such as starting their own VR software ecosystem or creating a Netflix for gaming emulator app for mobile devices, I could justify a lotto-ticket valuation. But it appears the answer has arrived; GameStop will remain a niche hardware/software middleman with higher variable costs than a purely online business.

Now might be the time to grab a bear spread. Wall Street Bets' attention has already shifted to Microstrategy and crypto.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 06, 2021, 08:30:06 AM
My earlier short-term optimism for GME stock depended on Mr Cohen becoming Chairman of the Board, and GameStop pushing into digital e-commerce.  They plan to keep doing more of the same, but with greater speed and service.  I have no idea if that combination lifts the stock up, since it seems underwhelming compared to expectations.

Just to expand our echo chamber:
"Shorts only control 15% of GME stock now, says S&P Global Market Intelligence "
"Wall Street analysts who follow the stock closely warn it's worth much less than retail investors think it is. The average 12-month price target is just 17.92"
"GME stock's fundamentals are a story of steady decline."
https://www.investors.com/research/gamestop-gme-stock-buy-now/

I still have a very small number of unprotected short calls on GME.  Meaning someone speculated that GME will go above a certain price, and I sold them the call option.  Looks like I'll want to watch and see what happens this month before making a decision.  I no longer thing buying calls before the board meeting makes sense.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 07, 2021, 07:33:29 AM
I'll continue to politely disagree, and am excited to see what's coming.

I think the transition to online sales will be good in terms of fundamentals, but more importantly I think there's still a huge squeeze opportunity. I think the reported short interest is not accurate.

Happy to wait and hold.

Now might be the time to grab a bear spread. Wall Street Bets' attention has already shifted to Microstrategy and crypto.

WSB was compromised (mods sold out, lots of bots/shills) and the GME holders left for other subs (/gme and /superstonk).

Their sentiment on anything now is suspect.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on May 07, 2021, 07:35:38 AM
I sold my last 0.12 shares yesterday at a loss.  Up about $100 overall. 
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 07, 2021, 08:49:07 AM
I'll continue to politely disagree, and am excited to see what's coming.

I think the transition to online sales will be good in terms of fundamentals, ...
Since they already have online sales, I don't see the transition.  You can search for "game stop controllers", and see Xbox One controllers in the results.  Their website already lists video games, controllers, and accessories.  The things they claim to be moving towards already seem to be on their existing website.

Maybe they improve service and speed, but they're still operating in the retail sales of physical items related to computer games and consoles.  Consider how little stock they sold this year - I think that's proportional to the cash they need.  They aren't changing so dramatically that they need billions.


...  but more importantly I think there's still a huge squeeze opportunity.  I think the reported short interest is not accurate.
According to Yahoo Finance's data, the short interest is under 16%.  I'd rather have more sources of information.  Do you have a source that contradicts that?

Short % of Shares Outstanding (Apr 14, 2021) 4   15.70%
https://finance.yahoo.com/quote/GME/key-statistics?p=GME
Title: Re: GME deathwatch - how to profit?
Post by: Financial.Velociraptor on May 07, 2021, 12:50:10 PM
I'll continue to politely disagree, and am excited to see what's coming.

I think the transition to online sales will be good in terms of fundamentals, ...
Since they already have online sales, I don't see the transition.  You can search for "game stop controllers", and see Xbox One controllers in the results.  Their website already lists video games, controllers, and accessories.  The things they claim to be moving towards already seem to be on their existing website.

Maybe they improve service and speed, but they're still operating in the retail sales of physical items related to computer games and consoles.  Consider how little stock they sold this year - I think that's proportional to the cash they need.  They aren't changing so dramatically that they need billions.


...  but more importantly I think there's still a huge squeeze opportunity.  I think the reported short interest is not accurate.
According to Yahoo Finance's data, the short interest is under 16%.  I'd rather have more sources of information.  Do you have a source that contradicts that?

Short % of Shares Outstanding (Apr 14, 2021) 4   15.70%
https://finance.yahoo.com/quote/GME/key-statistics?p=GME

My understanding is the only way to see real time short interest is with a Bloomberg Terminal.  Retail investors only get an update twice a month.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 08, 2021, 10:17:36 AM
...  but more importantly I think there's still a huge squeeze opportunity.  I think the reported short interest is not accurate.
According to Yahoo Finance's data, the short interest is under 16%.  I'd rather have more sources of information.  Do you have a source that contradicts that?

Short % of Shares Outstanding (Apr 14, 2021) 4   15.70%
https://finance.yahoo.com/quote/GME/key-statistics?p=GME
My understanding is the only way to see real time short interest is with a Bloomberg Terminal.  Retail investors only get an update twice a month.
I would assume people at bloomberg.com have access to a Bloomberg terminal, yet when their article from early Feb mentions other sources than themselves:

"Short interest in the video-game retailer plummeted to 39% of free-floating shares, from 114% in mid-January, according to IHS Markit Ltd. data. Data from S3 Partners, another market intelligence firm, showed a similar pattern, with GameStop’s short sales having fallen to about 50% of its total stock available to trade, down from a high of roughly 140% reached earlier this year."
https://www.bloomberg.com/news/articles/2021-02-01/gamestop-short-interest-plummets-in-a-sign-traders-are-covering
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 09, 2021, 08:53:53 PM
...  but more importantly I think there's still a huge squeeze opportunity.  I think the reported short interest is not accurate.
According to Yahoo Finance's data, the short interest is under 16%.  I'd rather have more sources of information.  Do you have a source that contradicts that?

Short % of Shares Outstanding (Apr 14, 2021) 4   15.70%
https://finance.yahoo.com/quote/GME/key-statistics?p=GME
My understanding is the only way to see real time short interest is with a Bloomberg Terminal.  Retail investors only get an update twice a month.
I would assume people at bloomberg.com have access to a Bloomberg terminal, yet when their article from early Feb mentions other sources than themselves:

"Short interest in the video-game retailer plummeted to 39% of free-floating shares, from 114% in mid-January, according to IHS Markit Ltd. data. Data from S3 Partners, another market intelligence firm, showed a similar pattern, with GameStop’s short sales having fallen to about 50% of its total stock available to trade, down from a high of roughly 140% reached earlier this year."
https://www.bloomberg.com/news/articles/2021-02-01/gamestop-short-interest-plummets-in-a-sign-traders-are-covering

One issue with the short interest ratio is that the average daily trading volume is the denominator. For a “peaky” meme stock this average could fluctuate a lot as the volume fluctuates a lot. The short/float metric is probably more reliable for meme stocks, but even it has issues due to things like derivatives not counting or double-loaning of shares.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 17, 2021, 06:24:14 PM
Lots of GME/AMC action in the last week or so.

I expect a lot more from GME (I don't follow AMC much) soon.

I think, due to the massive shorting, the company will receive more votes for their shareholders meeting than there are outstanding shares. This will be problematic.

Shareholder's meeting is 6/9. We'll see what happens.

I wouldn't want to be short these stocks.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 18, 2021, 07:09:01 AM
I think, due to the massive shorting, the company will receive more votes for their shareholders meeting than there are outstanding shares. This will be problematic.

Shareholder's meeting is 6/9. We'll see what happens.

I wouldn't want to be short these stocks.
Your investment relies on "massive shorting", which I don't see in the data.  Yahoo shows lower short interest, and the failure to deliver numbers have dropped dramatically.  If you're wrong about massive shorting, can the stock go higher?


I think more and more people are going to realize GameStop has an improved plan, but not a dramatically different one.  Their plan is more warehouse space, faster shipping, better response times to phone calls.  I don't view that as worth +900% gain YTD, so I'm waiting for GME to drop down to $50/share.
Title: Re: GME deathwatch - how to profit?
Post by: theoverlook on May 18, 2021, 07:58:15 AM

I think, due to the massive shorting, the company will receive more votes for their shareholders meeting than there are outstanding shares. This will be problematic.


From my brief reading, short sellers do not inherit voting rights when selling shares short.

https://www.investopedia.com/ask/answers/05/shortsalevotingrights.asp

"The investor that retains voting rights for corporate actions is the registered owner of the security, known as the holder of record.
In a short sale, the investor that shorts the shares never owns the shares and is, therefore, never the holder of record."
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 18, 2021, 08:34:09 AM


I think, due to the massive shorting, the company will receive more votes for their shareholders meeting than there are outstanding shares. This will be problematic.

Shareholder's meeting is 6/9. We'll see what happens.

I wouldn't want to be short these stocks.
Your investment relies on "massive shorting", which I don't see in the data.  Yahoo shows lower short interest, and the failure to deliver numbers have dropped dramatically.  If you're wrong about massive shorting, can the stock go higher?

As I've mentioned, shorts are being hidden in massively item calls and massively otm puts. I'm not sure what other explanation there is for buying a put at 0.50 right now. Or buying a bunch of $10 calls (why not buy shares or closer to ITM)?

The data is purposefully wrong because the hedge funds are manipulating the numbers to not show the true short percentage.

Quote
I think more and more people are going to realize GameStop has an improved plan, but not a dramatically different one.  Their plan is more warehouse space, faster shipping, better response times to phone calls.  I don't view that as worth +900% gain YTD, so I'm waiting for GME to drop down to $50/share.

I think it will, in time. Not soon.



I think, due to the massive shorting, the company will receive more votes for their shareholders meeting than there are outstanding shares. This will be problematic.


From my brief reading, short sellers do not inherit voting rights when selling shares short.

https://www.investopedia.com/ask/answers/05/shortsalevotingrights.asp

"The investor that retains voting rights for corporate actions is the registered owner of the security, known as the holder of record.
In a short sale, the investor that shorts the shares never owns the shares and is, therefore, never the holder of record."

Right. But all those people who own the shares do.

Short seller sells makes shorts to 20 people, who all vote, and the votes come in higher than there are outstanding shares, there's a problem.

The short hedge funds don't wanna vote... but the people holding GME sure do.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 18, 2021, 08:51:08 AM
Kinda changing the subject here, but staying on the topic of three-letter stocks starting with G and containing E. I wonder if GEO could be the next GME?

Short % of float on 4/30/21:
 GME: 28.96%
 GEO: 48.68%

Short % shares outstanding on 4/30/21:
 GME: 16.7%
 GEO: 31.47%

Number of shares short Mar-Apr change:
 GME: decreasing
 GEO: increasing

P/E:
 GME: negative and negative for the foreseeable future
 GEO: 5.38 (forward PE is around 6)

1 year price performance:
 GME: 2710%
 GEO: -46%

The story with GEO is they are a leveraged (D/E = 316%) private prison operator structured as an REIT (and big Republican donor) facing both pandemic costs and Joe Biden’s calls to abolish the use of private prison contractors. Already they’ve lost several contracts for the federal Bureau of Prisons, and BOP work accounted for 14% of revenue. Prisons aren’t exactly like apartments, so GEO is looking at years of vacancy - while paying the debts on these facilities - before they can sell them at a loss or contract with a local jurisdiction who will have a negotiating advantage as monopolistic buyers against a seller whose back is against the wall. GEO recently cut their 10% dividend to try and de-leverage, and they may change out of their REIT status soon to obtain more financial flexibility, as competitor CoreCivic did.

My question, which I don’t have time to research, is how much of their revenue comes from reliable sources, such as red-state state governments, versus how much could be cut in the next two years? Is GEO a falling knife with questionable ethics and a suddenly untenable debt burden or a compelling value play that will double by the next election season, when prison outbreaks of COVID-19 are a historical footnote? In the meantime, I think GEO has a much better chance of being a short squeeze candidate near the point of maximum pessimism, like where GME was several months ago. Additionally, GEO might be seen as a portfolio hedge against social chaos; their services might be sought after and their political critics muted in the event of rising crime or conspiracy-theory-led outbreaks of insurrection, ethnic conflict, or terrorism. Thoughts?
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on May 18, 2021, 04:56:55 PM
Not GME, but I'm going to have to break down and buy puts in AMC...four days in the last six I haven't been able to get shares to borrow and short..

They were readily available in March and the company continues to issue equity.  Where the heck are the shares!?!?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 19, 2021, 10:10:54 AM
arebelspy - I think I replied earlier that massively in the money calls make no sense at all.  They cost just as much as the stock, and nullify holding a short position.  If you are both bullish and bearish on the same stock, you pay fees and get no profits.

ChpBstrd - It doesn't look like a Covid sensitive stock.  If you look at a graph of Macy's stock, there's a huge drop when the pandemic starts.  On GEO's stock price graph, it's hard to spot.  The first year of the Trump Presidency was more dramatic for the stock than the pandemic.  If Biden follows through with not renewing any contracts with private prison companies, GEO will keep losing business.  Would it make sense to wait 2-3 years for the next Presidential election cycle?

chasesfish - Even though they issued 350m more shares (total 450m), it doesn't seem to have pushed the stock price much lower.  I think current investors are ignoring the dilution.  Maybe summer will see an increase in moviegoing, but it won't be 5x more than last year - especially with streaming services on the rise.

But I'm getting a bit bored with predicting AMC.  I thought the stock would drop Tuesday, and it dropped Wednesday.  Looking at stock price patterns reminds me I'd rather be index investing.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 19, 2021, 04:09:47 PM
arebelspy - I think I replied earlier that massively in the money calls make no sense at all.  They cost just as much as the stock, and nullify holding a short position.  If you are both bullish and bearish on the same stock, you pay fees and get no profits.

Agreed.

I think this is one of the clear pieces of evidence the short interest is much higher than reported, as they're using these massively ITM calls and massively OTM puts to roll out their FTD times on short positions to not be showing failure to delivers and not have to deliver or report on how short they actually are.

Some of the other evidence involves the buy/sell ratios on major brokers, activity reported from various international brokers, etc.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 20, 2021, 08:34:09 AM
arebelspy - I think I replied earlier that massively in the money calls make no sense at all.  They cost just as much as the stock, and nullify holding a short position.  If you are both bullish and bearish on the same stock, you pay fees and get no profits.
I think this is one of the clear pieces of evidence the short interest is much higher than reported, as they're using these massively ITM calls and massively OTM puts to roll out their FTD times on short positions to not be showing failure to delivers and not have to deliver or report on how short they actually are.

Some of the other evidence involves the buy/sell ratios on major brokers, activity reported from various international brokers, etc.
Maybe I'm misunderstanding the short position + deep in the money calls, because it makes no sense to me.  Someone shorts 100 shares of GME stock at $175 ($17,500 worth) and then buys 100 shares (1 contract) call option with a $60 strike for $12,200.  How can they possibly profit?


https://finance.yahoo.com/quote/GME/options?p=GME
Looking at May 21 and May 28 call options, there isn't many deep in the money.  Calls expiring tomorrow aren't that popular below $90 strike - the most is 23 "open interest" at $35 strike.  23 means 2,300 shares, or 1/30,000th of total GME shares.  There's the May 28 calls, where $50 and $60 stick out with 100 contracts each.  But even 20,000 shares is 1/3,500th of the overall 71M shares of GME.

If there's deep in the money calls used for some purpose... where are they?
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 20, 2021, 08:54:15 AM


arebelspy - I think I replied earlier that massively in the money calls make no sense at all.  They cost just as much as the stock, and nullify holding a short position.  If you are both bullish and bearish on the same stock, you pay fees and get no profits.
I think this is one of the clear pieces of evidence the short interest is much higher than reported, as they're using these massively ITM calls and massively OTM puts to roll out their FTD times on short positions to not be showing failure to delivers and not have to deliver or report on how short they actually are.

Some of the other evidence involves the buy/sell ratios on major brokers, activity reported from various international brokers, etc.
Maybe I'm misunderstanding the short position + deep in the money calls, because it makes no sense to me.  Someone shorts 100 shares of GME stock at $175 ($17,500 worth) and then buys 100 shares (1 contract) call option with a $60 strike for $12,200.  How can they possibly profit?

They aren't profiting. They're losing money.

But buying time by kicking the can down the road. They have tons of shorts they've created, and need to deliver those shares, or risk getting a FTD. Instead they can buy--and immediately exercise (why you don't see it in the open interest)--a deep ITM option from their buddy. Now they have the shares on their books to show they've covered. Only their partner doesn't deliver those shares, but just kick the can down the road further.

It's not to make money. It's to avoid having to cover and going backrupt.

I can't find a better explanation for all that deep ITM call activity (which were purchased, even if you don't see it as open interest).

Married puts are an even better way to do it.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 20, 2021, 10:56:57 AM
The strategy of kicking the can down the road reflects pure and absolute conviction on the part of the shorts. They are willing to pay the time decay on their protective calls because to them it's such a sure thing GME's price will eventually revert to its value. On the flip side, this means the level of shorting never does go down and this attracts people to hold the stock long (including the people selling the calls, who hedge by going long). It's a standoff to see if the shorts will recoup the time decay on long calls before it exceeds the amount of their future gains.

They are using far-ITM call options because time decay is slowest for these options, even if they cost a fortune, and because their time value will increase as GME falls closer to the strike price in their predicted scenario. E.g. GME is $166.35, an October call at the 20 strike has an asking price of $147.60 (Note the near-zero $1.25 time decay! That's the cost of maintaining a $166.35 short position.). When GME goes near $20 in August, as predicted, the call will gain time value due to being close to the money - maybe $4 - and the entity who is short GME can both get out of the short position and sell the long call option for some extra cash.

To me, the weird thing about this setup is on the long side. The long side reflects pure and absolute conviction that the short squeeze alone will increase the price of the stock forever, because as the longs observe, the shorts are full-conviction and can't profitably get out of the trade anyway. It is a game of musical chairs then, which is why the same people buying crypto are going long meme stocks.

Short squeezes used to be understood as something that lasted maybe a month, but GME has been going on for at least 5 months. Tesla was the original long-duration short, and it could be said their squeeze lasted years before the bears finally capitulated and short interest dropped to its current 5%ish range. Maybe Musk's eccentric behavior and disregard for norms was a brilliant move to lure the shorts in and pump up his own stock? I think the party ends when twice-burned investors refuse to short anything over X% short interest, or when tax loss harvesting season arrives and increases the allure of getting out. I also wonder how long the longs will continue to "like the stock" when it's not gone anywhere consistently for a few months and they see other longs taking their profits while the shorts demonstrate how they can bide their time for years?
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 20, 2021, 11:13:41 AM
What'll be interesting is if the number of votes for the upcoming shareholder meeting (6/9) come in way above the outstanding number of shares due to the massive shorting (and naked shorts).
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 20, 2021, 03:13:35 PM
ChpBstrd - It doesn't look like a Covid sensitive stock.  If you look at a graph of Macy's stock, there's a huge drop when the pandemic starts.  On GEO's stock price graph, it's hard to spot.  The first year of the Trump Presidency was more dramatic for the stock than the pandemic.  If Biden follows through with not renewing any contracts with private prison companies, GEO will keep losing business.  Would it make sense to wait 2-3 years for the next Presidential election cycle?

I think it's safe to say the COVID trade is over. For evidence, look at the airlines and cruise lines which are back to or above the values they had before sustaining all this damage.

GEO has been in decline for years as opposition to private prisons quickly went from a fringe position to a priority on the Democratic party platform. GEO didn't exactly defend their record well, jumping after contracts with ICE to participate in the separation of immigrant children from their families and visibly donating to GOP politicians. The stock market considers them to have bet it all on red and lost, which is why their stock is down 80% over the past 5 years, even as the S&P has doubled. A management shakeup would not be a surprise.

But did they really lose it all? Sure, in a couple of years they'll have a lot fewer federal contracts, they'll probably no longer be a REIT, and they'll be attempting to work off heavy leverage and sell off empty prisons, but there will be some residual value from their state and international businesses. I seriously doubt the federal government will forbid the states from contracting with private prison operators. 

Bureau of Prisons: 12% of revenue
US Marshals: 15% of revenue
Immigration & Customs Enforcement: 23% ..

So basically half their revenue is at risk, but the Biden administration's instructions were to not renew any contracts. Most of these contracts probably have years remaining. In other cases, if the government wanted to get rid of GEO they would either have to build a new facility from scratch, buy the facility from GEO, or lease the facility from GEO. It is unclear how far the mandate goes, but clearly we cannot simply write off all that revenue. GEO itself projects only a 9% reduction in revenue next year.

GEO's 2026 bonds sell for 67 cents on the dollar and might go lower, depending on negotiations which are said to be pending. It might not be a bad idea to put on a stink bid at 55 cents or so, because many banks have divested from the industry and there might be few buyers. If we haven't reached maximum pessimism yet, this could pay off. 

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 21, 2021, 08:59:24 AM
arebelspy , ChpBstrd  - Can both of you be right when one argues options are exercised immediately while the other says they're held long-term at a cheap time decay?

Instead they can buy--and immediately exercise (why you don't see it in the open interest)--a deep ITM option from their buddy. Now they have the shares on their books to show they've covered.
If they have -100 shares (short) and buy 1 call (100 shares) and then exercise it, the call gives them +100 shares, closing their short position.  They're not short - they have zero shares.


They are using far-ITM call options because time decay is slowest for these options, even if they cost a fortune, and because their time value will increase as GME falls closer to the strike price in their predicted scenario. E.g. GME is $166.35, an October call at the 20 strike has an asking price of $147.60 (Note the near-zero $1.25 time decay! That's the cost of maintaining a $166.35 short position.). When GME goes near $20 in August, as predicted, the call will gain time value due to being close to the money - maybe $4 - and the entity who is short GME can both get out of the short position and sell the long call option for some extra cash.
Except literally nobody is holding October GME call options at a $20 strike.
https://finance.yahoo.com/quote/GME/options?date=1634256000&p=GME
So... where are these massive numbers of deep in the money calls?

If they have -100 shares and 1 call contract (+100 shares), they cannot profit.  If the stock drops $5, their -100 shares cost $500 less to buy back ... while their deep ITM calls lose $500 in value.  They are paying fees to go nowhere - no profit.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 21, 2021, 09:20:36 AM
ChpBstrd - It doesn't look like a Covid sensitive stock.  If you look at a graph of Macy's stock, there's a huge drop when the pandemic starts.  On GEO's stock price graph, it's hard to spot.  The first year of the Trump Presidency was more dramatic for the stock than the pandemic.  If Biden follows through with not renewing any contracts with private prison companies, GEO will keep losing business.  Would it make sense to wait 2-3 years for the next Presidential election cycle?
I think it's safe to say the COVID trade is over. For evidence, look at the airlines and cruise lines which are back to or above the values they had before sustaining all this damage.
Two years ago Carnival Cruises stock (CCL) traded at $50.40/share.  Factoring in dilution, that's like $31.23/share.  CCL is trading for $27.57/sh right now, with +13% room to a full recovery.  It doesn't look fully recovered to me.

Two years ago Macy's (M) traded for $19.62/share.  Macy's didn't dilute much, so the after dilution equilvant is $19.55/share.  Macy's trades at $18.16/share now, so it might recover +8% more.  WSB has added volatility, pushing it up above $20 some days - but it is not above it's prior value.

There's Occidental Petroleum (OXY) that was $49.09/sh on May 21 2019, or about $39.33/sh after dilution.  It trades at $25.36/sh now, with +55% room to grow.  And oil has done really well already, but there's still room.

I still see room for stocks impacted by Covid to recover.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 21, 2021, 09:23:56 AM


Instead they can buy--and immediately exercise (why you don't see it in the open interest)--a deep ITM option from their buddy. Now they have the shares on their books to show they've covered.
If they have -100 shares (short) and buy 1 call (100 shares) and then exercise it, the call gives them +100 shares, closing their short position.  They're not short - they have zero shares.

They don't actually have the shares, they just print synthetic ones as a market maker... and then will need to deliver them later.

I thought we had talked about this earlier in the thread when I linked to the SEC paper describing how this can be used to get around FTDs and hide short interest?

Some other links:

https://www.reddit.com/r/GME/comments/m05jed/mystery_solved_the_deep_itm_calls_are_coming_from/

https://www.reddit.com/r/GME/comments/mhv22h/the_si_is_fake_i_found_44000000_million_shorts/
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 21, 2021, 09:48:53 AM

They are using far-ITM call options because time decay is slowest for these options, even if they cost a fortune, and because their time value will increase as GME falls closer to the strike price in their predicted scenario. E.g. GME is $166.35, an October call at the 20 strike has an asking price of $147.60 (Note the near-zero $1.25 time decay! That's the cost of maintaining a $166.35 short position.). When GME goes near $20 in August, as predicted, the call will gain time value due to being close to the money - maybe $4 - and the entity who is short GME can both get out of the short position and sell the long call option for some extra cash.
Except literally nobody is holding October GME call options at a $20 strike.
https://finance.yahoo.com/quote/GME/options?date=1634256000&p=GME
So... where are these massive numbers of deep in the money calls?

If they have -100 shares and 1 call contract (+100 shares), they cannot profit.  If the stock drops $5, their -100 shares cost $500 less to buy back ... while their deep ITM calls lose $500 in value.  They are paying fees to go nowhere - no profit.

I noticed that, but wanted to focus on trying to understand the mechanics of a protective call trade to see if it is a viable thing participant could do, even if in real life they are actually going naked short. There is open interest for far-ITM calls, but across different durations it does not seem like enough to hedge 20%+ short interest in the shares. I have not done the math to see how many shorts could potentially be covered by calls across all expiration dates. Plus, for several expiration dates, the available options only go down to a still-very-high strike price.

The way to make money with a far-ITM protective call would have to involve selling its increased TV as GME falls. Maybe if GME falls $5 the profit from a protective call wouldn't be noticeable, but if GME fell close to the strike price, the call would stop falling as quickly as the shares and would instead build up a buffer of TV that would constitute the profit on exiting the whole position. The TV for deep-ITM options is very low, so it costs very little to hold this completely safe position and wait for the right time to exit. Still, it seems like there are easier ways to make these few bucks.

That said, if I were a testosterone-crazed young trader with a binary home-run or get-fired career outcome, I would be tempted to go naked short on the rationale that it's a lot harder for GME to be short squeezed 500% higher now than it was when GME was a $20 stock. The short squeeze has already squeezed, so why hedge further? Maybe that explains the low open interest in calls.

In reality, it seems most open interest is concentrated at the money, with a big blip at the highest call strike where Redditors can yolo for less than a dollar a share. This would seem to be a strange way to hedge a volatile stock, because TV and decay are so high near the money. But it also involves tying up less money and earning higher profits in the event of a sudden meltdown to far below the call strike. That's what the shorts continue to bet on: a sudden and deep collapse in value.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on May 21, 2021, 09:55:01 AM
ChpBstrd - It doesn't look like a Covid sensitive stock.  If you look at a graph of Macy's stock, there's a huge drop when the pandemic starts.  On GEO's stock price graph, it's hard to spot.  The first year of the Trump Presidency was more dramatic for the stock than the pandemic.  If Biden follows through with not renewing any contracts with private prison companies, GEO will keep losing business.  Would it make sense to wait 2-3 years for the next Presidential election cycle?

I think it's safe to say the COVID trade is over. For evidence, look at the airlines and cruise lines which are back to or above the values they had before sustaining all this damage.

GEO has been in decline for years as opposition to private prisons quickly went from a fringe position to a priority on the Democratic party platform. GEO didn't exactly defend their record well, jumping after contracts with ICE to participate in the separation of immigrant children from their families and visibly donating to GOP politicians. The stock market considers them to have bet it all on red and lost, which is why their stock is down 80% over the past 5 years, even as the S&P has doubled. A management shakeup would not be a surprise.

But did they really lose it all? Sure, in a couple of years they'll have a lot fewer federal contracts, they'll probably no longer be a REIT, and they'll be attempting to work off heavy leverage and sell off empty prisons, but there will be some residual value from their state and international businesses. I seriously doubt the federal government will forbid the states from contracting with private prison operators. 

Bureau of Prisons: 12% of revenue
US Marshals: 15% of revenue
Immigration & Customs Enforcement: 23% ..

So basically half their revenue is at risk, but the Biden administration's instructions were to not renew any contracts. Most of these contracts probably have years remaining. In other cases, if the government wanted to get rid of GEO they would either have to build a new facility from scratch, buy the facility from GEO, or lease the facility from GEO. It is unclear how far the mandate goes, but clearly we cannot simply write off all that revenue. GEO itself projects only a 9% reduction in revenue next year.

GEO's 2026 bonds sell for 67 cents on the dollar and might go lower, depending on negotiations which are said to be pending. It might not be a bad idea to put on a stink bid at 55 cents or so, because many banks have divested from the industry and there might be few buyers. If we haven't reached maximum pessimism yet, this could pay off.

+1 on COVID trade: it's over. If the stock hasn't gone back to pre-covid levels by now, then that is a result of their impaired business, not a sign of future upside to come.

When I look at GEO, I see a value trap with few (none?) catalysts that could change the trajectory.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 21, 2021, 11:17:39 PM
Instead they can buy--and immediately exercise (why you don't see it in the open interest)--a deep ITM option from their buddy. Now they have the shares on their books to show they've covered.
If they have -100 shares (short) and buy 1 call (100 shares) and then exercise it, the call gives them +100 shares, closing their short position.  They're not short - they have zero shares.

They don't actually have the shares, they just print synthetic ones as a market maker... and then will need to deliver them later.

I thought we had talked about this earlier in the thread when I linked to the SEC paper describing how this can be used to get around FTDs and hide short interest?
https://www.reddit.com/r/GME/comments/mhv22h/the_si_is_fake_i_found_44000000_million_shorts/
Their theory is that deep ITM calls ($9 to $17) were used to avoid synthetic short positions from violating "failure to deliver" (FTD) rules.  They showed the open interest was stable while daily trade volumes spiked - options were traded and exercised the same day, in large volumes.  That poster was watching Yahoo Finance's GME options page all day, which I won't do.  But they also used "Market Champion" for similar data, which tells me access denied for using a VPN.  So I can't check on GME call volume in May at low strike prices:
https://marketchameleon.com/Overview/GME/OptionSummary/Volume

All of which is strange, but that post starts with "Today (MAR31)", suggesting it's almost 2 months old.  A summary graph shows the big Jan spike, 2 week delay, then the end of Feb spike, and ends with another 2 week delay.  That graph implies that April will begin with another spike caused by FTD covering ... but the price of GME did not spike in the first week of April.

Is there evidence of high short interest, FTD, or FTD covering in May?
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 22, 2021, 12:26:19 AM
Yeah, I was linking to when the theories were first explained months ago to explain them to you.

There has been other DD (deep dives or due diligence) in the meantime on a lot of different facets as people try to put puzzle pieces together.

Everyone still holding GME has their own reasons for doing so; mine is the March 10th activity. There is nothing normal about a stock opening at 269 (from a previous close of 246), rising to 348 in a matter of hours, dropping to 172 with 5 trading halts in 35 minutes, then bouncing back and ending the day at 265.

If the shorts covered in January, why was there a massive short attack to make sure the price didn't go above 350 in March?

To directly answer your question: yes. There is evidence since those posts of using deep ITM calls and married puts to hide FTDs, indicating massive short interest.

There's lots of things pointing to GME having a short interest much larger than what's being reported publicly (such as the amount of buy vs sell activity on various brokerages, and the volume activity, as the buy orders are all being routed through dark pools). So for me, I still like the stock, and I'm still holding.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 22, 2021, 10:52:05 AM
If the shorts covered in January, why was there a massive short attack to make sure the price didn't go above 350 in March?

To directly answer your question: yes. There is evidence since those posts of using deep ITM calls and married puts to hide FTDs, indicating massive short interest.
Since April, GME has not hit $200/share. If the short sellers acted at $350/share, weren't they right?

If you do come across that evidence again, does it match my theory of declining short interest?  Is the call volume lower in Feb than Jan... lower in Mar... lower in April... etc?  There needs to be significant hidden short interest for a short squeeze to work.

As I understand call options, settlement happens the next day for everyone - individuals, hedge funds, market makers.  Maybe that's wrong, and a market marker is buying deep ITM calls to delay settlement longer than 1 day?

When someone buys a call option and exercises it, they just threw away the time value.  That doesn't seem worth it for an option that settles the next day.  Buying shares on the open market would be more efficient.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 22, 2021, 10:59:29 AM


If the shorts covered in January, why was there a massive short attack to make sure the price didn't go above 350 in March?
Since April, GME has not hit $200/share. If the short sellers acted at $350/share, weren't they right?

These weren't new shorts betting it would go down, they were the hedge funds fighting to keep the price low so they didn't get margin called.

Whether they were right or not remains to be seen.

Quote
There needs to be significant hidden short interest for a short squeeze to work.

Correct.

Quote
When someone buys a call option and exercises it, they just threw away the time value.  That doesn't seem worth it for an option that settles the next day.  Buying shares on the open market would be more efficient.

Correct.

They aren't making money doing this, they're losing money. They're doing it to buy time (literally) and kick the can down the road.

They don't ever actually receive those shares from the call options, they just show them on their books and 21 days later or so their partner who sold them that option needs to deliver or get a FTD... or find some way to kick that FTD can down the road.

The option settles, yes, but that doesn't guarantee that the shares are delivered, basically.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 23, 2021, 05:06:57 AM
If WSB and hedge funds all buy a stock, it goes up with or without short covering.  So even if some shorts are covering, I think WSB + hedge fund buying also explains some of the stock price moves.  I had forgotten that in mid-March Macy's had a big surge in it's stock price - as did AMC.  So maybe the price moves are a mixture of WSB + hedge fund buying, and some degree of short covering.

Did WSB analyze Macy's and AMC Theater's stock?  The short positions and FTD numbers?


If the shorts covered in January, why was there a massive short attack to make sure the price didn't go above 350 in March?
Since April, GME has not hit $200/share. If the short sellers acted at $350/share, weren't they right?
These weren't new shorts betting it would go down, they were the hedge funds fighting to keep the price low so they didn't get margin called.

Whether they were right or not remains to be seen.
People who hold do not decide stock prices - it's people trading that determine prices.  So to send GME stock lower, someone had to be selling.  It had to be a new short position, otherwise there's no trade.

People who sold short at $350 have had months to take a profit.  Maybe they were right, and failed to take a profit, which is very foolish (and something I've done).


When someone buys a call option and exercises it, they just threw away the time value.  That doesn't seem worth it for an option that settles the next day.  Buying shares on the open market would be more efficient.
The option settles, yes, but that doesn't guarantee that the shares are delivered, basically.
Thanks, that's a clear description.  So there's some kind of call option that loses money, and when it's settled... it's not really settled.  Market makers can wait 3 weeks to deliver shares.

But that's only market makers - I thought hedge funds only got 3 days?  How can hedge funds pull this trick, if they only have 3 days?


I'd be curious to see new data showing that deep ITM call buying is still going on, and especially the amounts involved.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 23, 2021, 08:51:09 AM
They couldn't cover in that time, or they'd have started a huge squeeze due to the amount they're short.

They keep adding to their short position kicking the can down the road (and putting buys in dark pools to keep the price down and sells on the market), any start to cover kicks off a squeeze.

Citadel is a market maker and short hedge fund abusing their position as a MM to do all this.

There is a lot of data on calls and puts that are irrational except as FTD covering, I can dig up some later when I'm at my computer or feel free to search /r/superstonk for "married puts" or "otm calls" and such terms. :)
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on May 23, 2021, 07:45:11 PM

People who sold short at $350 have had months to take a profit.  Maybe they were right, and failed to take a profit, which is very foolish (and something I've done).

Maybe they are still short because they think it's still over priced.  Surely you have a bunch of investments currently in the green, so why not take the profit on all those instead of letting them ride?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 24, 2021, 08:51:08 AM
People who sold short at $350 have had months to take a profit.  Maybe they were right, and failed to take a profit, which is very foolish (and something I've done).
Maybe they are still short because they think it's still over priced.  Surely you have a bunch of investments currently in the green, so why not take the profit on all those instead of letting them ride?
I might not be the best example for that, since most of my investments are in Covid recovery stocks that I'm holding until they go bankrupt or recover.  Some have recovered (airlines, restaurants) and I've sold those stocks.  Others haven't, and I remain invested.

My track record on buying puts is quite bad.  So maybe my purchase of GME puts is a good sign for people going long.  :)

A third viewpoint would be that GME is stuck between two ranges, $140 to $180.  I imagine that's one of those observations that can fail spectacularly when it proves to be wrong.  But if you bought puts when the price nears $180, and sold those puts to buy calls near $140, that would have limited risk.  It's not something I've done, but it would be an investment approach halfway between pessimism and optimism for GME stock.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 25, 2021, 12:27:38 PM


People who sold short at $350 have had months to take a profit.  Maybe they were right, and failed to take a profit, which is very foolish (and something I've done).
Maybe they are still short because they think it's still over priced.  Surely you have a bunch of investments currently in the green, so why not take the profit on all those instead of letting them ride?
I might not be the best example for that, since most of my investments are in Covid recovery stocks that I'm holding until they go bankrupt or recover.

I think little investors like you for GME aren't relevant. Certain hedge funds like Citadel have shorted the stock multiple hundred of percents of the float and hidden those shorts via various tricks like married puts.

Tens of millions, maybe hundreds of millions of shares.

Will the price return to rational at some point? Sure. But not until all shorts have covered, with a big squeeze along the way.

The hedge funds shorted at $350 (doubling down), yes, but they couldn't take profit on it at $40 because they were still massively short at $4 and $12 and needed it to keep falling, and taking profits on the $350 shorts (and covering losses on the lower ones) would have kicked back up a squeeze, so they never did. And it keeps rising at a reliable t+21 delivery date.

On April 26 (the last t+21 FTD date) I added a calendar event for today to see if those predictions have held. So far it looks like a tentative yes. (To be fair, I didn't think it would take this long, a few months was my thought in Feb/March, we're now almost 4 months in... We'll see how long they can keep delaying.)

I wouldn't be betting against GME right now on any sort of short or medium timeframe.

I am long, and still like the stock.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 25, 2021, 10:17:47 PM
GameStop has an NFT site now.

Nft.gamestop.com

Seems like they maybe have a digital transition plan.

https://www.reddit.com/r/Superstonk/comments/nl1qq0/we_arent_even_grasping_how_big_the_nft_news_is_yet/

Also gave info on a GME crypto token:
https://www.reddit.com/r/Superstonk/comments/nl0lk1/gme_token_info/

Crypto dividend (aka Overstock) could kick off the squeeze.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 25, 2021, 11:08:25 PM
Oh man, you're in for some exciting stuff then! The Internet is filled with dumb things.

You're a bit too late for Time Cube though, gonna have to Internet Archive that one. :D
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 26, 2021, 07:03:34 AM
I think people going to the hospital after trying a hot pepper is dumber still:
https://en.wikipedia.org/wiki/Hot_pepper_challenge


...
My track record on buying puts is quite bad.  So maybe my purchase of GME puts is a good sign for people going long.  :)

A third viewpoint would be that GME is stuck between two ranges, $140 to $180.  I imagine that's one of those observations that can fail spectacularly when it proves to be wrong.  But if you bought puts when the price nears $180, and sold those puts to buy calls near $140, that would have limited risk.  It's not something I've done, but it would be an investment approach halfway between pessimism and optimism for GME stock.
Does self awareness count for something?  "My track record ... is quite bad ... GME is stuck between two ranges, $140 to $180".  I mean, the skill it takes to be that bad - literally a day before the stock pushed up past $200/sh.  Safe to say I'm a bad predictor of GME's short term moves.


GME's board meeting is scheduled for June 11, just over 2 weeks from now.  If I wanted to get people excited, I wouldn't announce my biggest piece of news 2 weeks ahead of a board meeting.  So is something more spectacular planned for 2 weeks from now?
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on May 26, 2021, 07:21:49 AM
(https://i.gifer.com/JxLe.gif)
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 26, 2021, 07:37:52 AM


GME's board meeting is scheduled for June 11, just over 2 weeks from now.  If I wanted to get people excited, I wouldn't announce my biggest piece of news 2 weeks ahead of a board meeting.  So is something more spectacular planned for 2 weeks from now?

The board meeting is 6/9*, not 6/11.

And yes, there's more fireworks coming, IMO.


*Much digital ink has been spilled about the fun immature nature of this date.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 27, 2021, 09:18:54 AM
frugalnacho - to respond to the "tired of being wrong", it's very much limited to short term moves.  I got a lifetime of being right packed into 2020, so I'm good to go for a long time.  I pushed 100% equities within 2% of the bottom (one trading day early) while also calling that bottom in another thread.  I've run an experiment that beat the market by +80% since it started in March 2020.  Maybe I got tired of the market being wrong in 2020, and now I'm trying to join in with my short-term GME moves.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on May 27, 2021, 11:02:03 AM
Don't take my criticism too seriously, I'm just fucking around.  But man are a lot of people consistently wrong about GME, including me.  I have no fucking clue what's going on or who to believe or what the real truth is.  This entire rollercoaster has just reaffirmed my belief in slow and steady growth in index funds.  I can't outsmart the market, or even a group of self proclaimed retards buying up meme stocks. 
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 27, 2021, 11:57:34 AM
What's weird about GME is that the short interest ratio is now only 22%. This is still high, but certainly not 140% any more. Shorts are paying 0.98% interest to borrow those shares.

https://fintel.io/ss/us/gme (https://fintel.io/ss/us/gme)

According to Yahoo Finance, there are 134 stocks with short interest ratios over 22%. There are 9 with SI higher than 50% of float, including BBBY, GEO, and EVI. If the rationale for HODL'ing GME was the short squeeze, why aren't investors rushing to these names with higher SI and why aren't they rushing out now that the short squeeze is clearly on for GME? Are they waiting for GME to go back down before selling?

GEO and EVI even have positive TTM earnings.

In late 2020, when GME short interest was 140%, then yes there was a strong rationale that a massive short squeeze was imminent. But with GME at 22% short interest, what's the rationale for it rather than the other 134 companies? BBBY and GEO have twice the shorts. 
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 27, 2021, 11:54:04 PM
What's weird about GME is that the short interest ratio is now only 22%.

IMO, that is not true.

The short interest is well above 100%.

A few things:
- It was very likely well above 140% before, that was just the highest # they could report.
- FINRA changed how short interest is calculated in February, and now it's not possible to even be over 100%, because they count all shares, not a % of the float, and possibly even synthetic shares. You aren't comparing an apples to apples number.
- The reported short interest is on borrowed shares, but there's other ways to short and not have it show up in those numbers. See: earlier discussion of shorting, not delivering the shares, and then hiding the failure to delivers (FTDs) via options trickery.

Short interest right now is insane, I'm betting in the hundreds of percent.

Quote
In late 2020, when GME short interest was 140%, then yes there was a strong rationale that a massive short squeeze was imminent. But with GME at 22% short interest, what's the rationale for it rather than the other 134 companies? BBBY and GEO have twice the shorts.

The rationale is the public numbers are wrong, and reading the research (DD:deep dive/due diligence) on GME, if you find it convincing, means you hold GME. That's what all the people on r/SuperStonk have done, decided that GME is still the play because the shorts haven't covered (and keep increasing their short position).
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 27, 2021, 11:55:42 PM
For the record, I expect GME to easily 4x from where it's at. Four figures.

As I've said for months, I think the squeeze is still on.

Disclaimer: Not financial advice, and I'm long the stock.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on May 28, 2021, 06:32:16 AM
I find @arebelspy 's argument (short interest is very high and unreported) to be very convincing.

Here's why:

Secrecy is the nature of a winning short position. If word gets out that you're short, you'll be crushed. It's not my opinion, it's just how the market works.

After GME soared in Jan/Feb. 2021, Melvin Capital and others very loudly announced the closing of their short positions. They had no choice--they had to broadcast that they were out of GME in order to stop people from buying. Did they really close their short? Well, judging by the 1Q losses they announced it makes sense. But did they really close out 100%? Only their trading desk knows.

Once I learned about how a synthetic short works; Buying DITM Calls allows you to avoid a Failure to Deliver notice while also allowing you to not have to report a short position, I knew that the public short information on GME would be suspect until the stock became re-aligned with the company fundamentals.  I even recall when Melvin Capital was publicly defending their short position (remember the video conference they'd announced?) they said 'We know more about shorting stocks than you do. Synthetic shorts.' I had no idea what they meant. Now I do and, I think:

1) The stock is (still) way overvalued compared to the value of the underlying company, even after six months. (How the hell does GME go from $145 to $250 in less than a week? with no news???) . I think we can all agree on this point. Therefore:
2) What is preventing the stock from dropping? What set of facts have to be true in order for the stock to stay (rise) at these levels?

A) No net sellers. Everyone who wanted to cash out/sell already has.
B) No short sellers. No one would risk a naked short on this stock, reporting their short interest and bringing attention back to GME.
C) Anytime the stock drops, buyers come in and drive the price back up. Who are these buyers? The WSB/YOLO trade is already over. They spent all their GME money already, very early on. It's not index funds and it's not value investors or even long term buy and hold. So who is the marginal buyer?
D) Is the marginal buyer a i) institutional long? ii) Hedge fund (long) iii) Hedge fund short covering?  iv) Someone else?

For me  b/c I can't think of who'd be in the 'someone else' category, I'm forced to go with: Hedge fund short covering.

Now if my premise is correct so far (and it might not be); why wouldn't the hedge fund short covers wait and cover at, say $100, instead of $140? Answer: There are so many that need to cover that the weakest hands have to cover at their first opportunity. If this is true (and it might not be), it would dovetail best with arebelspy's theory over the competing theories.

Final thoughts: I think that $1000 for GME is a bold call and one I wouldn't have made. But, GME has humbled so many stock forecasters and it's re-writing what I consider possible. I'd place a friendly wager (a beer?) that GME will see $500  before it sees $100.
Title: Re: GME deathwatch - how to profit?
Post by: chasesfish on May 28, 2021, 10:01:39 AM
I'm looking forward to the movies that will be made about this.

I don't know GME's business well enough to have an opinion now one way or another.  I actually banked a subsidiary they spun off in my professional career and I thought management was kind of incompetent.  That ship turned so there's a chance of a legitimate company with real leadership....



Speaking of movies...what do you think about AMC this week?  I did a consulting gig in this business and have loaned into it for years.  The company is worth....nothing.  They still can't pay their full rent due to $EPR (which I do own).   I was shorting it at $14 then selling at $10 or $11, but was fortunate no shares were available.   I do have some put option limit orders out there to buy $15 puts for $5/contract looking out into 2023.

The only game for this company is to issue stock into this strength and retire shares....but they still have lease liabilities to pay.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on May 28, 2021, 11:10:47 AM
@arebelspy do you know of a handy reference other than statements by anonymous people on social media where I could read more about changes you describe to the way short interest is calculated. I also found https://www.finra.org/filing-reporting/regulatory-filing-systems/short-interest#notices (https://www.finra.org/filing-reporting/regulatory-filing-systems/short-interest#notices) which does not list any relevant recent announcements (you'd think something as momentous as a change in the way something is calculated would be noted). I also found https://www.finra.org/rules-guidance/notices/information-notice-051019 (https://www.finra.org/rules-guidance/notices/information-notice-051019) describing in detail how short interest is calculated. The only ways I see to hide a short transaction is if an individual using a brokerage shorted shares that the brokerage had in their inventory (i.e. other people's long stock positions, in margin accounts). This would not require the brokerage to exchange with another brokerage, which is the event that triggers the FINRA rule.

Relevant quotes:

Quote
A common example is where a firm is facilitating a customer order to sell long. The firm may elect to first sell an equivalent number of shares from its own trading account to another firm and then purchase the shares from the customer at the same price to fill the outstanding long sale order. Trading in this manner reduces risk for the firm by enabling it to manage its inventory and lock in a price for the customer execution. Although this trading model involves two separate trades—one between the two firms and one between the firm and its customer—the two offsetting trades are executed at the same price to fill a single customer order. Thus, FINRA rules provide for the public dissemination of only one of the trades (the trade between the two firms) so as not to overstate the reported volume.

Quote
Some market participants mistakenly conclude that the bi-monthly short interest data is understated because the Daily File reflects short sale volume that is much larger than what is reported as short interest. However, short interest data reflects short positions held by market participants at a specific moment in time on two discrete days each month, while the Daily File reflects the aggregate volume of trades executed as short sales on each trade date. Therefore, while the two data sets are related (i.e., short sale volume may ultimately result in a reportable short interest position), they are not necessarily correlated.
For example, if a firm sells short 1,000 shares of security ABCD, then purchases 1,000 shares of ABCD later the same day, the short sale volume in the Daily File will include the 1,000 shares that were sold short. Because the firm sold short and purchased an equivalent number of shares that day, it did not establish or accumulate a short position in ABCD; thus, its short sale has no impact on the reported short interest in ABCD.

I agree that a "synthetic short" position (buy a put, sell a call) or naked short calls would not appear on the FINRA numbers because they are options, not borrowed shares of stocks that brokers have to report. Do you mean to say that in an environment where there are rampant naked short call positions, an event similar to a classic short squeeze could occur and the holders of the naked short calls would have to buy stock to hedge their losing bets?

For example, I can see a trader operating on the following algorithm:

     Sell naked short calls on GME at the 240 strike.
          If GME reaches 240, buy GME stock at 240 to transform the position into an ATM covered call to halt losses.
               Wait for the massive time value to erode off of the naked short call.
          If GME goes down instead, profit from exiting the naked short call.     

Is this what you are saying is happening?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 29, 2021, 01:15:50 AM
How the hell does GME go from $145 to $250 in less than a week? with no news???
I believe it was spurred by GameStop revealing they are building an NFT platform.
https://markets.businessinsider.com/currencies/news/gamestop-nft-building-ethereum-powered-platform-hiring-team-ecommerce-transformation-2021-5-1030467635
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 29, 2021, 01:29:01 AM
Don't take my criticism too seriously, I'm just fucking around.  But man are a lot of people consistently wrong about GME, including me.  I have no fucking clue what's going on or who to believe or what the real truth is.  This entire rollercoaster has just reaffirmed my belief in slow and steady growth in index funds.  I can't outsmart the market, or even a group of self proclaimed retards buying up meme stocks. 
I'm also thinking that by posting here so often, people get the impression of me as only a bear on GME.  If I posted about my other positions, it would just be constant, annoying bragging.  Too bad that's not my style, but that's why I don't mention the other investments much, and probably give everyone a biased view that GME is my only holding.  So sometimes I like to remind people I'm running an experiment that is beating the market by 80%.

When speculating, I need to stick to being an event investor.  Right as the January GME spike was breaking, I sold call options and had a nice profit.  Then, after the event was over, I repeated the same behavior when it made no sense - short calls on GME.  When there's no event, I need to do nothing.

This NFT boost to GME stock seems like an event, so I bought a few puts on Friday morning.  I'm happy with that timing, although there's a significant risk that Ryan Cohen makes more announcements and drives the price higher.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 29, 2021, 01:54:28 AM
As I've said for months, I think the squeeze is still on.
Why is it taking this long for a short squeeze?

I suppose the answer is "cheating with synthetic shorts and deep ITM calls".  GME market makers are losing slowly over time to avoid recognizing large losses.  When Congress looked at the issue, they only held hearings about people who were publicly visible - I don't think they followed the money.

Citadel doesn't get caught with "fail to deliver" fines very often.  Last year they were fined ... wait for it ... $10,000 for "fail to deliver" by FINRA.  I'm guessing a $30 billion market cap company isn't scared of a $10,000 fine.
https://files.brokercheck.finra.org/firm/firm_116797.pdf#page=50

Given the number of abuses, it does seem like they're pushing the limits.  So at what point does FINRA discover massive "fail to deliver" cheating?  If I can coin a term, "fail to deliver kiting"... like check kiting, but with FTD notices.

https://en.wikipedia.org/wiki/Citadel_LLC#Regulatory_issues
"In 2020, Citadel Securities was censured by FINRA a total of 19 times for a variety of misconduct, including failing to close failure-to-deliver positions, naked short selling, inaccurate reporting of short sale indicators, executing trades during circuit-breaker halts, and failing to offer its clients best prices on the bid-ask spread."
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 29, 2021, 04:35:52 PM
How the hell does GME go from $145 to $250 in less than a week? with no news???
I believe it was spurred by GameStop revealing they are building an NFT platform.
https://markets.businessinsider.com/currencies/news/gamestop-nft-building-ethereum-powered-platform-hiring-team-ecommerce-transformation-2021-5-1030467635
Nah. The NFT stuff came out after the rise started.

It went up due to the FTD cycle. It's on a t+21 day cycle.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 29, 2021, 04:39:22 PM


As I've said for months, I think the squeeze is still on.
Why is it taking this long for a short squeeze?

They don't want to go bankrupt?

They're kicking the can down the road as long as possible.

Why would the short hedge funds initiate the squeeze by trying to cover?

It hasn't squeezed cause there's no catalyst. The price needs to get high enough for margin calls, and that hasn't happened. When it gets close we see stuff like March 10.

There are several things that could cause a catalyst, like a reverse merger causing a new cusip number or a crypto dividend causing the shorts to have to cover cause they can't deliver that (see: overstock).

My money is on the number of  votes for the shareholders meeting coming in way over the amount of issued shares and that causing the catalyst for a squeeze (possibly via share recall).
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 29, 2021, 04:41:02 PM



Citadel doesn't get caught with "fail to deliver" fines very often. 

Yeah, all the illegal activity they do give very pathetic fines from the SEC or other regulatory bodies; they aren't a disincentive, just a cost of doing business.

That's why I think a different catalyst other than government intervention will be what kicks off the squeeze.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 30, 2021, 06:55:41 AM
How the hell does GME go from $145 to $250 in less than a week? with no news???
I believe it was spurred by GameStop revealing they are building an NFT platform.
https://markets.businessinsider.com/currencies/news/gamestop-nft-building-ethereum-powered-platform-hiring-team-ecommerce-transformation-2021-5-1030467635
Nah. The NFT stuff came out after the rise started.

It went up due to the FTD cycle. It's on a t+21 day cycle.
GME stock stayed below $200 for all of April and May (much longer than 21 days), and then the same day NFTs are announced, GME hits $269.  So it seems like when the 21 day cycle is a factor, the price didn't move that much.  When NFT offerings are a factor, the price spiked much higher.

I'm not following where the 21 day cycle begins.  Is it fair to say FTD problems cause price spikes in GME stock?

If it's based on peak prices:
Jan 28 GME hits local peak $483
+28 days, Feb 25 GME peaks at $185
+13 days, Mar 10 GME peaks $349
+25 days, Mar 26 GME peaks $219

These peaks already don't make sense when measured on a 21 day cycle.  With FTD, there's exactly 21 days to deliver, which means buying calls every 21 days.

? April 14 peak ?  GME opens $144 and hits $174
? April 19 peak ?  GME opens $172 and hits $175
? April 26 peak ?  GME opens $151 and hits $175
? April 27 peak ?  GME opens $184 and hits $188
? May 13 peak ?  GME opens $147 and hits $170
? May 17 peak ?  GME opens $160 and hits $183

Where is the 21 day cycle in April and May?  There's May 28 with a peak of $269, but 21 days before that GME stock wasn't moving much at all (from May 4-10).  So if the 21 day cycle causes price spikes on May 28, why did nothing happen on May 7?

I'm both curious and criticizing - my questions drive at things I don't understand, which I find hard to explain with a 21 day cycle.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on May 30, 2021, 05:33:59 PM
https://redd.it/nksg03

It's a bit confusing to read, but it was a prediction made.months ago updated a few times that predicted May 25 two months early.

As I said, on April 26 I added May 25 to my personal calendar to see if the prediction held.

Another example this was made a week ago:
https://redd.it/nf22qz

The whole superstonk sub was waiting for this week, specifically the 25th/26th.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on May 31, 2021, 06:11:51 AM
https://redd.it/nksg03
It's a bit confusing to read, but it was a prediction made.months ago updated a few times that predicted May 25 two months early.
It looks like their original predictions use T+21 trading days.  With most weeks having 5 trading days, that's like 29 calendar days.  There's another claim that at the end of the month, call options expire, and that predicts the surge in demand.  Although they disagree with that, both views seem to point at the end of month tending to have a surge in GME's stock price.

That fits the data better, with the last Th/Fri being the highest GME price (with one exception on Tues Apr 27 at $188, but the 2nd highest price was Friday Apr 30 at $184).
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on June 01, 2021, 06:42:44 AM
Careful, y'all.

When one overthinks a chaotic system, one often ends up with an explanation resembling superstition.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 01, 2021, 08:32:04 AM


When one overthinks a chaotic system, one often ends up with an explanation resembling superstition.

Indeed. But when someone makes precises, not vague, predictions months in advance and they come true, something interesting might be happening.

There's plenty of crazy theories tied in with GME right now, and a large part of researching it is separating the credible from the not.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 01, 2021, 10:08:02 AM
Careful, y'all.

When one overthinks a chaotic system, one often ends up with an explanation resembling superstition.
Superstition does not involve data.  The prediction that GME will spike at the end of each month is backed up by data from Jan to May.  So it might be something, but superstition doesn't quite fit.

Their theory is that "failed to deliver" would force market makers to take huge losses on short positions in GME.  To avoid those huge losses, the speculation is that they buy deep in the money calls and exercise them the same day - thus avoiding a "failure to deliver" for another 21 days.  Buying a deep call and exercising it immediately is very strange and doesn't make financial sense - it's just throwing away the time value of the option.  The fact that has been happening is strong evidence something strange is up.  So there's the predictions, and strange behavior that is hard to explain without the theory.

Of course, there's two things to watch for when someone posts their theory and it comes true:
(1) How many other places did they post different theories?  There's a mail scam where you send 32 letters predicting APPL will go up, and 32 more predicting it will go down.  The people who received a failed prediction are dropped from the mailing list.  Then you divide them again, making a new prediction.  And so on... the 16 people who saw you predict correctly twice in a row are unaware that 48 people saw your prediction fail.

(2) A feedback effect: on a really popular forum where people believe they need to buy GME at certain times, you provide a time for them to buy GME.  Their buying drives the stock up, fulfilling the prediction.
Title: Re: GME deathwatch - how to profit?
Post by: gertitorpe on June 02, 2021, 02:41:42 PM
How do I profit from the retail stock mania in the past year: Virtu Financials
It's a publicly traded market maker and financial services company in the US. Robinhood and other retail brokerage companies may forward their buy or sell orders, to Virtu or another market maker companies who execute these orders at or a better price as currently available on the market. If the executed price is better as the best marketed price, Virtu and the brokerage company will split that difference earned and count as revenue.

In other words when retail trading volume and/or volatility in stock markets is high, Virtu and other market maker companies make a bank.

Risk: there are discussions at the SEC to better regulate Virtu and other market makers which may significantly affect their business model, revenues, stock price, etc

Disclaimer: I own shares of Virtu
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 02, 2021, 05:24:46 PM
GameStop just announced their shareholders meeting will be just 15 minutes.

Reddit speculation is that they'll just announce that the vote count is way higher than number of shares and they can't accept the vote or proceed. (And then likely initiate share recall or some other action.)

https://redd.it/nqv2tm
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 02, 2021, 06:57:26 PM
https://www.reddit.com/r/Superstonk/comments/nqu45p/why_is_no_one_talking_about_this/

ALL the meme stocks are going up.  BB, AMC, BBY, GME. They're all moving in concert because of these hedge funds that have shorted them. I think GME is the ultimate play, but right now they're all tethered.

I don't see how anyone can believe the shorts covered when they said they did, all the evidence points to the contrary.

They'll all dive together too next dip.
Title: Re: GME deathwatch - how to profit?
Post by: tacticalteam4 on June 02, 2021, 07:47:33 PM
What do you make of GME not rising as drastically as the others today? Too expensive to FOMO into compared to the others?
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 02, 2021, 09:40:20 PM
What do you make of GME not rising as drastically as the others today? Too expensive to FOMO into compared to the others?

My speculation: Yeah, that, and the hedge funds still more desperate to keep GME down. It's their biggest liability. Some of them (like Susquehanna) actually went long AMC to try to recoup some. But AMC definitely getting some FOMO bump right now.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 03, 2021, 08:29:36 AM
On CNBC I heard it claimed that 80% of AMC shares are owned by retail investors.  And a brief poke around suggests it could be accurate, when you include institutional investors + insiders.  That really calls into question my theory that hedge funds have been pushing up AMC's price, or GME's price.  Yesterday tens of billions of dollars worth of AMC shares changed hands - that seems like an excessive amount for retail investors to buy in one day.  But now I'm not sure...

If the GME board meeting simply announces there's too many shares short, and ends the meeting, that seems likely to fuel another buying frenzy.  It would mean an insider confirms that WSB believes, that short positions using fake shares are being kept alive using tricks with derivatives.  And it serves Mr Cohen's interests to get rid of those shares as well, since their existence dilutes his voting power.  I guess we wait and see what happens next week.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 03, 2021, 10:38:57 AM
Okay normally I borrow stock from shareholder A to short it and sell it to shareholder B. By lending out their share, A gives up voting rights, and b can vote. 1 share, one vote.

Now say I'm a market maker, and someone buys a share of GME. I say okay, here's the share. As a market maker I can create that share out of thin air, and I'm supposed to match with a buyer within a few days (longer cause I'm a market maker). But now I don't. I get  failure to deliver (FTD). But then I use options trickery to delay the FTD another few weeks. Repeat.

I'm (the market maker) short that share, but by creating the share, now there's an extra owner entitled to a vote.

Do that tens of millions of times and now there's more people with shares that want to vote than there are real shares.

I glossed over kinda quickly cause on phone, but I think that should be enough to understand, yeah?
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on June 03, 2021, 10:59:08 AM
So what is your financial advice? YOLO into GME?
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on June 03, 2021, 12:42:31 PM
I think what he's saying is that the market makers can create shares out of thin air.  You want to buy a share?  Bam the market maker sells you a share, and then has 21 days to find a real share to officially complete the transaction.  But then 21 days later they just create another share so that the share they sold to you won't be reported as a "failed to deliver".  The transaction to you isn't a fail to deliver, because they delivered you a share by creating another share with a new 21 day due date.  Rinse and repeat so you are always delivering shares by creating new shares, without ever actually reducing the net amount of shares that need to be delivered.  They aren't actually creating anything, just kicking the can down the road.   Like if you have no money but a huge credit card bill, so you pay it off with a different credit card, then when that comes due you pay it off with another credit card.  It appears that you are paying your credit cards off, but really you just keep shuffling the credit around and extending the due date, but eventually you have to pay that final credit card with real money just like they have to deliver those shares with real shares.  The root problem is that you don't have any money to pay your card, just like they don't have any shares to pay, and are just playing a game to obfuscate so on paper it doesn't look like are failing to pay off their share debt. 

The individual buying the shares has no idea what is going on behind the scenes though, so they just think they legitimately own a share and have voting rights.  When the number of people believing they have legitimate voting rights is greater than the number of real shares the jig will be up though because they can't kick that can down the road.

Or maybe I'm not understanding it and someone else can chime in with more information. 
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on June 03, 2021, 02:04:46 PM
I think that's the crux of the whole thing.  Most people understand that buying the stock means it gets settled and you are the owner, but WSB and arebelspy are claiming there are shenanigans afoot.  I guess we will find out June 11 if the number of votes matches the number of share owners. 

Also I am not well versed on this and may have no idea what I am talking about.  I just index and don't know anything about puts or options.  I get some information from WSB and some from this thread, but I don't claim to understand all of it, so hopefully more people can chime in and correct anything incorrect I've said. 
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on June 03, 2021, 02:31:23 PM
I see T+6. Where is the T+21 from?

https://www.sec.gov/investor/pubs/regsho.htm

Quote
If a participant has a failure to deliver that the participant can demonstrate on its books and records resulted from a long sale, or that is attributable to bona fide market making activities, the participant must close out the failure to deliver by no later than the beginning of regular trading hours on the third consecutive settlement day following the settlement date, referred to as T+6.
(bolded)

Is the accusation/assumption that broker-dealers are routinely ignoring the T+x law?


A stock with persistent FTD has even more regulations.

Quote
In addition, Rule 203(b)(3) of Regulation SHO requires that participants of a registered clearing agency must immediately purchase shares to close out failures to deliver in securities with large and persistent failures to deliver, referred to as “threshold securities,” if the failures to deliver persist for 13 consecutive settlement days.

I am skeptical that stock market makers have a huge short on their books. They buy and sell all day to maintain liquidity. Why would they even be trading in GME when the volume is so high and the spread is so low?

I can see it happening with options market makers, who don't always hold 100 shares for each short call they hold and where the liquidity is lower.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on June 04, 2021, 06:12:02 AM
This could be big news, potentially, to test the T+21 theory. One prime broker will no longer execute/hold naked options in GME as of today.

https://finance.yahoo.com/news/jefferies-blocks-short-sells-gamestop-174600093.html

“Until further notice, Jefferies Prime Brokerage will no longer offer custody on naked options in GME, AMC and MVIS,” the memo noted. The firm will no longer allow the execution of short sells of those securities, the memo continued, noting that other stocks may be added to that list."

I believe that there are only a handful of prime brokers. One of them just declined this business; perhaps because they finally (!) delivered all their shares? In other words, if a trade is profitable for a prime broker, why would they ever, ever leave that trade?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 04, 2021, 10:52:07 AM
So what is your financial advice? YOLO into GME?
Hilarious!  Thanks for that.


I’m not understanding the “extra votes” and “fake shares” theories. I glanced at Reddit and most of what I read doesn’t make sense.

Can someone ELI5?

I’m assuming these are supposed to indicate that hedge funds are still trying to make money off meme stocks dropping, just in a covert way, but I’m not following how you could get more votes than shares (there’s only one owner per share), and I don’t understand what a fake share would be.
Before GME, my understanding of market makers was institutional investors that have a pool of the stock.  They make a market by placing or matching orders on the market for a specific stock.  They have a lot of stock, so if people are buying heavily they just sell from their inventory.  And maybe increase the distance between the buy/sell price if it looks risky.

My tentative understanding now is that market makers can have shares on credit.  The market trusts them to do their job of matching buyers and sellers.  So when they don't have enough shares to sell, they have longer than usual to find shares to cover a negative position.  Everyone else has to settle their negative shares (credit?) in days, but apparently market makers get weeks to settle. (I don't have evidence outside of reddit for that claim)

The SEC doesn't have big enough fines to put market makers out of business.  I've looked at the SEC report on Citadel Securities, and their last fine for "failure to deliver" was $10,000.  I think they're the largest market maker, so a $10,000 fine means nothing to them.

So when a market maker actually finds the shares they need, the rules say the problem is resolved.  If a market maker has -100,000 shares, and obtains +100,000 shares, it's back to zero and the problem is resolved.  But then the market maker can go -100,000 the next second/hour/day (not sure which) and reset the clock.

So in theory, market makers have to come clean every 21 days.  If they have a negative balance of shares, they have 21 days to fix it.  But apparently, they can fix it, and then go negative again.  So they can keep the cycle going.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 04, 2021, 11:08:45 AM
Since I saw the reports of deep in the money GME calls being bought and exercised the same day, I've believed there's cheating going on.  But I wonder if these market makers are better at cheating than WSB believes?  They might have infinite ability to pull this stunt, if my wildly speculative theory is correct.

I was really surprised how many times the SEC has fined Citadel Securities, for example.  It looks to me like they are treating fines like traffic tickets, and just continue speeding.

I believe "self interest" makes for strong conspiracies.  Several market makers are all in the same situation: they need to hide negative share balances, and they need to not lose money doing it.

So my wildly speculative theory is they pay nothing for deep in the money GME calls.  (What?)  Two market makers in a similar situation have an agreement: I'll sell you calls, and you sell me calls.  So one sells call options using "new fake shares".  The second firm buys the call options and immediately exercises those calls.  The new fake shares pass from one market market to another.  Then they flip roles, and the buyer becomes the seller.

So it's a bit like "fake share laundering".  I start with 20 day old negative shares.  I buy enough calls to cancel out those negative shares, leaving me with zero shares.  So now my balance sheets are clean, and I've met my obligations as a market maker.  Then, I turn around and become a seller of call options: I create new negative shares, and hand them over to whoever exercises the call option.

It's kinda beautiful if this is what's happening.  A cabal of market makers all covering up that they've had massive negative shares for months.  A conspiracy driven by their own self interest: if they expose another market maker, they're going down as well.  If they don't participate, they pay higher costs to keep the negative share balances.

But now the hard part: how do I prove/disprove the theory?
Title: Re: GME deathwatch - how to profit?
Post by: bwall on June 04, 2021, 02:45:08 PM
It's kinda beautiful if this is what's happening.  A cabal of market makers all covering up that they've had massive negative shares for months.  A conspiracy driven by their own self interest: if they expose another market maker, they're going down as well.  If they don't participate, they pay higher costs to keep the negative share balances.

But now the hard part: how do I prove/disprove the theory?

I guess it's important to define the terms :/

I can't imagine a scenario where the above described activities would be 'kinda beautiful'. Bankers in London conspired for decades (!) to keep LIBOR artificially low, to their benefit at the expense of other market participants. The rot was so bad that reforming LIBOR proved impossible.  LIBOR had to be disbanded and replaced with another system, which has proven really hard to do. So we already have proof that a conspiracy of self interested parties can be carried out for multiple decades.

If the same thing is happening here, where the powerful and connected who have all the considerable advantages of incumbency (deeper pockets, greater liquidity, clear information advantage, education advantage, etc.) and are able to leverage those against a disparate group of people who outwitted the incumbents in spite the incumbents' insurmountable advantages, well, I'd find that extremely depressing.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 05, 2021, 04:45:16 AM
It would certainly be artful and elegant to keep all the cheating to themselves.  But I don't follow why you would be surprised - Citadel has been caught front running it's own client's orders.  If they can cheat their clients and get away with it, this short share kiting is tame by comparison.

If the only thing against my theory is good behavior, that's easy to disprove.  Here's 140+ pages of FINRA allegations and fines against Citadel.  You might think this is a rap sheet of a repeat criminal, but Citadel is one of the largest (or the largest) market maker in the world.
https://files.brokercheck.finra.org/firm/firm_116797.pdf#page=39
Title: Re: GME deathwatch - how to profit?
Post by: bwall on June 07, 2021, 04:21:47 PM
hmm..... I wasn't trying to convey surprise--just how depressing it would be if powerful incumbents could (illegally?) collude to escape damages from their wrong-way bet.

In other news, GME stock closed up over $30 today to close above $280. Because why would someone just HAVE to buy GME today, when it's up $20, when they could've bought on Friday? Or why not wait a few days to get it below $250? Rhetorical questions, of course, and not signs of anything nefarious, just on the face of it doesn't appear entirely rational.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on June 07, 2021, 08:20:40 PM
Because why would someone just HAVE to buy GME today, when it's up $20, when they could've bought on Friday? Or why not wait a few days to get it below $250? Rhetorical questions, of course, and not signs of anything nefarious, just on the face of it doesn't appear entirely rational.

If there were two markets, one random and irrational and the other rational and moderately predictable, which would you invest in? This is meme stocks vs. index funds in a nutshell. I don't think GME is a short squeeze any more, I think it is a social media phenomenon.

At some point though, as with the Nasdaq bubble of '97-2000, the irrational market poses a threat to the rational one.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on June 07, 2021, 09:32:44 PM
Okay normally I borrow stock from shareholder A to short it and sell it to shareholder B. By lending out their share, A gives up voting rights, and b can vote. 1 share, one vote.

Now say I'm a market maker, and someone buys a share of GME. I say okay, here's the share. As a market maker I can create that share out of thin air, and I'm supposed to match with a buyer within a few days (longer cause I'm a market maker). But now I don't. I get  failure to deliver (FTD). But then I use options trickery to delay the FTD another few weeks. Repeat.

I'm (the market maker) short that share, but by creating the share, now there's an extra owner entitled to a vote.

Do that tens of millions of times and now there's more people with shares that want to vote than there are real shares.

I glossed over kinda quickly cause on phone, but I think that should be enough to understand, yeah?

With all due respect for my friend @arebelspy:

I understand the idea and the suggested mechanics.  I'm just not convinced that's how things actually work.

For one thing, I have to believe that there have been plenty of companies out there with measureable short interest when a shareholder vote occurred.  I find it extraordinarily unlikely that there has never been a case where a bunch of shorts voted and all the longs voted and exceeded the number of issued shares.  (Or any of the other problematic shareholder events happened - see item 3 below.)

Second, I'm not convinced that reddit is a good place to go for how things actually work, just in general.  While some people there might have some understanding of how things work, I doubt most of them actually know how things really work.

Third, in addition to the shareholder voting issue, for any company issuing a dividend, or going bankrupt, or merging with another company, or splitting into two companies, or doing a stock split or reverse stock split -- most if not all of those things become very problematic for these "market maker naked short share creator" folks.  And there may be others that I'm not thinking of.  It's not just a matter of FTDs and rolling over options, it's all these other things.

Is there any non-reddit proof that when a market maker sells a naked short on a stock and "creates" a share, that the person buying that share actually has voting rights?  If it were a real share, sure.  But I think somewhere at the bottom of all of this the stock's transfer agent actually has their own records of who owns the actual real shares, and I'm sure they solicit and accept proxies only from those real owners.  I know there's a process for shares owned by brokers on behalf of their clients to pass along these proxies, but I have to believe that in that process the broker knows who the real beneficial owners of the real shares are.

In other words, if GME's stock transfer agent's records show that Robinhood owns 1,000 shares of GME and a shareholder vote comes up, the transfer agent is only going to issue 1000 shares worth of proxies to Robinhood.  If Robinhood passes out those proxies to the non-real shareholders, then problems will happen, but the transfer agent is going to be able to isolate it by broker.

And these proxies are all traceable.  The transfer agent knows (I forget how; I think there are unique IDs assigned to each company/shareholder combination) which proxy belongs to which block of stock.  I was an HP shareholder during the Compaq acquisition proxy war.  Because I was also an employee, I had HP shares in about four different places, so I got four different proxies and voted four different proxies.

I'm also fairly certain that the transfer agent is continuously tabulating results.  They're not going to wake up Wednesday morning and discover a problem.  If there is a problem they'll be aware of it as soon as it happens and will probably work with the associated broker to straighten things out.

And of course, it's all computerized and barcoded and scantroned and backed up and probably audited to ISO 9001 or better standards, so even though there may be millions of shares, it's not like someone's going to make a math error.

So I'm going to take the other side of the GME shareholder meeting potential debacle and say it won't happen.  Meaning:
 whatever shareholder vote counts they announce will be less than the number of issued shares and there will not be panic or chaos due to synthetic shorts or whatever you want to call it.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 07, 2021, 10:38:04 PM
With all due respect for my friend @arebelspy

No caveats like this needed; I appreciate the alternative viewpoint and frank discussion. :D

Quote
For one thing, I have to believe that there have been plenty of companies out there with measureable short interest when a shareholder vote occurred.  I find it extraordinarily unlikely that there has never been a case where a bunch of shorts voted and all the longs voted and exceeded the number of issued shares.  (Or any of the other problematic shareholder events happened - see item 3 below.)

Sure, there have been plenty of companies with measurable short interest, but typically one gives up voting rights when loaning out their shares, so the number of votes remains the same. If reddit (conspiracy) theories are correct, citadel issuing tons of fake (synthetic) shares means there are many shares out there where the owners are expecting to (and trying to) vote, many more than there are actual shares. In other words, this isn't a typical "stock is heavily shorted" situation.

Quote
Second, I'm not convinced that reddit is a good place to go for how things actually work, just in general.  While some people there might have some understanding of how things work, I doubt most of them actually know how things really work.

100% with you there. Heck, I don't know how things really work. :)

Quote
Third, in addition to the shareholder voting issue, for any company issuing a dividend, or going bankrupt, or merging with another company, or splitting into two companies, or doing a stock split or reverse stock split -- most if not all of those things become very problematic for these "market maker naked short share creator" folks.  And there may be others that I'm not thinking of.  It's not just a matter of FTDs and rolling over options, it's all these other things.

Oh yeah, baby. There's a ton of things that could be a catalyst for a huge squeeze if there are a ton of unreported shorts, not just a share recall. This point seems bullish?

Quote
Is there any non-reddit proof that when a market maker sells a naked short on a stock and "creates" a share, that the person buying that share actually has voting rights?  If it were a real share, sure.

Think about it this way... the share doesn't have voting rights, but that person who bought it sure thinks it does. Maybe their broker even thinks it does. So they try to vote it. And a ton of votes come in, and now the company needs to figure out which share are real, which aren't, and initiate a share recall.

Quote
But I think somewhere at the bottom of all of this the stock's transfer agent actually has their own records of who owns the actual real shares, and I'm sure they solicit and accept proxies only from those real owners.  I know there's a process for shares owned by brokers on behalf of their clients to pass along these proxies, but I have to believe that in that process the broker knows who the real beneficial owners of the real shares are.

The broker is given a share by citadel (the market maker) for their client who bought a share of GME. How do the brokers know if it's real or fake? They just marked that client as having a share, and when voting time comes, they give them a proxy vote.

Quote
In other words, if GME's stock transfer agent's records show that Robinhood owns 1,000 shares of GME and a shareholder vote comes up, the transfer agent is only going to issue 1000 shares worth of proxies to Robinhood.  If Robinhood passes out those proxies to the non-real shareholders, then problems will happen, but the transfer agent is going to be able to isolate it by broker.

So Robinhood owns 1k shares of GME, then reports 5k votes. Problem. Fidelity owns 3MM shares, reports 10MM votes. Problem. Etc.

Quote
And these proxies are all traceable.  The transfer agent knows (I forget how; I think there are unique IDs assigned to each company/shareholder combination) which proxy belongs to which block of stock.  I was an HP shareholder during the Compaq acquisition proxy war.  Because I was also an employee, I had HP shares in about four different places, so I got four different proxies and voted four different proxies.

I'm also fairly certain that the transfer agent is continuously tabulating results.  They're not going to wake up Wednesday morning and discover a problem.  If there is a problem they'll be aware of it as soon as it happens and will probably work with the associated broker to straighten things out.

Right. I think it's quite possible that they've known for weeks it's an issue, and Ryan Cohen and Gamestop's twitter has been cute about it (including GS official twitter tweeting MOASS--acronym used for Mother of All Short Squeezes) but are waiting for all the votes to come in to announce it at the meeting. They made their shareholder's meeting only 15 minutes, and though many shareholder meeting times are down because of COVID, I think there's a chance that it's because they're announcing the votes are in too much, and they're initiating a recall (or some other action).


Quote
So I'm going to take the other side of the GME shareholder meeting potential debacle and say it won't happen.  Meaning:
 whatever shareholder vote counts they announce will be less than the number of issued shares and there will not be panic or chaos due to synthetic shorts or whatever you want to call it.

I'm excited to see.

Even if I'm wrong, I'm content to hold for the next t+21 cycle.


So what is your financial advice? YOLO into GME?

lol

This is where I reiterate none of my speculation is financial advice and I'm not a financial advisor, and also disclose again that I'm long GME.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 08, 2021, 06:09:16 AM
Looks like the final votes are filed with the SEC within 4 business days of the shareholder's meeting, so results may not be in tomorrow.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 08, 2021, 06:36:48 AM
Second, I'm not convinced that reddit is a good place to go for how things actually work, just in general.  While some people there might have some understanding of how things work, I doubt most of them actually know how things really work.
I mostly agree, but I can't find information on it.  So I try to prefix comments about how MM work and T+21 with the fact it came from reddit, although I think I've been lax about stating that recently.

So I'm going to take the other side of the GME shareholder meeting potential debacle and say it won't happen.  Meaning:
 whatever shareholder vote counts they announce will be less than the number of issued shares and there will not be panic or chaos due to synthetic shorts or whatever you want to call it.
A panic is not required for pushing GME's price higher - just look at recent activity.  As to chaos, GME stock has been chaotic for months.  How do you reconcile those claims with the price moves of GME in 2021?

Ryan Cohen's letter to GME's board is where all the hopes for GME's future started.  He recently revealed GME will sell NFTs, and the stock surged.  There's some others I'm forgetting, but I see plenty of evidence Mr Cohen can move the stock.  And he will officially take control of GameStop (become their chairman of the board) at this Wednesday's shareholder meeting.  I strongly suspect the stock moves higher, but I haven't put money behind it (quite the opposite, long term).
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 08, 2021, 06:47:01 AM
The founder of Interactive Brokers was on CNBC recently, and he had a different explanation for excess shares of meme stocks like GME.  People who hold shares in a margin account apparently also give their brokers the ability to loan those shares out.  So the shares are loaned to someone else, who sells them.  And "round and round" it goes, I believe he said.  So his explanation is that the shared loaned out are the reason for artificially higher numbers of shares.

IBKR's advertisements claim they "revolutionized" trading with being one of the first to offer a digital trading platform.  Point is they've been doing this for decades with the same founder, so he's a better authority than me on this stuff.


Speaking of CNBC / NBC:

https://www.nbcnews.com/business/personal-finance/trading-hot-stocks-gamestop-seems-fun-until-you-look-beneath-n1258147
"As the biggest market maker in the U.S., Citadel Securities has a bird's-eye view on many stocks, as well as the overall market. Citadel data showed it handled 29 percent of trading volume in GameStop the week the stock crashed."
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 08, 2021, 08:30:26 AM


  I strongly suspect the stock moves higher, but I haven't put money behind it (quite the opposite, long term).

I actually think the shorts will tank it on the earnings report.

They can only do it for so long though.

Enjoy this crude hand drawn chart, courtesy of Reddit, of the weekly lows of GME since January:
(https://i.redd.it/tgao2ujviu371.jpg)
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on June 08, 2021, 08:51:17 AM
100% agree on not making investment decision based on things typed into reddit (or any social media) by random usernames.

Some quick googling reveals that shorts are not registered as the owners of the securities they borrow. Neither are the original owners. The people who buy the loaned shares are registered as owners.

https://www.investopedia.com/ask/answers/05/shortsalevotingrights.asp (https://www.investopedia.com/ask/answers/05/shortsalevotingrights.asp)

This would imply that if you have a stock in your margin account, and your broker chooses to lend it out, you don't have voting rights unless your broker borrows shares during the record date to replace the ones they loaned out. This is confirmed by this example disclaimer language:

Quote
Industry regulations may limit, in whole or in part, your ability to exercise voting rights of securities that have been lent or pledged to others. You may receive proxy materials indicating voting rights for a fewer number of shares than are in your account, or you may not receive any proxy materials.
Source: https://www.apexclearing.com/finra-rules/ (https://www.apexclearing.com/finra-rules/)
Title: Re: GME deathwatch - how to profit?
Post by: bwall on June 08, 2021, 09:00:29 AM
If there were two markets, one random and irrational and the other rational and moderately predictable, which would you invest in? This is meme stocks vs. index funds in a nutshell. I don't think GME is a short squeeze any more, I think it is a social media phenomenon.

At some point though, as with the Nasdaq bubble of '97-2000, the irrational market poses a threat to the rational one.

I think this is a good an explanation as any.

GME is up another $35-$40 today, to $315~ish, on no news. On nothing, really. Overall market is flat.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on June 09, 2021, 07:46:10 AM
Kinda changing the subject here, but staying on the topic of three-letter stocks starting with G and containing E. I wonder if GEO could be the next GME?

Short % of float on 4/30/21:
 GME: 28.96%
 GEO: 48.68%

Short % shares outstanding on 4/30/21:
 GME: 16.7%
 GEO: 31.47%

Number of shares short Mar-Apr change:
 GME: decreasing
 GEO: increasing

P/E:
 GME: negative and negative for the foreseeable future
 GEO: 5.38 (forward PE is around 6)

1 year price performance:
 GME: 2710%
 GEO: -46%

The story with GEO is they are a leveraged (D/E = 316%) private prison operator structured as an REIT (and big Republican donor) facing both pandemic costs and Joe Biden’s calls to abolish the use of private prison contractors. Already they’ve lost several contracts for the federal Bureau of Prisons, and BOP work accounted for 14% of revenue. Prisons aren’t exactly like apartments, so GEO is looking at years of vacancy - while paying the debts on these facilities - before they can sell them at a loss or contract with a local jurisdiction who will have a negotiating advantage as monopolistic buyers against a seller whose back is against the wall. GEO recently cut their 10% dividend to try and de-leverage, and they may change out of their REIT status soon to obtain more financial flexibility, as competitor CoreCivic did.

My question, which I don’t have time to research, is how much of their revenue comes from reliable sources, such as red-state state governments, versus how much could be cut in the next two years? Is GEO a falling knife with questionable ethics and a suddenly untenable debt burden or a compelling value play that will double by the next election season, when prison outbreaks of COVID-19 are a historical footnote? In the meantime, I think GEO has a much better chance of being a short squeeze candidate near the point of maximum pessimism, like where GME was several months ago. Additionally, GEO might be seen as a portfolio hedge against social chaos; their services might be sought after and their political critics muted in the event of rising crime or conspiracy-theory-led outbreaks of insurrection, ethnic conflict, or terrorism. Thoughts?

GEO is up 40% and climbing this morning. Called it! My profit is zero due to cowardace.
Title: Re: GME deathwatch - how to profit?
Post by: bwall on June 09, 2021, 09:00:48 AM
Kinda changing the subject here, but staying on the topic of three-letter stocks starting with G and containing E. I wonder if GEO could be the next GME?

Short % of float on 4/30/21:
 GME: 28.96%
 GEO: 48.68%

Short % shares outstanding on 4/30/21:
 GME: 16.7%
 GEO: 31.47%

Number of shares short Mar-Apr change:
 GME: decreasing
 GEO: increasing

P/E:
 GME: negative and negative for the foreseeable future
 GEO: 5.38 (forward PE is around 6)

1 year price performance:
 GME: 2710%
 GEO: -46%

The story with GEO is they are a leveraged (D/E = 316%) private prison operator structured as an REIT (and big Republican donor) facing both pandemic costs and Joe Biden’s calls to abolish the use of private prison contractors. Already they’ve lost several contracts for the federal Bureau of Prisons, and BOP work accounted for 14% of revenue. Prisons aren’t exactly like apartments, so GEO is looking at years of vacancy - while paying the debts on these facilities - before they can sell them at a loss or contract with a local jurisdiction who will have a negotiating advantage as monopolistic buyers against a seller whose back is against the wall. GEO recently cut their 10% dividend to try and de-leverage, and they may change out of their REIT status soon to obtain more financial flexibility, as competitor CoreCivic did.

My question, which I don’t have time to research, is how much of their revenue comes from reliable sources, such as red-state state governments, versus how much could be cut in the next two years? Is GEO a falling knife with questionable ethics and a suddenly untenable debt burden or a compelling value play that will double by the next election season, when prison outbreaks of COVID-19 are a historical footnote? In the meantime, I think GEO has a much better chance of being a short squeeze candidate near the point of maximum pessimism, like where GME was several months ago. Additionally, GEO might be seen as a portfolio hedge against social chaos; their services might be sought after and their political critics muted in the event of rising crime or conspiracy-theory-led outbreaks of insurrection, ethnic conflict, or terrorism. Thoughts?

GEO is up 40% and climbing this morning. Called it! My profit is zero due to cowardace.

Wow! Well done!

Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 09, 2021, 09:39:27 AM
Nothing noteworthy at GME shareholders meeting.

Vote counts filed with SEC in four business days.

EDIT: Vote count above shares cannot be legally reported on the 8-K form, must be normalized.

But sounds like the SEC is investigating, with cooperation from GameStop.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 09, 2021, 10:21:20 AM
Not much movement in GME at all, up or down, so far.

On July 31st the current GameStop CEO steps down.

My impression is that most CEOs are very aware of business fundamentals - they have to talk to shareholder's every quarter about it.  To align their incentives with the company, they get performance bonuses that typically involve stock options.

I wonder how they're going to find a new CEO.  A year ago this retail business was priced at $5/share, and now it's $300/share.  So will new CEOs be offered stock options at $300 per share?  Will they have to take a retailer with a -500 forward P/E ratio and turn it around?  Most performance measures will heavily penalize any CEO who agrees to lead GameStop.  I wonder what they're going to do before August.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 10, 2021, 07:21:04 AM
I wonder how they're going to find a new CEO ...  Most performance measures will heavily penalize any CEO who agrees to lead GameStop.
It amuses me they didn't find someone with experience being CEO - but they did find someone with 2+ years experience as "Country Manager, Australia" (since 2019), according to this:
https://www.crunchbase.com/person/matt-furlong

Ranking countries by exports, Australia comes in at #19, between Belgium and Poland.  I would hazard a guess this wasn't their top pick for CEO.
https://en.wikipedia.org/wiki/List_of_countries_by_exports

I'm also surprised that after the NFT tease, there was nothing bigger to reveal.  They announce NFTs for games 2 weeks before their big quarterly meeting... and then at the meeting, nothing.

In the pre-market trading, GME is down from yesterday's close.
Title: Re: GME deathwatch - how to profit?
Post by: Radagast on June 10, 2021, 08:37:16 PM
Nice! In January I bought 1 GME for 140. In February I put in a long limit order to sell at 330. Looks like it went through! Now the price is down to $230.

Now I need to decide to either take the money and run, or try again with a long dated buy limit for more shares.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 11, 2021, 06:08:24 AM
GME stock dropped 27% yesterday, the first day after their earnings report.

... I see plenty of evidence Mr Cohen can move the stock.  And he will officially take control of GameStop (become their chairman of the board) at this Wednesday's shareholder meeting.  I strongly suspect the stock moves higher, but I haven't put money behind it (quite the opposite, long term).
Wrong prediction.  I thought Mr Cohen's motto with customer service was to overdeliver ... but then he teased NFTs and delivered... nothing.


I actually think the shorts will tank it on the earnings report.
Correct prediction.  Earnings were disappointing, and Mr Cohen mentioned diluting GME stock by another 5 million shares at some point.


Back to the incoming CEO, they were a General Manager (Director) and then a Country Manager (Director?  Vice President?).  So just over 2 years as a Vice President.  I don't know to what extent that lack of leadership experience played into the market drop in GME yesterday.

"From what I have seen, if Amazon posts a job with the title “General Manager”, it’s more likely to be Director level position."
https://www.quora.com/What-is-the-difference-between-a-general-manager-and-a-senior-manager-at-Amazon-Are-they-both-at-level-7-or-whats-the-difference

"Directors are Level 8. Vice presidents are Level 10, while senior vice presidents are Level 11"
https://mashable.com/2013/10/15/amazons-corporate-ladder/
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 11, 2021, 07:20:29 AM
Wrong prediction.  I thought Mr Cohen's motto with customer service was to overdeliver ... but then he teased NFTs and delivered... nothing.

They announced the SEC is looking into trading/share manipulation around the stock.

My bet is it has to do with the outstanding number of shares.

I think he is limited on what he can say.

As far as business strategy, I think he has some things cooking, but right now GME is the play for the short squeeze.

Quote
Earnings were disappointing

What? They crushed earnings. By like 50% better than expected. How were they disappointing?

The same thing happened last earnings report 3 months ago; better than expected, huge dip, big rebound.

Market isn't open, we'll see if the latter happens.

Edit: looking like not. Possibly because GameStop completed their ATM offering? We'll find out next week.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 13, 2021, 11:17:58 AM
Earnings were disappointing
What? They crushed earnings. By like 50% better than expected. How were they disappointing?
They did have a smaller than expected loss - Yahoo says they expected to lose -0.86 per share, and only lost -0.45 per share.

"GameStop tried to paint its Q1 performance in the best possible light. The company noted that sales increased 25% year over year to $1.28 billion ..."
Two years ago, GameStop earned a small profit on $1.55 billion of revenue during the first quarter -- and that was considered a terrible performance. In the first quarter of fiscal 2018, GameStop posted adjusted EPS of $0.30 on $1.79 billion of revenue."
https://www.fool.com/investing/2021/06/13/gamestop-earnings-no-sign-of-a-turnaround/

Skipping last year during the pandemic, it's revenue (in billions): 1.79 .. 1.55 .. 1.28 for years 2018, 2019 and 2021.  GME did well compared to store closures in a pandemic ... but compared to normal years, the earnings feed the story of a retail store in decline.
Title: Re: GME deathwatch - how to profit?
Post by: WoodsRun on June 22, 2021, 10:24:33 AM
GameStop completed their 5,000,000 share offering and raised over $1,000,000,000 in cash since they announced the offering on June 9, 2021.

Seems like they are transitioning into a tech company rather than just an e-retailer.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 22, 2021, 01:29:26 PM
Indeed! They aren't allowed to declare over the total number of shareholders voted, so they announced that exactly 100% voted while simultaneously announcing the SEC is investigating trading on GameStop stock.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 24, 2021, 01:45:42 AM
Look at the number of votes on the 8K and look at the float. And then look at how many couldn't vote (e.g. etoro that reported only 63% of their eligible gme holders voted).

Another t+21 day is here. Curious to see how the price changes over the next two days. 219 right now.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on June 25, 2021, 12:57:48 AM
Yeah, I stand corrected.

This is the best summary of the votes I found: https://www.reddit.com/r/Superstonk/comments/nwc4mi/psa_the_votes_are_in_heres_all_you_need_to_know/
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on June 25, 2021, 09:15:28 AM
Another t+21 day is here. Curious to see how the price changes over the next two days. 219 right now.
This t+21 day does not explain GME spiking on May 25, again on June 2, and again on June 8-9.  Each of those spikes in GME stock price were higher than the prior one.  They don't fit t+21.

From March 12 to May 12, GME went lower and lower, with a few bumps.  Are those bumps the t+21 days?  They're not exactly large jumps in stock price.

What I expect is that if the current t+21 doesn't work - if the price doesn't spike higher - then reddit will claim the "new t+21" is measured off June 2.  And if that fails, they'll start measuring off June 9.
Title: Re: GME deathwatch - how to profit?
Post by: Epor on July 14, 2021, 01:48:32 PM
Another t+21 day is here. Curious to see how the price changes over the next two days. 219 right now.
This t+21 day does not explain GME spiking on May 25, again on June 2, and again on June 8-9.  Each of those spikes in GME stock price were higher than the prior one.  They don't fit t+21.

From March 12 to May 12, GME went lower and lower, with a few bumps.  Are those bumps the t+21 days?  They're not exactly large jumps in stock price.

What I expect is that if the current t+21 doesn't work - if the price doesn't spike higher - then reddit will claim the "new t+21" is measured off June 2.  And if that fails, they'll start measuring off June 9.

Tomorrow will be another t+21 from 6/24; let's see how the market behaves. (I do not own GME, mine is just a fascination with the evolving GME story).
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on July 14, 2021, 01:52:01 PM
I don't think that maths out..it's trading days. I believe it's the 26th of July. Nevertheless, it does seem like the shorts, if they exist in numbers as speculated, can kick the can down the road semi-indefinitely. Some other catalyst would be needed.

MustacheandaHalf's idea was correct, I'm seeing lots of other potential dates people are predicting (notably iirc Aug 23-Sept 7 timeframe). Basically hot air.

Something is happening with GameStop and crypto/nfts though that could be interesting.
Title: Re: GME deathwatch - how to profit?
Post by: Epor on July 14, 2021, 01:55:28 PM
Trading days! Thanks for the correction.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on July 15, 2021, 10:08:30 AM
Yesterday I sold a $200 GME put for about $28/sh, and with the stock down at $164 that wasn't the best choice.  The market has been so volatile, that I didn't know how many down days would occur in a row - and the put expires Friday.

GameStop sells platform games, and they have hinted at NFTs.  It's possible persistent items in games will be represented by NFTs.  But assuming the incentive is profit, I don't see the incentive for NFTs to be compatible across Sony vs Xbox.  There's no incentive to allow your users to switch to a competitor.  At best, I would expect an Xbox-only NFT that can be carried through a game series.  That way if you spend money on an NFT, you have an incentive to stick with the same console.  But it's very easy for Xbox to make their own NFTs - there's nothing keeping NFTs exclusive to GameStop.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on July 15, 2021, 12:53:13 PM
Yesterday I sold a $200 GME put for about $28/sh, and with the stock down at $164 that wasn't the best choice.  The market has been so volatile, that I didn't know how many down days would occur in a row - and the put expires Friday.

GameStop sells platform games, and they have hinted at NFTs.  It's possible persistent items in games will be represented by NFTs.  But assuming the incentive is profit, I don't see the incentive for NFTs to be compatible across Sony vs Xbox.  There's no incentive to allow your users to switch to a competitor.  At best, I would expect an Xbox-only NFT that can be carried through a game series.  That way if you spend money on an NFT, you have an incentive to stick with the same console.  But it's very easy for Xbox to make their own NFTs - there's nothing keeping NFTs exclusive to GameStop.

Makes me think of the good ole days when the only incentive we needed to play galaga or mario all day was "points".
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on September 12, 2021, 09:44:16 AM
I'm still long GME.

It isn't done, IMO.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on September 13, 2021, 05:55:31 AM
He likes the stock.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on September 13, 2021, 06:21:54 AM
Because of a short squeeze or because Ryan Cohen? ;)
It's not in a short squeeze any more. Short % of float is 12.35%.
https://shortsqueeze.com/shortinterest/stock/gme.htm (https://shortsqueeze.com/shortinterest/stock/gme.htm)

Must be Ryan Cohen.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 13, 2021, 09:50:43 AM
What's amazing about GME stock is how it rebounds, regardless of information.  Analysts digested GameStop's earnings report & earnings call, and sent the stock down 10%.  I read that earnings had greater losses than expected, and there was complete silence from management about the company's transformation.  Seems like valid reasons to lower expectations for GME stock... but WSB jumped in and bought until the stock price recovered.

I'm coming to view WSB as "trolling with money".  They want to change things, make noise... and use money as a form of trolling.  Does the stock price make sense?  Do a troll's posts make sense?  The stock price moves are like a troll's posts, drawing in interested people to discuss - or invest.  The fundamentals aren't there - the stock price could be $150 or $250 without anything taking place.

I see two risks: (1) GME is a mess that comes crashing down.  (2) It works, and people who made money this way keep trying this same approach.  Chase meme stocks endlessly, which also seems like a bad idea.  Maybe GameStop will be more successful than expected, but if that's the case, the Chairman and CEO are suspiciously quiet about the transformation they extolled mere months ago.
Title: Re: GME deathwatch - how to profit?
Post by: YttriumNitrate on September 13, 2021, 10:12:23 AM
When this thread was started back in January, I would have bet good money that GameStop's stock price would have been back to single digits by September, and I would have been wrong.

GameStop's price is a great example of the old saying that "The market can stay irrational longer than you can stay solvent."
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on September 13, 2021, 12:32:29 PM
I'm coming to view WSB as "trolling with money".  They want to change things, make noise... and use money as a form of trolling.  Does the stock price make sense?  Do a troll's posts make sense?  The stock price moves are like a troll's posts, drawing in interested people to discuss - or invest.  The fundamentals aren't there - the stock price could be $150 or $250 without anything taking place.

GME & AMC appear to be in the realm of cryptocurrencies and NFTs - tokens with little or no intrinsic value that are traded around as a speculative gamble simply because a large enough ecosystem of traders has developed to do the same, and because more speculators are expected to join. The sudden rise of Dogecoin earlier this year seems to have been based on the humor of the concept, and the expectation that this branding would attract more speculators. Saying the number of speculators will run out is like saying the world will run out of idiots.

The ingredients for a breakout meme speculation appear to be (1) the perceived opportunity to "outsmart" Wall Street traders who would never invest in such a thing based on their paradigm, (2) some imaginable narrative in which the thing goes exponential (a short squeeze, revival of interest in product, taking over the financial system, etc.) that can become a theme for meme/video content, and (3) a "hook" of some sort that might be meme humor or irony or the perception of a mysterious transformative technology.

TL;DR: Buy TurdCoin now.
https://www.mintme.com/token/TurdCoin (https://www.mintme.com/token/TurdCoin)
Title: Re: GME deathwatch - how to profit?
Post by: WoodsRun on September 16, 2021, 10:21:01 AM
From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 252M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

Edit: Numbers.
Title: Re: GME deathwatch - how to profit?
Post by: boarder42 on September 16, 2021, 10:25:48 AM
From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 348M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

correct this is why its a small value company - lots of cash maybe they decide to make EVs and surpass tesla

Out of favor companies with good balance sheets are poised to pivot and explode.  Picking the right one is hard.  GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies everyone of us would look at and say this is shit why would i put my money here - this is the exact reason SCV outperforms VTSAX long term.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 17, 2021, 08:33:41 AM
From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 252M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

Edit: Numbers.
You invest without considering the share price?  It was under $10/sh one year ago, and is now about $209/share, or 20x higher.  Giving your numbers that context, the company looks horrible.

GME's market cap was $565M a year ago, and is $16,000M now.  By the measure used in index funds, GameStop has grown 2700% larger in 12 months.
https://ycharts.com/companies/GME/market_cap

That growth is what spoils the profit numbers you mentioned.  Using your profit numbers divided by market cap:
$252M / $565.6M = profits equal to 44% of it's market cap a year ago
$320M / $16000M = profits equal to 2% of it's market cap now

Yahoo displays GME's total revenue and gross profit.  Look at Jan numbers for 2018, 2019, 2020, 2021 ... both declined every year.  Their gross revenue was $9.2B in 2018, and $5.1B in 2021 - down by almost half.  Their gross profit sank from $3.04B to $1.26B, a decline of more than half.
https://finance.yahoo.com/quote/GME/financials?p=GME
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 17, 2021, 08:44:18 AM
correct this is why its a small value company - lots of cash maybe they decide to make EVs and surpass tesla

Out of favor companies with good balance sheets are poised to pivot and explode.  Picking the right one is hard.  GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies everyone of us would look at and say this is shit why would i put my money here - this is the exact reason SCV outperforms VTSAX long term.
Just to correct a few incorrect statements:
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(2) GME is a stock, not a "fund"
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".
Title: Re: GME deathwatch - how to profit?
Post by: boarder42 on September 17, 2021, 08:49:53 AM
correct this is why its a small value company - lots of cash maybe they decide to make EVs and surpass tesla

Out of favor companies with good balance sheets are poised to pivot and explode.  Picking the right one is hard.  GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies everyone of us would look at and say this is shit why would i put my money here - this is the exact reason SCV outperforms VTSAX long term.
Just to correct a few incorrect statements:
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(2) GME is a stock, not a "fund"
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".

I think alot of what you inferred from what I said was taken out of context. My main point was as everyone laughs about something like game stop thinking it's a terrible bet which a majority of people here think it is. Was the basis for why scv outperforms. People think these small out of favor companies aren't going to do well but a few do. And I haven't looked at ijs holding recently but it held gme as of Feb or march when I last looked. Looks like theyve moved out of it as it doesn't fit the asset classes they are tracking. But prior to the run up AND during the run up ijs held gme.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 17, 2021, 09:33:44 AM
correct this is why its a small value company - lots of cash maybe they decide to make EVs and surpass tesla

Out of favor companies with good balance sheets are poised to pivot and explode.  Picking the right one is hard.  GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies everyone of us would look at and say this is shit why would i put my money here - this is the exact reason SCV outperforms VTSAX long term.
Just to correct a few incorrect statements:
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(2) GME is a stock, not a "fund"
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".
I think alot of what you inferred from what I said was taken out of context. My main point was as everyone laughs about something like game stop thinking it's a terrible bet which a majority of people here think it is. Was the basis for why scv outperforms. People think these small out of favor companies aren't going to do well but a few do. And I haven't looked at ijs holding recently but it held gme as of Feb or march when I last looked. Looks like theyve moved out of it as it doesn't fit the asset classes they are tracking. But prior to the run up AND during the run up ijs held gme.
You're claiming I took "GME is an anomaly" out of context from the sentence "GME is an anomaly due to its Reddit fame"?  Good luck convincing others I misunderstood that sentence - the meaning is quite clear.  You know that GME made national news and defined a new category called "meme stocks".  GME is an anomaly, and it is not appropriate to pretend it's performance is typical for small cap value stocks.

Am I taking your entire two posts out of context?  In both your first and second posts, you point to GME as an example of why SCV outperforms.  I've quoted it so others can see - you're clearly comparing GME with SCV performance, which is not accurate.  It is wrong to claim that GME's performance is somehow an example of SCV performance, when GME is an obvious outlier ("an anomaly").

You are trying to have it both ways.  You both acknowledge "GME is an anomaly due to its Reddit fame", and then claim in two different posts that somehow GME should be used as an example of small cap value (SCV) performance.

You also didn't refute my other points, you just rationalized why you presented wrong information.
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on September 17, 2021, 09:41:30 AM
Thought this might be interesting...

https://www.reuters.com/business/finance/massachusetts-fines-massmutual-475-mln-failing-supervise-roaring-kitty-other-2021-09-16/

"Massachusetts fines MassMutual $4.75 mln in 'Roaring Kitty' case"

"BOSTON, Sept 16 (Reuters) - A MassMutual investment subsidiary has agreed to pay $4.75 million to resolve allegations by Massachusetts securities regulators including that it failed to supervise its agents, among them the social media persona "Roaring Kitty," whose online posts helped spark January's trading frenzy in GameStop Corp (GME.N) shares."
Title: Re: GME deathwatch - how to profit?
Post by: WoodsRun on September 17, 2021, 09:55:10 AM
From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 252M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

Edit: Numbers.
You invest without considering the share price?  It was under $10/sh one year ago, and is now about $209/share, or 20x higher.  Giving your numbers that context, the company looks horrible.

GME's market cap was $565M a year ago, and is $16,000M now.  By the measure used in index funds, GameStop has grown 2700% larger in 12 months.
https://ycharts.com/companies/GME/market_cap

That growth is what spoils the profit numbers you mentioned.  Using your profit numbers divided by market cap:
$252M / $565.6M = profits equal to 44% of it's market cap a year ago
$320M / $16000M = profits equal to 2% of it's market cap now

Yahoo displays GME's total revenue and gross profit.  Look at Jan numbers for 2018, 2019, 2020, 2021 ... both declined every year.  Their gross revenue was $9.2B in 2018, and $5.1B in 2021 - down by almost half.  Their gross profit sank from $3.04B to $1.26B, a decline of more than half.
https://finance.yahoo.com/quote/GME/financials?p=GME


I am investing in GameStop as I would invest in a tech company that has lots of cash positioned for growth.
The last earnings call included new CEO Matt Furlong explaining that they are transitioning from a retail to a tech company. In other words previous quarterly and annual profits / revenue are not relevant. It will turn into an entirely different company with vastly different profit margins.
Title: Re: GME deathwatch - how to profit?
Post by: boarder42 on September 17, 2021, 02:32:21 PM
correct this is why its a small value company - lots of cash maybe they decide to make EVs and surpass tesla

Out of favor companies with good balance sheets are poised to pivot and explode.  Picking the right one is hard.  GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies everyone of us would look at and say this is shit why would i put my money here - this is the exact reason SCV outperforms VTSAX long term.
Just to correct a few incorrect statements:
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(2) GME is a stock, not a "fund"
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".
I think alot of what you inferred from what I said was taken out of context. My main point was as everyone laughs about something like game stop thinking it's a terrible bet which a majority of people here think it is. Was the basis for why scv outperforms. People think these small out of favor companies aren't going to do well but a few do. And I haven't looked at ijs holding recently but it held gme as of Feb or march when I last looked. Looks like theyve moved out of it as it doesn't fit the asset classes they are tracking. But prior to the run up AND during the run up ijs held gme.
You're claiming I took "GME is an anomaly" out of context from the sentence "GME is an anomaly due to its Reddit fame"?  Good luck convincing others I misunderstood that sentence - the meaning is quite clear.  You know that GME made national news and defined a new category called "meme stocks".  GME is an anomaly, and it is not appropriate to pretend it's performance is typical for small cap value stocks.

Am I taking your entire two posts out of context?  In both your first and second posts, you point to GME as an example of why SCV outperforms.  I've quoted it so others can see - you're clearly comparing GME with SCV performance, which is not accurate.  It is wrong to claim that GME's performance is somehow an example of SCV performance, when GME is an obvious outlier ("an anomaly").

You are trying to have it both ways.  You both acknowledge "GME is an anomaly due to its Reddit fame", and then claim in two different posts that somehow GME should be used as an example of small cap value (SCV) performance.

You also didn't refute my other points, you just rationalized why you presented wrong information.

You're not really understanding what I'm saying probably bc I'm not saying something correctly but I don't really care either way. You do you.
Title: Re: GME deathwatch - how to profit?
Post by: Radagast on September 19, 2021, 11:31:55 AM
correct this is why its a small value company - lots of cash maybe they decide to make EVs and surpass tesla

Out of favor companies with good balance sheets are poised to pivot and explode.  Picking the right one is hard.  GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies everyone of us would look at and say this is shit why would i put my money here - this is the exact reason SCV outperforms VTSAX long term.
Just to correct a few incorrect statements:
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(2) GME is a stock, not a "fund"
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".
I think I'm gonna take Boarder42's side here. Gamestop is not in IJS now, but it was at the end of 2020, and also throughout the first half of 2021 or so. The reason it no longer is is because IJS was unloading it for months. I remember skimming a thread on Bogleheads where there was a great amount of consternation that a huge percentage of IJS was in GME (not sure why though, it made IJS owners a ton of money). You can easily google this.

Also I am not sure how much of an anomaly it was. Company stock returns, like many other economic things, follow a Pareto distribution, meaning 20% of the stocks produce 80% of the returns. But this relationship holds all the way to the end: 20% of the most 20% of profitable stocks produce 80% of the 80% of the returns. And so on, following 0.2^x and 0.8^x. Following that, you would expect a single stock in the S&P600 to be responsible for 40% of its returns (but probably the actual 80:20 is a little too extreme IRL, and it might be 67:33 or something)

On topic:
I made like $200 profit trading 1 share of GME with a starting $140. Now I am in RKLB, which so far has been a bad move.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 22, 2021, 08:55:18 AM
There's a trend in these recent posts - people are shown they are wrong with data, and then continue to keep the same views.

boarder42 - Or you could be wrong.  I notice you claim to not be understood, but can't quote anything I misunderstood.  You haven't been able to refute the points I made.  So to me, I think you know you're wrong, and don't want to admit it.  Is that a good strategy for investing?


From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 252M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

Edit: Numbers.
You invest without considering the share price?  It was under $10/sh one year ago, and is now about $209/share, or 20x higher.  Giving your numbers that context, the company looks horrible.

GME's market cap was $565M a year ago, and is $16,000M now.  By the measure used in index funds, GameStop has grown 2700% larger in 12 months.
https://ycharts.com/companies/GME/market_cap

That growth is what spoils the profit numbers you mentioned.  Using your profit numbers divided by market cap:
$252M / $565.6M = profits equal to 44% of it's market cap a year ago
$320M / $16000M = profits equal to 2% of it's market cap now

Yahoo displays GME's total revenue and gross profit.  Look at Jan numbers for 2018, 2019, 2020, 2021 ... both declined every year.  Their gross revenue was $9.2B in 2018, and $5.1B in 2021 - down by almost half.  Their gross profit sank from $3.04B to $1.26B, a decline of more than half.
https://finance.yahoo.com/quote/GME/financials?p=GME
I am investing in GameStop as I would invest in a tech company that has lots of cash positioned for growth.
The last earnings call included new CEO Matt Furlong explaining that they are transitioning from a retail to a tech company. In other words previous quarterly and annual profits / revenue are not relevant. It will turn into an entirely different company with vastly different profit margins.
In your earlier post, you quote the revenue and profit compared to last year.  And in this post, you contradict yourself, and claim the very numbers you posted "are not relevant".  Why did you post data that is "not relevant"?

GameStop is a retail company.  In SPDR Retail ETF it is listed under "COMPUTER & ELECTRONICS RETAIL".  And Vanguard Consumer Discretionary ETF (VCR) lists it as holding #55 (by weight).
https://www.ssga.com/us/en/individual/etfs/resources/doc-viewer#xrt&third-quarter-holdings
https://investor.vanguard.com/etf/profile/portfolio/VCR/portfolio-holdings

GME stock opened at $19/share, and then hit $483/share the same month.  Management hadn't changed, it was still a retail company with thousands of outlets and almost all employees working in retail stores.  What happened wasn't a transformation - it was an attack on short sellers by reddit/wallstreetbets.  And it worked - hedge funds lost billions.  Check any news coverage - it will match my description.

Which tech companies have 4800+ retail stores, like GameStop?  They employ 12,000 full time and about 20,000 part time workers.  Where do 95% (literally) work?  In retail.  A company that makes most of it's money from retail, has almost all it's workers in retail, and has 4800 retail stores... is a retail company.  This isn't the dot-com era, where having a website means you're a tech company (and, BTW, they already had a website for selling games last year - improving a website isn't a transformational change).
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 22, 2021, 09:43:23 AM
... GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies ...
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".
I think I'm gonna take Boarder42's side here. Gamestop is not in IJS now, but it was at the end of 2020, and also throughout the first half of 2021 or so. The reason it no longer is is because IJS was unloading it for months. I remember skimming a thread on Bogleheads where there was a great amount of consternation that a huge percentage of IJS was in GME (not sure why though, it made IJS owners a ton of money). You can easily google this.

Also I am not sure how much of an anomaly it was. Company stock returns, like many other economic things, follow a Pareto distribution, meaning 20% of the stocks produce 80% of the returns. But this relationship holds all the way to the end: 20% of the most 20% of profitable stocks produce 80% of the 80% of the returns. And so on, following 0.2^x and 0.8^x. Following that, you would expect a single stock in the S&P600 to be responsible for 40% of its returns (but probably the actual 80:20 is a little too extreme IRL, and it might be 67:33 or something)

On topic:
I made like $200 profit trading 1 share of GME with a starting $140. Now I am in RKLB, which so far has been a bad move.
Boarder42 was wrong, and I was right.  You can take the wrong side if you like, but you're still wrong.  You also don't seem to understand the goal of a small-cap ETF.  IJS doesn't speculate in what makes money - it doesn't keep GME because "it made IJS owners a ton of money".  That might be why you didn't understand a "great amount of consternation" on Bogleheads - they might rightly be concerned that a mid-cap stock had the largest weight in a small-cap ETF.  GME's market cap has been over $10 billion for the past 5 months.

In case you didn't know, "anomaly" was first mentioned by Boarder42.

Can you prove the statement "Company stock returns, like many other economic things, follow a Pareto distribution"?  I'm using specific numbers to prove my point, rather than generalizations like the 80% rule.  I don't expect general statements can be taken to an exponential power and still be accurate.  So I disagree that "you would expect a single stock in the S&P600 to be responsible for 40% of its returns".

I claim GameStop is an outlier - an unusual situation caused by a short squeeze that became nationwide, mainstream news.  Unique events like the GameStop rise in Jan 2020 aren't something you can expect to happen.  And so, it's not reasonable to invest in small cap stocks in the hope that a rise like GME's will happen again.
Title: Re: GME deathwatch - how to profit?
Post by: boarder42 on September 22, 2021, 10:12:34 AM
... GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies ...
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".
I think I'm gonna take Boarder42's side here. Gamestop is not in IJS now, but it was at the end of 2020, and also throughout the first half of 2021 or so. The reason it no longer is is because IJS was unloading it for months. I remember skimming a thread on Bogleheads where there was a great amount of consternation that a huge percentage of IJS was in GME (not sure why though, it made IJS owners a ton of money). You can easily google this.

Also I am not sure how much of an anomaly it was. Company stock returns, like many other economic things, follow a Pareto distribution, meaning 20% of the stocks produce 80% of the returns. But this relationship holds all the way to the end: 20% of the most 20% of profitable stocks produce 80% of the 80% of the returns. And so on, following 0.2^x and 0.8^x. Following that, you would expect a single stock in the S&P600 to be responsible for 40% of its returns (but probably the actual 80:20 is a little too extreme IRL, and it might be 67:33 or something)

On topic:
I made like $200 profit trading 1 share of GME with a starting $140. Now I am in RKLB, which so far has been a bad move.
Boarder42 was wrong, and I was right.  You can take the wrong side if you like, but you're still wrong.  You also don't seem to understand the goal of a small-cap ETF.  IJS doesn't speculate in what makes money - it doesn't keep GME because "it made IJS owners a ton of money".  That might be why you didn't understand a "great amount of consternation" on Bogleheads - they might rightly be concerned that a mid-cap stock had the largest weight in a small-cap ETF.  GME's market cap has been over $10 billion for the past 5 months.

In case you didn't know, "anomaly" was first mentioned by Boarder42.

Can you prove the statement "Company stock returns, like many other economic things, follow a Pareto distribution"?  I'm using specific numbers to prove my point, rather than generalizations like the 80% rule.  I don't expect general statements can be taken to an exponential power and still be accurate.  So I disagree that "you would expect a single stock in the S&P600 to be responsible for 40% of its returns".

I claim GameStop is an outlier - an unusual situation caused by a short squeeze that became nationwide, mainstream news.  Unique events like the GameStop rise in Jan 2020 aren't something you can expect to happen.  And so, it's not reasonable to invest in small cap stocks in the hope that a rise like GME's will happen again.

my point had nothing to do with the returns of GME - my point was the psychology of why almost everyone thought GME was such a bad play even at 9 dollars when this whole ruse started at the beginning of the year.  It wasnt that the returns from GME in IJS dictate the reason SCV outperforms.  Simply the mindset of an out of favor company and how or why would people put money in it even at 9 dollars a share. To be frank most any thing in the SCV area could be considered an anomaly when it does out perform due to a pivot in business model b/c people dont expect or see those things coming.  Its why SCV is made up of small out of favor companies like financials and mining and retail and oil. 

As asset rich company that is undervalued to book has historically outperformed a large growth company with expectations of performance that may or may not come.  and its outperformed by 2-3%. 

again my point was along the lines of the psychology behind how people think not along the returns that GME provided.  Though Amazon could have come along and decided they needed the retail space of GME to expand their cashier less mini marts and it could have exploded.  there are lots of opportunities for small cash flush/asset rich companies to explode.  And the mentality of well that's just a dated company with alot of money is why the SCV premium exists and will exist in perpetuity.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 26, 2021, 07:03:21 AM
It wasnt that the returns from GME in IJS dictate the reason SCV outperforms.  Simply the mindset of an out of favor company and how or why would people put money in it even at 9 dollars a share.
You said nothing about that in your earlier posts.  Further, IJS is a small cap index fund.  It does not involve psychology - it buys whatever is in it's index.  When GME was a small cap, it was in IJS.  When GME stayed at mid-cap market cap, it was sold by small cap index funds.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 26, 2021, 07:46:29 AM
If GameStop is going to be great at online game sales, why does GME have a higher market cap than Valve?  Valve not only makes games, but runs the #1 website for selling games: steam.  Players have built up game libraries over the almost 20 years that steam has been #1.  Valve's estimated value is taken from this article:
https://millennialmoney.com/valve-stock-ipo/

I think GME is worth $14 billion (versus Valve $10 billion) because it's a meme stock.  In January, GME was at $480/sh at one point, driven by a short squeeze.  At the end of February, r/wallstreetbets struck again, driving the price sharply higher.  Both of those events happened with old management and no company news.

Look at YTD prices for GME on Yahoo Finance.  In June, there was a spike as the new CEO and transformation were announced... and by a month later, the stock had faded back to it's level from before June.  But look back to the end of February, and the second short squeeze.  The current price is about the same as the price back then.  If there's something else going on, the stock price should reflect it.  But it doesn't.
https://finance.yahoo.com/quote/GME/
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on September 26, 2021, 12:18:26 PM


But look back to the end of February, and the second short squeeze.  The current price is about the same as the price back then.  If there's something else going on, the stock price should reflect it.  But it doesn't.
https://finance.yahoo.com/quote/GME/

Oh man, you got so close, but didn't take the next step.

You're right, there isn't anything else going on but the squeeze.

The shorts haven't covered.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on September 26, 2021, 01:46:34 PM


But look back to the end of February, and the second short squeeze.  The current price is about the same as the price back then.  If there's something else going on, the stock price should reflect it.  But it doesn't.
https://finance.yahoo.com/quote/GME/

Oh man, you got so close, but didn't take the next step.

You're right, there isn't anything else going on but the squeeze.

The shorts haven't covered.

Days to cover: 1.9
Short % if Float: 12.35%
https://www.marketbeat.com/stocks/NYSE/GME/short-interest/

The short squeeze has been over for a while.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on September 26, 2021, 02:07:52 PM
We'll have to agree to disagree.

I think the outstanding shares (due to synthetic shorts) is way, way higher than the publish numbers and the hedge funds are still short over 100% of the float.

We'll see.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on September 27, 2021, 04:37:42 PM
We'll have to agree to disagree.

I think the outstanding shares (due to synthetic shorts) is way, way higher than the publish numbers and the hedge funds are still short over 100% of the float.

We'll see.

This may explain the anomalies people were seeing:
https://markets.businessinsider.com/news/stocks/sec-charges-illegal-meme-stocks-options-trading-scheme-2021-9 (https://markets.businessinsider.com/news/stocks/sec-charges-illegal-meme-stocks-options-trading-scheme-2021-9)
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 28, 2021, 07:58:19 AM


But look back to the end of February, and the second short squeeze.  The current price is about the same as the price back then.  If there's something else going on, the stock price should reflect it.  But it doesn't.
https://finance.yahoo.com/quote/GME/

Oh man, you got so close, but didn't take the next step.

You're right, there isn't anything else going on but the squeeze.

The shorts haven't covered.
There is no next step in the YTD performance data.
Why is there a short squeeze in Jan, another in late Feb/early March, then nothing?
https://finance.yahoo.com/quote/GME/

There hasn't been a short squeeze since mid-March, which is over 6 months ago.  I don't count the June meeting - earlier in this thread I thought the new CEO and transformational plans would push GME up.  But even if we disagree and call that a short squeeze... why 0-1 squeezes in 6 months?
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on September 28, 2021, 08:10:36 AM
I donno, I wouldn't say nothing has happened since March; it did jump 27% on no news just a month ago, August 24.

https://www.barrons.com/articles/gamestop-amc-stock-price-meme-51629847398?tesla=y

Hard to see any reasonable explanation for that.

None of these (save January) were the short squeeze though. That'll happen when the shorts (inevitably) cover.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 28, 2021, 08:23:59 AM
None of these (save January) were the short squeeze though. That'll happen when the shorts (inevitably) cover.
GME went from $45 on Feb 23 to $265 on Mar 10.  That +480% jump was not a short squeeze?
How else can you explain 2x in one day, and almost 6x in 2.5 weeks?

Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on September 28, 2021, 08:27:29 AM
Oh, it certainly was in line with and a part of the short squeeze play going on.

I'm just saying it wasn't the end of it. It wasn't *the* short squeeze.

As we've seen in the last week via documents discovered/leaked from an ongoing lawsuit, the hedge funds (specifically Citadel, but I'm sure they're not the only ones) increased their short positions on Jan 27 after telling Robin Hood to shut off the buy button.

When all the shorts cover, the squeeze will happen.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 29, 2021, 09:31:31 AM
Oh, it certainly was in line with and a part of the short squeeze play going on.

I'm just saying it wasn't the end of it. It wasn't *the* short squeeze.

As we've seen in the last week via documents discovered/leaked from an ongoing lawsuit, the hedge funds (specifically Citadel, but I'm sure they're not the only ones) increased their short positions on Jan 27 after telling Robin Hood to shut off the buy button.

When all the shorts cover, the squeeze will happen.
I didn't find the stories you mention in a quick search.  There seems to be a lawsuit about what happened 8 months ago on Jan 27.  What have hedge funds been doing recently?

Personally, I find the price chart compelling.   I can turn it into numbers by visiting Yahoo Finance's "historical prices" page for GME, and getting the monthly summary.  There I see highs and lows for each month - to get volatility, I can divide them.  But I see stalemate - GME never returning to the high vs low ratio of those first 3 months (Jan - Mar):
Jan : 483 / 17 = 28.4x
Feb : 322 / 38.5 = 8.4x
Mar : 348.5 / 99.97 = 3.5x
Apr : 196.97 / 132 = 1.5x
May : 268.8 / 136.5 = 2.0x
Jun : 344.66 / 197 = 1.7x
Jul : 216.83 / 158 = 1.4x
Aug : 227 / 145.22 = 1.6x
Sep : 231.44 / 178 = 1.3x
https://finance.yahoo.com/quote/GME/history?period1=1609459200&period2=1632873600&interval=1mo&filter=history&frequency=1mo

If I was investing based on those numbers, $181 looks in the lower range for GME.  It's also midway between quarterly meetings, so I might buy now and wait for the November meeting, and sell during a run-up to that meeting - before it occurs.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on September 29, 2021, 10:01:48 AM
Addendum - Based on the theory that I would be a buyer right now, I sold my GME put option that will expire Jan 2022 (at a loss).  GME seems to stable to wait for volatility and a price drop.

That leaves me with one position on GME.  After closing positions at steep losses on Feb 24, that day my last position had risen to double those already large losses.  Given I had just one position, lots of liquidity... I decided to stare down the market, and not sell.  So far, that has reduced my losses - but it's still a loss.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on September 29, 2021, 12:28:48 PM
It appears the solution to the "how to profit?" question is "do not play the game."

Long GME lost.
Long puts on GME lost.
Naked short calls did well at one particular time, but then again there are lots of ways to play Russian Roulette.
Title: Re: GME deathwatch - how to profit?
Post by: boarder42 on September 29, 2021, 05:59:25 PM
It appears the solution to the "how to profit?" question is "do not play the game."

Long GME lost.
Long puts on GME lost.
Naked short calls did well at one particular time, but then again there are lots of ways to play Russian Roulette.

I made some money. I owned an index fund that held gme. Then it sold it when it was not small or value anymore. Think we found a way to profit off this in the future.
Title: Re: GME deathwatch - how to profit?
Post by: Rockies on October 01, 2021, 08:50:08 AM
I made a massive amount of money by not paying any time or attention to GME and not investing in it. Instead I worked and lived by life while steadily contributing 20% of my income to a diversified index fund. 
Title: Re: GME deathwatch - how to profit?
Post by: WoodsRun on October 06, 2021, 01:40:05 PM
There's a trend in these recent posts - people are shown they are wrong with data, and then continue to keep the same views.

boarder42 - Or you could be wrong.  I notice you claim to not be understood, but can't quote anything I misunderstood.  You haven't been able to refute the points I made.  So to me, I think you know you're wrong, and don't want to admit it.  Is that a good strategy for investing?


From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 252M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

Edit: Numbers.
You invest without considering the share price?  It was under $10/sh one year ago, and is now about $209/share, or 20x higher.  Giving your numbers that context, the company looks horrible.

GME's market cap was $565M a year ago, and is $16,000M now.  By the measure used in index funds, GameStop has grown 2700% larger in 12 months.
https://ycharts.com/companies/GME/market_cap

That growth is what spoils the profit numbers you mentioned.  Using your profit numbers divided by market cap:
$252M / $565.6M = profits equal to 44% of it's market cap a year ago
$320M / $16000M = profits equal to 2% of it's market cap now

Yahoo displays GME's total revenue and gross profit.  Look at Jan numbers for 2018, 2019, 2020, 2021 ... both declined every year.  Their gross revenue was $9.2B in 2018, and $5.1B in 2021 - down by almost half.  Their gross profit sank from $3.04B to $1.26B, a decline of more than half.
https://finance.yahoo.com/quote/GME/financials?p=GME
I am investing in GameStop as I would invest in a tech company that has lots of cash positioned for growth.
The last earnings call included new CEO Matt Furlong explaining that they are transitioning from a retail to a tech company. In other words previous quarterly and annual profits / revenue are not relevant. It will turn into an entirely different company with vastly different profit margins.
In your earlier post, you quote the revenue and profit compared to last year.  And in this post, you contradict yourself, and claim the very numbers you posted "are not relevant".  Why did you post data that is "not relevant"?

GameStop is a retail company.  In SPDR Retail ETF it is listed under "COMPUTER & ELECTRONICS RETAIL".  And Vanguard Consumer Discretionary ETF (VCR) lists it as holding #55 (by weight).
https://www.ssga.com/us/en/individual/etfs/resources/doc-viewer#xrt&third-quarter-holdings
https://investor.vanguard.com/etf/profile/portfolio/VCR/portfolio-holdings

GME stock opened at $19/share, and then hit $483/share the same month.  Management hadn't changed, it was still a retail company with thousands of outlets and almost all employees working in retail stores.  What happened wasn't a transformation - it was an attack on short sellers by reddit/wallstreetbets.  And it worked - hedge funds lost billions.  Check any news coverage - it will match my description.

Which tech companies have 4800+ retail stores, like GameStop?  They employ 12,000 full time and about 20,000 part time workers.  Where do 95% (literally) work?  In retail.  A company that makes most of it's money from retail, has almost all it's workers in retail, and has 4800 retail stores... is a retail company.  This isn't the dot-com era, where having a website means you're a tech company (and, BTW, they already had a website for selling games last year - improving a website isn't a transformational change).


Sorry I was trying to reply to one of your earlier posts where you said they had a 'greater loss than expected'

What's amazing about GME stock is how it rebounds, regardless of information.  Analysts digested GameStop's earnings report & earnings call, and sent the stock down 10%.  I read that earnings had greater losses than expected, and there was complete silence from management about the company's transformation.  Seems like valid reasons to lower expectations for GME stock... but WSB jumped in and bought until the stock price recovered.

I'm coming to view WSB as "trolling with money".  They want to change things, make noise... and use money as a form of trolling.  Does the stock price make sense?  Do a troll's posts make sense?  The stock price moves are like a troll's posts, drawing in interested people to discuss - or invest.  The fundamentals aren't there - the stock price could be $150 or $250 without anything taking place.

I see two risks: (1) GME is a mess that comes crashing down.  (2) It works, and people who made money this way keep trying this same approach.  Chase meme stocks endlessly, which also seems like a bad idea.  Maybe GameStop will be more successful than expected, but if that's the case, the Chairman and CEO are suspiciously quiet about the transformation they extolled mere months ago.

In which I tried to point out that earnings were not as bad as expected. That is the only reason I brought up the fundamentals.

That being said, I still think it is hard to evaluate the future of GameStop based on previous earnings reports. At this point in time investing in GameStop is like investing in a low / mid cap tech company. GameStop has already closed several retail locations to consolidate sales. I don't know how much GameStop will still depend on traditional retail going forward.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on October 07, 2021, 11:13:22 AM
What "low/mid cap tech company" lacks a viable product or a business plan to produce a viable product, even after being gifted a billion dollars by investors to come up with such a thing?

GME hasn't done enough homework to make it onto the Shark Tank TV show, much less be categorized alongside boutique software firms and semiconductor suppliers who have a clear direction towards growth.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 08, 2021, 08:32:00 AM
It appears the solution to the "how to profit?" question is "do not play the game."

Long GME lost.
Long puts on GME lost.
Naked short calls did well at one particular time, but then again there are lots of ways to play Russian Roulette.
I have another take on the short calls, but I pretty much agree with this description.

When GME spiked in January, the short squeeze left the company extremely overvalued.  National media coverage let every hedge fund and institutional investor know a profit opportunity was available, and the next Monday, they all took it.  I could have been wrong, but I think my analysis was sound, and the risk was appropriate.  I should have made 90% profit (sell short $100, then buy it back later for $10).

What I did instead, is think the institutional money would never leave.  I treated the drop in GME's price as a sure thing, and ignored risk and amount of money I put in.

I recently covered some of my remaining GME short calls.  If the stock gets hyped up before the shareholder's meeting, I might return to my original position size.  I'm keeping it small and manageable, which I didn't do at the end of February.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 26, 2021, 09:06:15 AM
I've closed my short call position, and now hold no exposure to GameStop outside index funds.  Ah, quite a relief!

Next, one of two things will happen:
(1) I'll stay away from GME shares and options
(2) I'll sell GME calls next month near the time of the shareholder's meeting
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on October 26, 2021, 09:37:39 AM
I've closed my short call position, and now hold no exposure to GameStop outside index funds.  Ah, quite a relief!

Next, one of two things will happen:
(1) I'll stay away from GME shares and options
(2) I'll sell GME calls next month near the time of the shareholder's meeting

Volatility is too low to sell calls right now. VIX is in the 15's. Maybe that will change next month. If anything, I'm tempted to go long S&P index calls. One could 2x leverage the S&P 500 for the entire year of 2022 with a maximum downside of about 12-15%. I'm actively doing the math on the Calls and Cash strategy I was suggesting months ago on this board.

If selling calls, I'd also be afraid the October and November inflation numbers suddenly start to confirm the Fed's "transitory" thesis. If so, we could be in for a big EOY rally.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 26, 2021, 12:36:23 PM
I've closed my short call position, and now hold no exposure to GameStop outside index funds.  Ah, quite a relief!

Next, one of two things will happen:
(1) I'll stay away from GME shares and options
(2) I'll sell GME calls next month near the time of the shareholder's meeting
Volatility is too low to sell calls right now. VIX is in the 15's. Maybe that will change next month. If anything, I'm tempted to go long S&P index calls. One could 2x leverage the S&P 500 for the entire year of 2022 with a maximum downside of about 12-15%.
Well, S&P doesn't have much to do with GME deathwatch, but I'll bite.

Do you literally mean "S&P index calls", as in ^SPX call options?  Buying 2x those costs about $200,000 each contract.  Those are the only calls I've ever seen with negative time value - they are sold at a discount.  I suspect that's because 2x calls aren't that popular, tie up a lot of money, and can't be exercised like other options (they are cash settled).

My guess is you meant SPY calls, which can be exercised to get shares of SPY (the S&P 500 ETF).  I've managed to buy those 2x options for under 1% time value over 2+ years, which seems like a good deal to me.

But there's no such thing as "maximum downside of 15%".  If the S&P 500 falls 10%, these 2x calls take a 20% loss.  It's very unlikely that Dec 2023 calls will be 20% down from here, but it's possible.

Back to GME, the VIX is useful for non-meme stocks.  I've heard options with 100% implied volatility called extremely volatile, but GME hit 4000% implied volatility back in Jan/Feb.  Although an interesting idea - if GME has volatility similar to the wider market, maybe that spells trouble for GME?  Nobody wants to go very slowly to the moon, especially if they're below escape velocity and fall back to earth ...
(Or maybe "escape volatility"?)

The most recent news item on GameStop's website is about hiring 500 people for customer care.  It's part of the move towards better customer service.  Which is nice... but might not be a huge transformation on the scale people imagined.
https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-hire-500-employees-new-customer-care-center-south

The next GameStop quarterly meeting happens Dec 6, not Nov.  I'm assuming price and volume will increase the week before this meeting.
"Q3 2021 GameStop Corp Earnings Release        6 Dec 2021 / 6PM CST"
https://www.reuters.com/companies/GME.N/events

It's a convenient trade, if I try to do it.  I can wait for activity, and then decide if I want to short shares or calls.  There's a dozen analysts covering GameStop, and the fundamentals are likely to disappoint relative to it's current market cap.  So there will likely be a drop from their negative views, at which point we find out if GME fans start buying to make up for it.

Either way, weeks afterwards the stock is likely to be down, and I'll wait for that.  Or maybe I'll just ignore the whole thing, and invest in something more predictable!
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 26, 2021, 01:32:14 PM


The most recent news item on GameStop's website is about hiring 500 people for customer care.  It's part of the move towards better customer service.  Which is nice... but might not be a huge transformation on the scale people imagined.
https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-hire-500-employees-new-customer-care-center-south

I think you underestimate their digital transformation and the potential impact of Blockchain a and NFTs on their business.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 26, 2021, 06:26:13 PM


The most recent news item on GameStop's website is about hiring 500 people for customer care.  It's part of the move towards better customer service.  Which is nice... but might not be a huge transformation on the scale people imagined.
https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-hire-500-employees-new-customer-care-center-south
I think you underestimate their digital transformation and the potential impact of Blockchain a and NFTs on their business.
GameStop's price was determined by the short squeeze at the start of 2021, not by it's plans for digital transformation.  GME is a meme stock with a price decided by WallStreetBets.

Buying a game or game download requires trust in the game company that made it.  A blockchain doesn't add anything, because trust is required.  Game companies can make persistent items available in their stores, or use another NFT provider.  At best, GameStop could cash in on some partnerships and NFT money, but that entire market is relatively small - certainly not in the billions.

GameStop is king of retail game sales, and nothing else.  Steam already leads in digital sales, and each game company doesn't want to lose sales to GameStop's online store.  If game companies view GameStop as a threat, they could even pull their games from GameStop, since they don't want to fund a competitor.

GameStop hired a director from Amazon who had no CEO experience, and hadn't worked in the game industry.  Why is that a recipe for success?  GameStop has to partner with game companies, and compete with entrenched competitors.  While I expect that to turn out worse than expected, the stock is already priced for astounding success.

If WallStreetBets abandons GME, and analysts provide price targets based on company fundamentals, the stock price would drop sharply.  That already happened at the last quarterly meeting - a stock price drop, followed by a rescue from WallStreetBets.  If GME ever trades on fundamentals again, the stock price will drop quickly.
Title: Re: GME deathwatch - how to profit?
Post by: WoodsRun on October 27, 2021, 07:23:24 AM


The most recent news item on GameStop's website is about hiring 500 people for customer care.  It's part of the move towards better customer service.  Which is nice... but might not be a huge transformation on the scale people imagined.
https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-hire-500-employees-new-customer-care-center-south
I think you underestimate their digital transformation and the potential impact of Blockchain a and NFTs on their business.


If WallStreetBets abandons GME, and analysts provide price targets based on company fundamentals, the stock price would drop sharply.  That already happened at the last quarterly meeting - a stock price drop, followed by a rescue from WallStreetBets.  If GME ever trades on fundamentals again, the stock price will drop quickly.

Yes if Reddit / retail investors completely abandon GameStop I could see the possibility of it being over. But at the moment GameStop will be working on their NFT platform and other Web3 developments. With that information I can see investors piling more money into the stock, not less. This will be good for the company and will aid in their digital transformation.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 27, 2021, 08:14:01 AM
And let's not forget the short squeeze.

So many shares sold short and never closed (SEC report that came out last week confirmed the volume in Jan was retail FOMO, not shorts covering).
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on October 27, 2021, 10:21:10 AM
Overall, the markets are getting very frothy, with greed-driven desperation bets all over the place:

Crypto: Let's put all our money into something with no working application on the bet that others will pay even more for it.
GME/AMC: Let's put all our money into a defunct retailer / theatre with serious strategic issues and see what they do with the funds from secondary offerings.
SPACs: Let's put all our money into a shell corporation on the basis that it might pick up a bargain some day.
DWAC: Let's put all our money into a non-existent possible future social media platform run by people with no experience at social media and lots of experience screwing investors.

Maybe this is a consequence of today's deeply negative real bond yields or our CAPE being near 39, or maybe it's because any investor over 45 has lived through 3 massive SORR corrections/financial crises in their lifetimes already and has developed a distrust for long-term buy-and-hold? Would WallStreetBets have even become a thing if retail investors were enthusiastic about The Simple Path to Wealth, A Random Walk Down Wall Street, or the MMM message? It seems like the mentality is that the only way to get rich is to win a gamble, and the way to get nowhere is to diligently save, invest in diversified indexes, and get wiped out by the next crisis - if not killed by the COVID floating around at your job. I wonder if this was what things were like in 1980, when everyone assumed inflation could only rise and that the crazy government's interest rate hikes were going to put all US industry out of business, and despair + greed pushed people into silver and gold as a desperate last-ditch capitulation gambles because everything else looked so bad? Has anyone been informed that S&P500 earnings are forecast to increase about 9.3% next year?

Anyways, I can't decide whether today's "irrational exuberance" is a buy signal like 1981 or 2011, or if it's a bubble signal like 1999. As I learned once before, a bursting bubble drags everything down.
Title: Re: GME deathwatch - how to profit?
Post by: boarder42 on October 27, 2021, 11:06:04 AM
Overall, the markets are getting very frothy, with greed-driven desperation bets all over the place:

Crypto: Let's put all our money into something with no working application on the bet that others will pay even more for it.
GME/AMC: Let's put all our money into a defunct retailer / theatre with serious strategic issues and see what they do with the funds from secondary offerings.
SPACs: Let's put all our money into a shell corporation on the basis that it might pick up a bargain some day.
DWAC: Let's put all our money into a non-existent possible future social media platform run by people with no experience at social media and lots of experience screwing investors.

Maybe this is a consequence of today's deeply negative real bond yields or our CAPE being near 39, or maybe it's because any investor over 45 has lived through 3 massive SORR corrections/financial crises in their lifetimes already and has developed a distrust for long-term buy-and-hold? Would WallStreetBets have even become a thing if retail investors were enthusiastic about The Simple Path to Wealth, A Random Walk Down Wall Street, or the MMM message? It seems like the mentality is that the only way to get rich is to win a gamble, and the way to get nowhere is to diligently save, invest in diversified indexes, and get wiped out by the next crisis - if not killed by the COVID floating around at your job. I wonder if this was what things were like in 1980, when everyone assumed inflation could only rise and that the crazy government's interest rate hikes were going to put all US industry out of business, and despair + greed pushed people into silver and gold as a desperate last-ditch capitulation gambles because everything else looked so bad? Has anyone been informed that S&P500 earnings are forecast to increase about 9.3% next year?

Anyways, I can't decide whether today's "irrational exuberance" is a buy signal like 1981 or 2011, or if it's a bubble signal like 1999. As I learned once before, a bursting bubble drags everything down.

pretty good analysis of the current frothiness.  Just what bubble will burst and when and what will be pulled with it.  also while a bursting bubble drags everything down there are many asset classes that recover faster after bubbles burst.  Typically b/c they aren't part of the bubble that burst.

Its odd when i get people who know nothing about investing but know its what i talk about alot, and they come to me asking me about crypto or AARK or even posts around here talking about swapping indexes b/c this one has outperformed that one recently.  Recency bias, FOMO, uneducated investors.  its definitely getting frothy.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 27, 2021, 12:03:11 PM
It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on October 27, 2021, 05:21:00 PM
It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?
There is no answer. GME is going the way of the old AOL CDs people got in the mail back in the 90s.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 27, 2021, 11:24:58 PM
It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

Selling digital video games (or reselling them) is only a very small part of the digital transformation. It means expanding to more than a game company, but a tech/financial company.
Title: Re: GME deathwatch - how to profit?
Post by: WoodsRun on October 28, 2021, 03:35:19 AM
It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

Steam / Valve does not support Blockchain.

Edit: sidenote, I learned that Steam is from Valve since you mentioned it.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on October 28, 2021, 06:29:39 AM
It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

Steam / Valve does not support Blockchain.

Edit: sidenote, I learned that Steam is from Valve since you mentioned it.

Is GME going to solve a problem with blockchain that Steam/Valve cannot solve without blockchain? For example, is Steam/Valve unable to confirm which of its customers have purchased digital items, or where customers are in the payment process?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 28, 2021, 12:34:50 PM
It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?
Selling digital video games (or reselling them) is only a very small part of the digital transformation. It means expanding to more than a game company, but a tech/financial company.
I've never seen GameStop claim they will become a tech/financial company.  Is there a news source for that?  I searched for "gamestop plans digital transformation", and got this article.
https://qz.com/2019225/what-really-is-gamestops-e-commerce-transformation/

Oh, and my earlier information about NFTs sales was outdated.  First half of 2021, $2.5 billion sales ... and now it's quadrupled to $10.7 billion total sales.
https://www.reuters.com/technology/nft-sales-surge-107-bln-q3-crypto-asset-frenzy-hits-new-highs-2021-10-04/


Gamestop has an NFT page on it's website, where they ask people to join their team.  That's reliable information that NFTs are part of their strategy.  The above article concludes with the following:
Quote
Gaming-related NFTs also surged, with the blockchain-based game Axie Infinity leading the "play-to-earn" sector with $776 million in Q3 revenues, DappRadar said.
Axie Infinity is a game company with an iPhone/Android game.  They made their own crypto currency, and their own NFTs.  If anyone is positioned to consult for other game companies, it's Axie Infinity.  Making an NFT is the easy part - verifying it, and integrating it into a game is much harder.  I just don't see game companies paying GameStop to do the easy part for them.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 28, 2021, 12:52:10 PM
IMO, you are thinking much too narrowly about the possibilities of Blockchain and fungible and non-fungible tokens.

GameStop as a brick and mortar store that has an online presence is what they are today. Evidence is they're transitioning into something more.

Regardless, this recent article makes a good case that you shouldn't fight the Reddit mob sentiment anyways:
https://www.nasdaq.com/articles/dont-try-to-fight-an-uphill-battle-against-the-gamestop-apes-2021-10-25
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 28, 2021, 01:42:35 PM
IMO, you are thinking much too narrowly about the possibilities of Blockchain and fungible and non-fungible tokens.

GameStop as a brick and mortar store that has an online presence is what they are today. Evidence is they're transitioning into something more.
You're making short, vague statements without evidence for your claims.  That I'm "thinking much too narrowly" is a claim - where is your evidence?  You mention "Evidence is they're transitioning into something more", so where is the evidence? 


Regardless, this recent article makes a good case that you shouldn't fight the Reddit mob sentiment anyways:
https://www.nasdaq.com/articles/dont-try-to-fight-an-uphill-battle-against-the-gamestop-apes-2021-10-25
If this is your evidence, there's a problem.  The last line of that article is: "The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc."  Which hints at why I should question the source of that article.  That article links to the original source of the content, which is here:
https://investorplace.com/2021/10/dont-try-to-fight-an-uphill-battle-against-the-gme-stock-apes/

And that's where it becomes clear you linked to a blogger who also said "It’s perfectly okay to hold both DOGE and SHIB in your cryptocurrency portfolio. Neither one is “better” than the other; they’re just different."
https://investorplace.com/2021/10/you-can-love-your-shiba-inu-but-dont-put-dogecoin-in-the-doghouse/


The data from the article I quoted is from a company called DappRadar, which supposedly tracks NFT markets.  If I'm wrong about that source, I'm fine being corrected about it.  But I'm citing data for my evidence, rather than bloggers.

I think this is a trend with most GameStop supporters here.  Vague, short comments that make claims - but nothing to back it up.  Usually not even a clear explanation, let alone data or evidence.  I think it's better to invest based on data.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 28, 2021, 03:21:54 PM
You mention "Evidence is they're transitioning into something more", so where is the evidence? 

Loopring publishing to Git referencing Gamestop seems a good indicator. Could be wrong, but this is how making predictions go. By the time the evidence is the way you want it, the move has happened.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 28, 2021, 03:43:39 PM
For the conspiracy theorists there's a lot of coincidences.

Like 3 months ago someone posts this image on the main GME subreddit, superstonk:
https://www.reddit.com/r/Superstonk/comments/ofpteu/today_in_visual_format/

(https://i.redd.it/5k75xrboau971.jpg)

Two days ago billionaire chairman of the board Ryan Cohen tweets same image, sans captions/text:
https://mobile.twitter.com/ryancohen/status/1453174821072801794 (https://mobile.twitter.com/ryancohen/status/1453174821072801794)

Could be a coincidence, absolutely. But why, exactly, is a billionaire well aware of the hype surrounding his company tweeting this random ass picture for no reason?
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on October 28, 2021, 03:54:57 PM
But why, exactly, is a billionaire well aware of the hype surrounding his company tweeting this random ass picture for no reason?

My first thought is he doesn't have a better business plan.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 28, 2021, 03:56:06 PM
Could be. Hype up the internet mob to keep valuations high and take advantage of that.

They did get rid of all their debt and raise billions this year by becoming a meme stock.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on October 28, 2021, 04:27:34 PM
They did get rid of all their debt and raise billions this year by becoming a meme stock.

Yes, but that was hardly their plan, and isn't really a sustainable business model IMHO.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 28, 2021, 10:39:58 PM
They did get rid of all their debt and raise billions this year by becoming a meme stock.

Yes, but that was hardly their plan, and isn't really a sustainable business model IMHO.

Agreed.

I was referring to your hypothesis of his recent tweet being that he has no other business plan other than hyping internet mob to keep valuation high, and that earlier meme stock status gave him the "pay off debt and raise cash" benefits, so continuing that, while not indefinitely sustainable, has benefits, and this could be why he's tweeting it.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 29, 2021, 12:10:30 PM
You mention "Evidence is they're transitioning into something more", so where is the evidence? 
Loopring publishing to Git referencing Gamestop seems a good indicator. Could be wrong, but this is how making predictions go. By the time the evidence is the way you want it, the move has happened.
I found the NFT marketplace, but I already knew about that.  There's already large marketplaces for NFTs.  GameStop is still hiring a team... would you rather invest in a market leader or a company who hasn't started?
https://gmedd.com/blockchain/loopring-code-confirms-gamestop-nft-marketplace-is-underway/

You posted an article by a guy who believes joke crypto currencies (DOGE, SHIB) are legitimate investments to hold.  I'm not counting that as evidence for something more!  (I don't get that kind of scoop often.  I plan to gloat about it one more post before dropping it, haha!)
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 29, 2021, 12:58:14 PM
Regardless of what he thinks make good investments (things that seem clearly like greater fool speculation), I can still agree with his larger point in that specific article about "don't fight the apes."
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on October 29, 2021, 01:52:03 PM
The brain trust over at /r/superstonk thinks they have a way to stop shorting.  Unfortunately they are wrong both in their understanding of securities trading mechanics and the supposed cure.

Street name stock is held at Cede & Co. the DTCC nominee.  Every broker is a DTCC member and all hold shares in Cede & Co. who is the legal owner of all street name stock.  This enables clearing to be done internally at DTCC as all trades are netted against each other to create a daily net settlement.  Only few shares need to go to the Transfer Agent since Cede & Co. remains the owner throughout the whole process.  When customers open a margin account they agree that the broker can lend their shares for short sales.  Shares that are sold short are borrowed and sold in the market.  Those shorted shares then become a position in the buyers account.  There is no way for the buyer to know that the shares are borrowed, which means the process can be repeated.  This can result in more than 100% of the float being shorted.  This is entirely legal and how Wall Street works.

/r/superstonk have come up with the bright idea to remove the Street name position from Cede & Co. and place it with Computershare through the DTCC Direct Registration (DRS) system.  The only thing this will achieve is high fees for themselves and make the shares illiquid as they are moved around.  Even if a few percentage of a company shares are moved to Computershare the vast majority of all  stocks shares are still held by Cede & Co..  It will have no impact on anything.  The saddest part is "the apes" think they have discovered some way to force "squeezes" for the companies they are targeting,  the ABSOLUTE IDIOTS are too dumb to know their scheme will not work.  It all feeds into creating the false stories to feed the apes for the next squeeze play.  Reddit is loaded with idiots.  If you challenge them you are a "paid shill". LOL  Enjoy your loses morons.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 29, 2021, 02:09:03 PM
I wish we had news anchors talking like jim555 posts.  Using facts and insults is a fun combination, but facts are definitely key.  Which brings up a blogger who isn't so fond of facts.

Regardless of what he thinks make good investments (things that seem clearly like greater fool speculation), I can still agree with his larger point in that specific article about "don't fight the apes."
But he suggests you buy DOGE coin, why not follow that advice?

I don't think his DOGE coin idea was a one off - it represents how he approaches the article you liked, as well.  For example, he says the company isn't in debt.  Great, but they wouldn't be in debt at $50/share, too.  Companies that pay off their debt do not have to go up 20x in a year.

They claim the company is in "growth mode" because of a new fulfillment center.  First of all, that was Ryan Cohen's plan all along - to improve customer satisfaction.  It doesn't mean the stock should be up 20x.  And second, the company has declining revenues going back a decade, which is important context that gets ignored it saying GameStop is in "growth mode".  Ignoring evidence seems to be a specialty with this blogger.

So when the same person claims that "apes" have clout and staying power, it's hard to trust that claim.  To me it's another failed point in an article that ignores context and makes leaps that are not justified by the information presented.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 29, 2021, 05:33:32 PM
So when the same person claims that "apes" have clout and staying power, it's hard to trust that claim.  To me it's another failed point in an article that ignores context and makes leaps that are not justified by the information presented.

What is your explanation on why the price remains at $180 nine months later instead of being back down to, say, $50?
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 29, 2021, 05:34:35 PM
/r/superstonk have come up with the bright idea to remove the Street name position from Cede & Co. and place it with Computershare through the DTCC Direct Registration (DRS) system.  The only thing this will achieve is high fees for themselves and make the shares illiquid as they are moved around.  Even if a few percentage of a company shares are moved to Computershare the vast majority of all  stocks shares are still held by Cede & Co..

And what if more than 100% of the float gets directly registered and there's still millions of shares held by Cede & Co.?
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on October 29, 2021, 07:35:09 PM
So when the same person claims that "apes" have clout and staying power, it's hard to trust that claim.  To me it's another failed point in an article that ignores context and makes leaps that are not justified by the information presented.

What is your explanation on why the price remains at $180 nine months later instead of being back down to, say, $50?
Idiocy.
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on October 29, 2021, 07:38:41 PM
/r/superstonk have come up with the bright idea to remove the Street name position from Cede & Co. and place it with Computershare through the DTCC Direct Registration (DRS) system.  The only thing this will achieve is high fees for themselves and make the shares illiquid as they are moved around.  Even if a few percentage of a company shares are moved to Computershare the vast majority of all  stocks shares are still held by Cede & Co..

And what if more than 100% of the float gets directly registered and there's still millions of shares held by Cede & Co.?
DTCC holds the vast majority of all issues, like 90%+.  There is no way these "apes" could even move a few percentage out of Cede & Co..  Pure fantasy.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 29, 2021, 07:42:04 PM


/r/superstonk have come up with the bright idea to remove the Street name position from Cede & Co. and place it with Computershare through the DTCC Direct Registration (DRS) system.  The only thing this will achieve is high fees for themselves and make the shares illiquid as they are moved around.  Even if a few percentage of a company shares are moved to Computershare the vast majority of all  stocks shares are still held by Cede & Co..

And what if more than 100% of the float gets directly registered and there's still millions of shares held by Cede & Co.?
DTCC holds the vast majority of all issues, like 90%+.  There is no way these "apes" could even move a few percentage out of Cede & Co..  Pure fantasy.

Oh, I'm saying if Cede and Co. still holds more than the float and a vast majority of all shares... and yet the entire float is also registered with Computershare?
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on October 29, 2021, 07:49:31 PM


/r/superstonk have come up with the bright idea to remove the Street name position from Cede & Co. and place it with Computershare through the DTCC Direct Registration (DRS) system.  The only thing this will achieve is high fees for themselves and make the shares illiquid as they are moved around.  Even if a few percentage of a company shares are moved to Computershare the vast majority of all  stocks shares are still held by Cede & Co..

And what if more than 100% of the float gets directly registered and there's still millions of shares held by Cede & Co.?
DTCC holds the vast majority of all issues, like 90%+.  There is no way these "apes" could even move a few percentage out of Cede & Co..  Pure fantasy.

Oh, I'm saying if Cede and Co. still holds more than the float and a vast majority of all shares... and yet the entire float is also registered with Computershare?
You are not going to get but a small percentage to Computershare. 

Mutual funds, ETFs, Institutions are not moving their positions out of Cede  & Co., it simply will not happen, and they hold most of the shares.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 30, 2021, 03:03:31 AM
So when the same person claims that "apes" have clout and staying power, it's hard to trust that claim.  To me it's another failed point in an article that ignores context and makes leaps that are not justified by the information presented.
What is your explanation on why the price remains at $180 nine months later instead of being back down to, say, $50?

Same thing I said earlier:
GameStop's price was determined by the short squeeze at the start of 2021, not by it's plans for digital transformation.  GME is a meme stock with a price decided by WallStreetBets.
...
If WallStreetBets abandons GME, and analysts provide price targets based on company fundamentals, the stock price would drop sharply.  That already happened at the last quarterly meeting - a stock price drop, followed by a rescue from WallStreetBets.  If GME ever trades on fundamentals again, the stock price will drop quickly.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on October 30, 2021, 08:24:41 AM


So when the same person claims that "apes" have clout and staying power, it's hard to trust that claim.  To me it's another failed point in an article that ignores context and makes leaps that are not justified by the information presented.
What is your explanation on why the price remains at $180 nine months later instead of being back down to, say, $50?

Same thing I said earlier:
GameStop's price was determined by the short squeeze at the start of 2021, not by it's plans for digital transformation.  GME is a meme stock with a price decided by WallStreetBets.
...
If WallStreetBets abandons GME, and analysts provide price targets based on company fundamentals, the stock price would drop sharply.  That already happened at the last quarterly meeting - a stock price drop, followed by a rescue from WallStreetBets.  If GME ever trades on fundamentals again, the stock price will drop quickly.

Yeah.

"If WallStreetBets abandons GME"

And that article is about how apes have stuck with it for 9 months and not to bet against them.

I don't see those ideas in conflict.

E.g. you're saying it is priced where it is cause internet mob ("apes"). That article says not to bet against apes sticking it out.

I'm tentatively agreeing with the article with the proof that the price is still $180, not $50.

Your quoted paragraph seems to agree. IF they abandon it...

But they haven't. Will they? Maybe. Maybe not. I wouldn't bet on it at this point.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on October 31, 2021, 03:08:12 AM


So when the same person claims that "apes" have clout and staying power, it's hard to trust that claim.  To me it's another failed point in an article that ignores context and makes leaps that are not justified by the information presented.
What is your explanation on why the price remains at $180 nine months later instead of being back down to, say, $50?

Same thing I said earlier:
GameStop's price was determined by the short squeeze at the start of 2021, not by it's plans for digital transformation.  GME is a meme stock with a price decided by WallStreetBets.
...
If WallStreetBets abandons GME, and analysts provide price targets based on company fundamentals, the stock price would drop sharply.  That already happened at the last quarterly meeting - a stock price drop, followed by a rescue from WallStreetBets.  If GME ever trades on fundamentals again, the stock price will drop quickly.

Yeah.

"If WallStreetBets abandons GME"

And that article is about how apes have stuck with it for 9 months and not to bet against them.

I don't see those ideas in conflict.

E.g. you're saying it is priced where it is cause internet mob ("apes"). That article says not to bet against apes sticking it out.

I'm tentatively agreeing with the article with the proof that the price is still $180, not $50.

Your quoted paragraph seems to agree. IF they abandon it...

But they haven't. Will they? Maybe. Maybe not. I wouldn't bet on it at this point.
I thought the implication was if this situation has held for 9 months, don't bet against it now, because that will continue.  The article does limit itself to "now" though, so I think we're in agreement: Will they?  Won't they?  We don't know.

Which begs the question, why invest in something that requires WallStreetBets to keep the price up?  When analysts get quarterly reports, their pessimism triggers selling that sends the stock price down.  Then WallStreetBets buys it back up.  You can look at the past couple quarterly reports to see what I mean - but you'll need to look at the few days surrounding the quarterly report of GME.

What I see currently is a stock going nowhere.  When will WallStreetsBets investors agree?  I'll guess.  I often see financial news use 12 month performance, even when they're measuring from Mar 2020 during the panic.  So maybe March 2022, GME's 12 month performance is going to look lousy.  That might be the next gut check for WallStreetBets.

For now, though, I don't expect GME stock to be that interesting until it's next quarterly meeting, in early December.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 02, 2021, 11:45:23 PM
So what do people who are not on the GME train think of the movement of the past few days?

Essentially 180 (bottom of 173ish) last Wednesday opening to 219 (today's after hours). 20% climb on zero news? (Okay, one piece of news, on Friday it was announced the COO left--which most media pieces said was bearish for the company. BUt the stock climbed before that, and after.)

Do you think the Reddit crowd all randomly (or with some coordination) decided to start buying more and pump it up again?

I think we all have already agreed that the stock is not trading on any sort of fundamentals.

Where we disagree is that you (specifically M&1/2, but other skeptics as well) think it's just propped up by the internet crowd and nothing else is going on, whereas I think there's more afoot.

Going from 207 to 219 (+5.8%) after hours today.. why? I don't think it's the Reddit crowd randomly buying a whole bunch after hours or something.

IMO, it is manipulated to hell because of these short sellers, and at some point the day of reckoning squeeze is coming. They kick the can down the road, but can only do so for so long.

These sort of days, like the crazy day in March and such with the multiple trading halts, are the things that give anecdotal evidence to the theories, in my mind.

I think it'll head back to $300 before it hits $100 again.

We'll see.


EDIT: BBBY is up 80%+ after hours due to an announced stock buyback plan. This created a lift for all "meme" stocks which have traded in strongly correlated tandem, with speculation that they're all in a basket/ETF together certain hedge funds are shorting.  BBBY going up caused a runup on the others as well.
Title: Re: GME deathwatch - how to profit?
Post by: boarder42 on November 03, 2021, 05:19:35 AM
i think its white noise and its why i don't trade individual stocks or assets anymore.  BBBY is making me money now too hopefully it prices it self out of the small value sector and i can take my profits and run like i did with GME. 

Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on November 03, 2021, 07:14:22 AM
I don't see GME as being in a short squeeze again, which short interest being only 12.2% of float. I am unpersuaded by claims that there is secret short interest out there, but I also don't have an explanation for why this isn't a $15 stock. Like @MustacheAndaHalf I am wary of betting any money on the long-term continuation of an internet fad, because I've seen a lot of internet fads.
https://shortsqueeze.com/?symbol=gme&submit=Short+Quote™ (https://shortsqueeze.com/?symbol=gme&submit=Short+Quote™)

BBBY, however, may be explained as a short squeeze. Its short shares are >27% of the float. They just announced a deal to sell their products in Krogers and via a website.
https://shortsqueeze.com/?symbol=bbby&submit=Short+Quote (https://shortsqueeze.com/?symbol=bbby&submit=Short+Quote)

BBBY is buying back stock despite a balance sheet that is bleeding free cash flow and equity, and massive negative earnings, so I suspect the executives are trying to pump up the stock price up so they can cash out. I wonder how many options were tied to Q4 2021? These 3 announcements hit all at the same time because management wanted to sock it to the short sellers, and grab the cash themselves. I wish I had a bug in that boardroom.

What's really interesting about the BBBY short squeeze is just how pedestrian management's new ideas are. If supplying Kroger was the path to riches, we should all rush to buy Kraft or General Mills. If a website offering third-parties a chance to sell was the deal, WalMart has positive earnings and will likely crush BBBY in the long run. And if borrowing money to buy back stock and leverage to the sky with negative earnings was a smart move... you get it.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 03, 2021, 08:53:40 AM
I don't see GME as being in a short squeeze again, which short interest being only 12.2% of float. I am unpersuaded by claims that there is secret short interest out there

I am persuaded.

Quote
but I also don't have an explanation for why this isn't a $15 stock.

Thanks for saying so. I think the explanation for why it isn't $50 is the internet mob not selling. But that isn't an explanation for the odd price movements, and I think short hedge fund fuckery is the only explanation for that.

Today's movement, for example.

The rest of your post was about a BBBY squeeze... But why is GME, AMC, BB, etc. all also moving in concert?

Today's market for meme stocks:
(https://forum.mrmoneymustache.com/index.php?action=dlattach;topic=120407.0;attach=75674;image)

I think it's because all the meme stocks were shorted together in one "basket" via portfolio swaps and covering on BBBY has caused those to rise as well.

A few random links on this concept (literally just searching meme basket, so these aren't curated just a few discussing the idea):
https://www.reddit.com/r/DDintoGME/comments/pgnbru/a_deep_dive_into_the_basket_of_meme_stock_swaps/
https://www.reddit.com/r/Superstonk/comments/pbmcww/quanting_support_for_ucriands_latest_masterpiece/
https://www.reddit.com/r/Superstonk/comments/pb22oj/the_puzzle_pieces_of_quarterly_movements_equity/

It's this sort of weirdness that makes me think there is more afoot than random internet mob doing things.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on November 03, 2021, 12:01:36 PM
After months of GME going nowhere, I closed my short calls a week before the stock price spiked.  While I left open the possibility of speculating on GME again, I haven't marked my calendar for the next quarterly meeting.  Maybe I'll watch from afar, with no GME holdings (outside index funds).


I am unpersuaded by claims that there is secret short interest out there, but I also don't have an explanation for why this isn't a $15 stock.
During the GME meme craze (meme-stop?), GameStop amassed more cash by selling shares.  They're sitting on about $3.35 billion (Sept 2021), which comes out to about $44/share in cash.  Which is good news for GME bulls, because that's enough money to fund a transformation.

But I think GameStop is too late to be a big player in NFTs.  They're still hiring a team while their competition already have marketplaces and celebrity endorsements.


I think it's because all the meme stocks were shorted together in one "basket" via portfolio swaps and covering on BBBY has caused those to rise as well.

A few random links on this concept (literally just searching meme basket, so these aren't curated just a few discussing the idea):
https://www.reddit.com/r/DDintoGME/comments/pgnbru/a_deep_dive_into_the_basket_of_meme_stock_swaps/
I should just ignore that and the link, but it's such an unusual concept I'm curious about it.  A basket of meme stocks means that GME and KOSS will move together.  Look at the 6 month stock price moves, especially the start of June.  GME spikes 3 times, but KOSS only joins it for the middle spike in price.  Why did KOSS drop back down while GME spiked again?  But take a look for yourself (YTD):
https://finance.yahoo.com/quote/GME/
https://finance.yahoo.com/quote/KOSS/

So I didn't get far in the basket of meme stocks theory, because I didn't see enough correlation in their stock prices to consider them linked.  Is there a group of stocks that serve as a better example?  I'm skeptical, but curious.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 03, 2021, 12:33:15 PM
You can see some in my screenshot.

The second link above talks about their correlation.

Or look at some of the links in this comment on that thread:
https://www.reddit.com/r/Superstonk/comments/pbmcww/-/hacu7qg

This is the original post of the theory:
https://www.reddit.com/r/Superstonk/comments/p37osl/are_futures_or_swaps_the_secret_sauce_to_price/

Give me any reason why BBBY announcing a store partnership and stock buyback causes a spike in these completely unrelated meme stocks. Yesterday AH movements and today's movements are very strong evidence for this theory (beyond various months of similar movement).

Just like I can find no other reasonable explanation for $340->$180 in minutes on March 10, I can find no other explanation why a stock in a totally unrelated industry makes a half dozen others move in concert.

Short hedge funds doing their thing is the only explanation I've found that makes sense.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on November 03, 2021, 02:31:58 PM
So what do people who are not on the GME train think of the movement of the past few days?

Don't know what the value has been for weeks or months, mostly don't care.

I bought 2 shares briefly to be a part of the meme and maybe see if it got crazy quickly. Once I got tired of checking it daily or multiple times a day, I sold for a $200 or so loss. While I held it I spent tons of time thinking about exit strategy and whether I might consider buying more, and checking stuff online about it. Then I offhandedly liquidated $10k of my index funds without thought because I needed to top off my monthly expenditures bank accounts. I'm more of a "set it and forget it" investor and a "stick to a plan" investor.

I'm fascinated by the constant hopping from one foot to another as to why this stock is both secretly mega-shorted *and* has a promising future that will make the current value worth it. I mean beyond the fact that fundamentals has no support for this price, if it's still as high as the chatter seems to indicate.

For the "stick it to the short sellers" angle, that requires knowing when to move in and out, and I don't want to pay that much attention to the stock for this long! Also, if you miss your sell window you then lose out.

For the promising future angle, I guess I'd rather try angel investing than jumping into GME. It's kind of analogous. Yeah they got a cash infusion and some new leadership. That's a startup company, basically. Some weird hybrid of angel investing and an IPO.

For the crypto angle...<sigh>...I probably should keep my mouth shut, but crypto seems crazy to me. Or at the very least fad-driven. I mean I think conceptually it's very intriguing, but literally anybody can create a new cryptocurrency, and as far as I can tell NFTs are tied to one type of cryptocurrency.

And I still don't get why more folks haven't taken blockchain and used it to more cheaply do money wires and EFTs on a large-transaction basis. (For actual government-backed fiat currency transactions.) Or at least tried to apply it to a retail POS situation which would need to be done for cryptocurrency to be actually useful currency in the first place.

For a comparison overhyped stock, I think Tesla as a company is well poised to dominate the EV market, especially trucking. But I have absolutely no idea if TSLA is a good investment, because the company's success and the stock price have left typical fundamentals are are in hype mode. So I haven't touched TSLA directly even though I'm high on their future as a company.

Edit: I *will* say I find NFTs very intriguing *for content/media creators*. And if people are willing to pay a premium for an NFT, I liken that to collectibles like Beanie Babies or any other collectible. Ok, fine. I just have tons of doubt about the endurance of any given cryptocurrency as they exist today.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on November 03, 2021, 06:34:26 PM
@arebelspy these are some interesting thoughts, but because the actual swaps are hidden from everyone's view we are still speculating on their existence. We're also speculating that

I have a question based on a claim made at https://www.reddit.com/r/Superstonk/comments/pb22oj/the_puzzle_pieces_of_quarterly_movements_equity/ (https://www.reddit.com/r/Superstonk/comments/pb22oj/the_puzzle_pieces_of_quarterly_movements_equity/)


Quote
1) Melvin and other SHFs buy up ITM CALLs with low OI so that the counterparties are guaranteed.
2) Melvin and other SHFs exercise the ITM CALLs to obtain synthetic shares from the counterparty (Citadel, Virtu).
3) Melvin and other SHFs deliver the shares to the clearing house to close out of their original short position.
4) By delivering synthetics through the ITM CALLs, the counterparty (Citadel, Virtu) is now net short the trade and must hedge the short position to avoid forced buy-ins.
5) Melvin and other SHFs open Equity Total Return Swaps with the counterparty to reposition their shorts and still have short exposure - only this time, the shorts aren't on their balance sheets.
6) Short Interest drops because it is no longer reported on the SHFs balance sheet. Rather, it's on the broker-dealers who have special privileges for the sake of liquidity.
7) Counterparties open up DOOMPs to hedge these synthetics/Equity Total Return Swaps.
8) If the stock goes up, the SHFs are still screwed because they are "short" through the derivative exposure. Citadel and Virtu are also screwed by taking on the bag. Why would they do this and take the risk? They probably already have bags with other Equity Total Return Swaps or are involved in them through their own Hedge Funds.

And thus, it is a fake-out that the squeeze is "over".

My question is why "Melvin and other SHFs" would take step #5 to bail out their counterparties, when they could just meet their obligation  per step #3 and walk away from the trade? Is covering the counterparty's short exposure hypothesized to be a term of the deal if they pay back their exposure in swaps from the counterparties rather than shares? This is another moving piece in the theory that is invisible / without evidence, and Occam's razor does not like such hypotheticals. Why not just say the counterparties now have the short exposure?

My other question is why Citadel took a $2B stake in Melvin (which they are now starting to unwind). How much of Melvin's short exposure was paid for by this transaction, and no longer exists? Why is this dynamic not part of the narrative of what happened, as big a deal as it is?

If your reasoning is correct, it would be fairly safe to sell a near-the-money put on GME and earn 10% within the next 30 days. Are you doing it?
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 03, 2021, 07:11:41 PM
@arebelspy these are some interesting thoughts, but because the actual swaps are hidden from everyone's view we are still speculating on their existence.

Agreed. I don't know anything. All of my thoughts are opinions, not financial advice.

Quote
My question is why "Melvin and other SHFs" would take step #5 to bail out their counterparties, when they could just meet their obligation  per step #3 and walk away from the trade?

I think Citadel is both sides of the transaction; different arms of citadel are both parties, and they are very short GME through this method.

Quote
My other question is why Citadel took a $2B stake in Melvin (which they are now starting to unwind). How much of Melvin's short exposure was paid for by this transaction, and no longer exists? Why is this dynamic not part of the narrative of what happened, as big a deal as it is?

I think Citadel bailed out Melvin because Citadel was very short GME and if Melvin failed their margin call, GME keeps going up, hurting Citadel. So Citadel stepped in to bail out a smaller HF to protect themselves.

Quote
If your reasoning is correct, it would be fairly safe to sell a near-the-money put on GME and earn 10% within the next 30 days. Are you doing it?

I don't know what the stock will do in the short term (30 days). Or middle term. I do believe there are lots of outstanding shorts and it will squeeze at some point. In the meantime, the price movements are hard to guess, it's a very manipulated stock. One thing I have said for awhile as far as predictions is that it'll hit 300 again before it hits 100 again, and I still believe that. My position is long GME.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on November 04, 2021, 07:26:58 AM
You can see some in my screenshot
The screenshot had no dates or prices.  I ignored it because that's not informative.  I did peek at GME and KOSS, and figured out that's a two day view.  There's lots of reasons stocks can move at the same time, like when Nike announced results and numerous other stocks moved.  Analysts updated their assumptions about all stocks based on what they learned from Nike's results.

More importantly, how does it help you speculate on GME?  Knowing that several stocks have some higher chance of moving at the same time, how you you invest differently?


Give me any reason why BBBY announcing a store partnership and stock buyback causes a spike in these completely unrelated meme stocks. Yesterday AH movements and today's movements are very strong evidence for this theory (beyond various months of similar movement).
"Bed Bath & Beyond announced the launch of a digital marketplace that will sell goods from third-parties"
https://www.cnbc.com/2021/11/02/bed-bath-beyond-shares-soar-more-than-50percent-after-news-of-kroger-e-commerce-partnership.html

I think a better way for you to argue this would be to say "isn't the main reason it's moving because of the short squeeze?".  And the article would agree with you, because it states BBBY is more shorted than any other stock in the U.S.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 04, 2021, 07:31:04 AM


You can see some in my screenshot
The screenshot had no dates or prices.

You weren't asking for that. You were asking for tickers, which it had, and why I referenced it again.

Further, it said right before the screenshot that it was a picture of "Today's market". You can see the date on the post. It was opening bell to the time I made that post.

Yes, BBBY moved up because of potential squeeze.

Why does that make GME move up? Why does it make AMC or BB move up?

As for how does it affect my buying GME, as I said, it gives evidence to the theories about the short hedge funds.
Title: Re: GME deathwatch - how to profit?
Post by: LetsRetireYoung on November 05, 2021, 08:47:31 PM
The screenshot had no dates or prices.  I ignored it because that's not informative.
You can lead a horse to water... ;) @arebelspy already pointed out that it was a single-day screenshot. That was apparent in less than 20 seconds after I saw it.

But even if that screenshot were for 1 week or 1 month or 1 year, that would've made his point even more. Isn't it really damn fascinating how all those unrelated tickers have a virtually identical chart? They move up and down in near-perfect unison, and that's not the first time that happened.

The "meme basket" theory is not a conspiracy theory. Hell, we live in a post-conspiracy-theory universe. In our universe, the journalist who broke the Panama Papers story got killed with a car bomb. Angry rednecks stormed the Congress after being given tours of the building by actual government officials. JP Morgan spent half of the last decade manipulating the price of precious metals, and got slapped with a tiny fine. All of those are wild, crazy things - and all of them have actually happened.

Given all that, is it really so hard to believe that someone on Wall Street decided to lump a lot of meme stocks together to create synthetic CDOs or some similar product that they could pass on to their clients? Because to me, that sounds a lot less outlandish than an angry international money-laundering community killing a journalist with a car bomb. ¯\_(ツ)_/¯


As for my own GME involvement (and to keep this post on topic haha), I got into GME early on, in January, just before the big squeeze (I spent the weekend reading their DDs; their math checked out), and made 293% in 2 days. :) Since then, I would swoop in for an occasional swing trade: so far this year, I've successfully traded it 10 times, though with far smaller returns haha. Right now, I hold 100 shares at $169 cost basis, which I used to sell a 195c covered call for 11/05. (I did not see this spike coming.) I rolled them into 11/12 for a few more hundred dollars. The unholy combination of idiotic apes and some really big hedge funds appears to be dead set on holding the floor at or near $150, so it makes for a pretty good source of covered call profits. That call will likely get exercised next week, but everything is cyclical: I'll just buy it again on the downswing...
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on November 05, 2021, 10:52:46 PM
You can see some in my screenshot
The screenshot had no dates or prices.
You weren't asking for that. You were asking for tickers, which it had, and why I referenced it again.

Further, it said right before the screenshot that it was a picture of "Today's market". You can see the date on the post. It was opening bell to the time I made that post.
You claim to know what I asked, but won't quote me?  I asked for stocks that are better examples of correlation, as others can see from my earlier post, below.

So I didn't get far in the basket of meme stocks theory, because I didn't see enough correlation in their stock prices to consider them linked.  Is there a group of stocks that serve as a better example?  I'm skeptical, but curious.

So I didn't just want random stocks, I wanted examples of correlation.  Before the definition gets distorted, here's what asset correlation means:
"Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other."
https://www.investopedia.com/terms/c/correlation.asp

Portfolio Visualizer provides an "asset correlation" screen where you enter stock symbols, dates, and correlation approach.  I used 2021 YTD, 20 day rolling period, and daily correlations (36 months would be odd for YTD correlations).
https://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=VTI+VXUS+VWO+BND+GME+KOSS+BB+AMC+BBBY+PFE+CCL&startDate=01%2F01%2F2021&timePeriod=1&tradingDays=20&months=36

Why include BB and AMC on a list, when they are not correlated to GME?  Looking at YTD asset correlations, they are not correlated to GME at all.

I expect the claim that one day shows correlation - can you only invest on that one day?  You haven't said how this lets you invest better, knowing they moved together one day.  One day does not prove correlation - especially when WSB is deliberately manipulating their prices to cause a short squeeze.

I included PFE and CCL on the list, and you'll notice CCL has a negative correlation to PFE.  Yet Friday, both stocks had unusually strong gains.  So are they suddenly correlated stocks?  No, Pfizer impacted hundreds of stocks by announcing it had proven it's Covid-19 treatment is 89% effective.  Carnival Cruises can sail again more safely, airlines will have more passengers, hotels more guests, etc.


Asset correlation is measured over time, not on just one day.  Stocks can move together for one day despite being negatively correlated (PFE, CCL).  The meme stocks are being manipulated by WallStreetBets, yet still most of those stocks are not correlated with each other.
Title: Re: GME deathwatch - how to profit?
Post by: LetsRetireYoung on November 06, 2021, 01:35:21 AM
You claim to know what I asked, but won't quote me?  I asked for stocks that are better examples of correlation, as others can see from my earlier post, below.
I replied to your then-most-recent comment, in which you erroneously claimed that the screenshot had no date. That was objectively false.

Why include BB and AMC on a list, when they are not correlated to GME?  Looking at YTD asset correlations, they are not correlated to GME at all.
Actors that star in the same movie don't spend all day every day together. They only need to be together for one scene. If you had actually bothered to look, you would see that on the individual days with the biggest moves (up or down), those stocks move in unison.

Quote
I expect the claim that one day shows correlation - can you only invest on that one day?
Yeah, no, now you're just trolling. Farewell.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on November 06, 2021, 03:54:32 AM
You claim to know what I asked, but won't quote me?  I asked for stocks that are better examples of correlation, as others can see from my earlier post, below.
I replied to your then-most-recent comment, in which you erroneously claimed that the screenshot had no date. That was objectively false.
Naturally, you're misquoting me, so if you want to nitpick over a meaningless point, I said "dates".  One date is not "dates".  There's no date range, showing correlation over time.  Not that I was even replying to you, but here's the quote you didn't use:

The screenshot had no dates or prices. 

And as usual, my entire post is about asset correlations, and the reply says nothing about asset correlations.  Instead there's an irrelevant metaphor about actors, which has nothing to with asset correlation.  I even provided a definition, because I knew in advance the reply would not mention asset correlation.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on November 15, 2021, 08:16:02 AM
As most people here have said, GME is not trading based on fundamentals but if you treat gamestop as a SPAC startup with an incredible team of ex-amazon, ex-chewy, ex-walmart execs who now joined GME. We are more likely than not going to see some very interested innovation and speculation as in the long-term gamestop will trade as an ecommerce / tech company PE level. $800 / share will be considered "underpriced" given all this info in mind. Feel free to visit www.gmedd.com for more information, $169 is the bull case stock price according to their analysis.
If GME is going to $169, I suppose it's a short at $202.

My next thought (a bigger question than GME) is what a reasonable valuation should be for a SPAC? Why should a SPAC be worth more than the sum of its assets? The theory is that a SPAC can purchase a company and make it more valuable by listing it on the public markets or providing the infrastructure for dirt-cheap bond issues. In this process, SPACs can do an end-run around the investment banks by getting themselves organized  and on the markets while they and their costs are small, and then scaling up with investor dollars to save some small tech company a ton of traditional listing and underwriting fees (remember the reverse mergers by Chinese companies?). However, mergers are usually paid for at a premium to stock prices, so why not just buy stocks or private equity? If you buy companies already on the markets, you avoid the risk of overpaying for a SPAC which is basically a shell business paying a bunch of liabilities to exist. If you go the private equity route, you lose liquidity but get shares at a discount, and if the company is bought by a SPAC someday, you get that premium too. To pay a premium for a SPAC is to give up the premium earned by all the shareholders who benefit when a company obtains liquidity, right?

Of course, GME is not really a SPAC. They've been listed and liquid for years. The SPAC thing is a metaphor for handing over wads of cash in the hopes that someone who knows better than you finds a special way to spend it. GME has vaguely articulated plans regarding NFTs and economic transfers within games, but the tech world is full of potentially multi-billion dollar ideas, only a tiny fraction of which will ever earn a profit. What makes GME special? The argument is they've hired (thrown money at?) a lot of talent with the proceeds from their stock sale, and so they're bound to come up with something cool. Maybe they will, and maybe they won't, but at these valuations it seems more likely Microsoft is going to hit it out of the part with Windows 11.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 15, 2021, 03:08:22 PM
I think most of the spac stuff is GME investors being wishful.

I do think if book value is $55 they are worth some multiple of that based on some of the potential (especially around etfs. I do think they're doing some interesting things with the Blockchain and loopring, and we'll see announcements around that soon), but idk what that price would be. I don't really care.

I do think it's overvalued on a fundamental basis unless you like speculating on up and coming technology; I think GameStop is more than a brick and mortar now.

But--more important to me--I also think there's clear evidence of weird stuff going on with the stock and price manipulation that makes it a good speculation opportunity because of a potential squeeze. I continue to be long GME for this reason.

The next prediction is a jump up in price next week, around the 23rd, perhaps +/- one day.

Let's see, shall we?
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on November 15, 2021, 04:41:27 PM
The next prediction is a jump up in price next week, around the 23rd, perhaps +/- one day.

Let's see, shall we?

Seems like a good opportunity for you to test a falsifiable hypothesis.

What could happen on 11/22 - 11/24 with the stock price that is measurable and objective that would mean you were wrong?

And if there is nothing, that's an interesting place to be intellectually.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 15, 2021, 04:43:05 PM
I expect a climb of, say, 15%+ on or around that day, on no news.

If I'm wrong, it will be flat or down or only slightly up (say, like today's 3% move).

Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on November 15, 2021, 05:00:56 PM
I expect a climb of, say, 15%+ on or around that day, on no news.

If I'm wrong, it will be flat or down or only slightly up (say, like today's 3% move).

Seems testable enough.  Good luck.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 22, 2021, 02:15:03 PM
I expect a climb of, say, 15%+ on or around that day, on no news.

If I'm wrong, it will be flat or down or only slightly up (say, like today's 3% move).

When I posted this one week ago, GME had just closed at 209.14 (after opening at 203.86, up 2.6% on that day).

Today, a week later (one day before my prediction, but within the +/- one day range I gave) it closed at 247.50, an increase of 8.17% for the day and an increase of 18.34% since this post a week ago.

But--more important to me--I also think there's clear evidence of weird stuff going on with the stock and price manipulation that makes it a good speculation opportunity because of a potential squeeze. I continue to be long GME for this reason.

This remains true. It is not a normal stock.

The most benign explanation is hype feeding into itself--it becomes a known date, so more people buy right before that date, leading to a self-fulfilling prophecy. I don't think this is a sufficient explanation for what we've seen the last 10 months, and the fairly reliable, predictable movements.

I will admit it hasn't done the single day jump I claimed, but I also think there will be more action tomorrow, my prediction date.

Even if it doesn't do the single day 15%+ jump like I predicted, as they spread the covering over the last few days to not have a big one day jump, I'll leave it to you guys to judge the prediction. If it goes up again and ends up +25% since the prediction 8 days before, well, I think it'd be hard to call that a failure.

Normal stocks don't move 18% in one week on zero news/rumors, right?

Looking forward to tomorrow

As before:
Let's see, shall we?
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on November 22, 2021, 03:37:14 PM
I expect a climb of, say, 15%+ on or around that day, on no news.

If I'm wrong, it will be flat or down or only slightly up (say, like today's 3% move).

Seems testable enough.  Good luck.

After I wrote the above, I had second thoughts.

There's plenty of wiggle room in the above prediction:  the time frame is a few days, there is a wide gap between 3% and 15%, and there is also a prediction about news.

What if there's some news and an 8% increase?  What if there's important news and a 1% increase?

I think there are enough moving parts and wiggle room in the prediction that we'll see some more posts like the one immediately above.  In other words, my prediction is that no matter what happens, ARS, you'll find a way to justify your thinking that your current theory is correct.

That's normal.  Humans don't like to be wrong, thus we have the cognitive error of confirmation bias.  I'm just a bit sad, though, as I don't think long term that you're going to be proven to be right about GME.  Perhaps I have my own confirmation bias, since I don't own any GME except as perhaps a tiny sliver in my index funds.

Good luck anyways.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 22, 2021, 03:44:14 PM
Perhaps.

One thing I think I am fairly good at is admitting when I'm wrong. Eventually, I may have to do that here.

If the stock were lower COB tomorrow than I was when I made that prediction with no significant jump, I was planning to make a post saying I was wrong. I don't know if you think I would have come on here and made some excuse/justification were that the case? Or even if we don't get a big jump tomorrow, I will still be wrong.

You're right that predictions often have wiggle room, but that was not intentional here, nor was the above post to claim any sort of victory (premature or not). As I said, I'll leave you all to judge the conclusion of that. I don't think it's been fulfilled yet.

The price movement is interesting to me, though. We'll see.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on November 22, 2021, 04:04:26 PM
Perhaps.

One thing I think I am fairly good at is admitting when I'm wrong. Eventually, I may have to do that here.

If the stock were lower COB tomorrow than I was when I made that prediction with no significant jump, I was planning to make a post saying I was wrong. I don't know if you think I would have come on here and made some excuse/justification were that the case? Or even if we don't get a big jump tomorrow, I will still be wrong.

You're right that predictions often have wiggle room, but that was not intentional here, nor was the above post to claim any sort of victory (premature or not). As I said, I'll leave you all to judge the conclusion of that. I don't think it's been fulfilled yet.

The price movement is interesting to me, though. We'll see.

Eh.  Overall, I'm just watching and eating popcorn over here.

It seems to me that you want to believe, and it seems that a lot of (most of? didn't count them) your sources are reddit threads and posts.  I personally don't have a lot of respect for reddit as a source of wisdom.  And some of the aspects of your theory, as we've discussed previously, don't match my understanding of how shares of stock are held.

I guess I would think that the most likely outcome is that whatever happens over the next day or two will end up being neither a slam dunk confirmation of your prediction nor an abysmal failure that all could agree on.  And I think that whatever middling result happens, you'll be more likely than not to continue to hold to your opinion and your stock.

We all pays our money and takes our chances.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on November 23, 2021, 07:20:20 AM
It doesn't match my understanding of stocks either.  But it's been insanely priced for like 11 months now.

(https://c.tenor.com/h2Lr3UkguCEAAAAC/somethings-fucky.gif)
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on November 23, 2021, 10:26:39 AM
It doesn't match my understanding of stocks either.  But it's been insanely priced for like 11 months now.

Heh.  I meant that some of ARS's explanations (which he's passing along from reddit in this particular part IIRC) about how certain market participants can create and sell short doesn't comport with my understanding of the underlying mechanisms of how shares of stock are tracked.  I continue to believe that it is not possible for there to be more shares outstanding than actual shares outstanding.  I think that there are market rules, and possibly SEC rules, that prevent otherwise.

But I've already expressed my thoughts, opinions, and arguments in favor of them earlier in this thread, and they were not persuasive.  So here I sit and eat my popcorn.
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on November 23, 2021, 10:34:33 AM
It doesn't match my understanding of stocks either.  But it's been insanely priced for like 11 months now.

Heh.  I meant that some of ARS's explanations (which he's passing along from reddit in this particular part IIRC) about how certain market participants can create and sell short doesn't comport with my understanding of the underlying mechanisms of how shares of stock are tracked.  I continue to believe that it is not possible for there to be more shares outstanding than actual shares outstanding.  I think that there are market rules, and possibly SEC rules, that prevent otherwise.

But I've already expressed my thoughts, opinions, and arguments in favor of them earlier in this thread, and they were not persuasive.  So here I sit and eat my popcorn.

Yeah, that stuff doesn't make sense to me either. 

(https://y.yarn.co/94da2dd2-65f1-4cc0-b96a-de3331615642_text.gif)
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on November 23, 2021, 12:12:24 PM
While I disagree with ARS, and planned to eat popcorn (I no longer have any GME exposure outside ETFs), ARS has a point about fake shares.  It's known as "failure to deliver", and is not just a reddit conspiracy - the SEC provides data on it.
https://www.sec.gov/data/foiadocsfailsdatahtm

While wikipedia and investopedia explain failure to deliver, I looked for a higher quality news source, and found Bloomberg news:
Quote
On Jan. 28, the day after GameStop Corp. mania hit its crescendo on the back of a short squeeze for the record books, about $359 million worth of shares were caught in limbo.

More than 1 million shares were deemed failed-to-deliver that day due either to buyers lacking cash to complete purchases or sellers not having the shares to settle trades, according to U.S. Securities and Exchange Commission data.
https://www.bloomberg.com/news/articles/2021-02-17/sec-data-show-359-million-of-gamestop-shares-failed-to-deliver

My take is this:
"failure to deliver": $359 million, 10 months ago
monthly GME trade volume: $19,194 million or 53x as much every month.

I think the original failure to deliver is noise compared to the trading volume since then.  But failure to deliver does happen, as shown by both SEC.gov and Bloomberg.
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on November 23, 2021, 01:32:51 PM
... I continue to believe that it is not possible for there to be more shares outstanding than actual shares outstanding.  I think that there are market rules, and possibly SEC rules, that prevent otherwise.
It is totally possible.  You have shares in a margin account, that means you agreed to have the broker loan your shares if they want to.  So you buy X, broker lends those shares for a short sale, I come and buy the shorted shares for my margin account.  My broker then lends them and the process repeats.  There is no mechanical limit on how many times this can be repeated.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on November 23, 2021, 01:50:14 PM
... I continue to believe that it is not possible for there to be more shares outstanding than actual shares outstanding.  I think that there are market rules, and possibly SEC rules, that prevent otherwise.
It is totally possible.  You have shares in a margin account, that means you agreed to have the broker loan your shares if they want to.  So you buy X, broker lends those shares for a short sale, I come and buy the shorted shares for my margin account.  My broker then lends them and the process repeats.  There is no mechanical limit on how many times this can be repeated.

Yes, I've already been down that road earlier in the thread.  People didn't agree with me then, and you don't agree with me now.  I'm fine with that.  (If you're really interested in my point of view and reasoning, I believe I laid it out earlier in the thread.)
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on November 23, 2021, 01:55:24 PM
Yes, I've already been down that road earlier in the thread.  People didn't agree with me then, and you don't agree with me now.  I'm fine with that.  (If you're really interested in my point of view and reasoning, I believe I laid it out earlier in the thread.)
The rule makers would need to issue a rule saying if more than 100% of float is shorted then no more shorting.  But no rule currently exists.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on November 23, 2021, 02:37:13 PM
My prediction for today's movement was very wrong.

Final result was basically opposite of what I said: -13.59%.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on November 24, 2021, 12:06:06 AM
"GameStop Corp. (NYSE: GME) (“GameStop” or the “Company”) today announced that it will report third quarter fiscal 2021 earnings results after the market closes on Wednesday, December 8, 2021"
https://news.gamestop.com/news-releases/news-release-details/gamestop-announces-release-date-q3-2021-financial-results
Title: Re: GME deathwatch - how to profit?
Post by: frugalnacho on November 24, 2021, 07:39:11 AM
My prediction for today's movement was very wrong.

Final result was basically opposite of what I said: -13.59%.

(https://c.tenor.com/JxhSGIzFrNwAAAAC/dumb-and-dumber-samsonite.gif)
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on November 30, 2021, 08:48:19 AM
https://finance.yahoo.com/news/robinhood-others-win-dismissal-meme-192120340.html

"(Reuters) -A U.S. judge dismissed a lawsuit accusing Robinhood Markets Inc and other brokerages of wrongly preventing retail investors from buying fast-rising "meme stocks," triggering a sell-off.

In a decision on Wednesday, Chief Judge Cecilia Altonaga of the federal court in Miami found no proof of an illegal conspiracy to cut off social media-fueled trading of GameStop Corp, AMC Entertainment Holdings Inc, Bed Bath & Beyond Inc and six other stocks."
Title: Re: GME deathwatch - how to profit?
Post by: DaTrill on November 30, 2021, 06:43:16 PM
The best way to profit from the GME show is to sell popcorn.  Any rational reason for the price left the barn last year. 
Title: Re: GME deathwatch - how to profit?
Post by: DaTrill on December 04, 2021, 04:12:13 PM
Framed original share certificates of GME may be worth a mint someday.

Investors who held one certificate of Enron still did well. 

https://www.bullmarketgifts.com/Enron-Corp-Stock-Certificate-p/1693.htm
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on December 08, 2021, 03:14:59 PM
GameStop shares fall as video game retailer reports widening losses in third quarter

"GameStop shares fell more than 5% in extended trading on Wednesday, after the video game retailer reported that its losses widened in the fiscal third quarter."

https://www.cnbc.com/2021/12/08/gamestop-gme-3q-2021-earnings.html

Title: Re: GME deathwatch - how to profit?
Post by: DaTrill on December 08, 2021, 05:07:16 PM
I traded a few OG "Meme" stocks in 2000.  SCON, which is trading for $2.90 today had a split adjusted high in 2000 of $60,000,000+.  There were a few other absolute rips in a few months, but can't remember or they are delisted, now the CEOs are "Crypto/NFT evangelists". 

https://www.bing.com/search?q=scon+price&cvid=5762ec243df84a30af6248b111698538&aqs=edge..69i57j0j69i64.2713j0j1&pglt=43&FORM=ANNTA1&PC=EDGEDB

This is all cryptos, Meme and NFTs today.

"Nobody goes broke taking profits" all old traders who still has money and a job.   
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on December 09, 2021, 02:40:36 PM
GameStop shares fall as video game retailer reports widening losses in third quarter

"GameStop shares fell more than 5% in extended trading on Wednesday, after the video game retailer reported that its losses widened in the fiscal third quarter."

https://www.cnbc.com/2021/12/08/gamestop-gme-3q-2021-earnings.html

I wonder what investors were expecting? Profits?
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on January 05, 2022, 06:47:10 PM
GME $129.37 down $19.54.  Super squeeze any day now...
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on January 21, 2022, 08:03:14 AM


One thing I have said for awhile as far as predictions is that it'll hit 300 again before it hits 100 again, and I still believe that.

I was wrong.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on January 21, 2022, 08:35:55 AM


One thing I have said for awhile as far as predictions is that it'll hit 300 again before it hits 100 again, and I still believe that.

I was wrong.

Somewhere a while ago I asked you for a testable prediction, which IIRC turned out to fail.  I was wondering whether you had chosen to disregard that, or if you had modified your theory, or something else.  Just curious.
Title: Re: GME deathwatch - how to profit?
Post by: Psychstache on January 21, 2022, 09:10:26 AM


One thing I have said for awhile as far as predictions is that it'll hit 300 again before it hits 100 again, and I still believe that.

I was wrong.

I appreciate the accountability, honesty, and transparency.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 21, 2022, 10:27:23 AM


One thing I have said for awhile as far as predictions is that it'll hit 300 again before it hits 100 again, and I still believe that.

I was wrong.

Then is it time to short GME? E.g. Bear Spreads?

What do you think the odds are that people will re-tread this old meme? "Visible" short interest is down to under 14% now.
Title: Re: GME deathwatch - how to profit?
Post by: DaTrill on January 21, 2022, 11:33:28 AM
Even shorts can get crushed in these markets.  There will be vicious dead cat bounces which can take out any new short without HUGE buffer.  This one is a good lesson to sit and watch the demise.  Maybe send a few bards to Apes.  Saw a personalized license plate last week "AMC Ape 3", should have taken a picture as a sign of a selloff is coming. 
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 22, 2022, 01:47:30 AM
I was wondering if inflation and higher bond yields would hurt meme stocks.

Vanguard Growth (VUG) -13% YTD
GME -28%
AMC -34%

At some point in 2022 I expect markets to get too pessimistic, and stop punishing growth stocks.  I guess then we'll find out if retail investors will keep these stocks going or not.
Title: Re: GME deathwatch - how to profit?
Post by: DaTrill on January 23, 2022, 01:46:55 PM
I was wondering if inflation and higher bond yields would hurt meme stocks.

Vanguard Growth (VUG) -13% YTD
GME -28%
AMC -34%

At some point in 2022 I expect markets to get too pessimistic, and stop punishing growth stocks.  I guess then we'll find out if retail investors will keep these stocks going or not.

These and many other stocks have fallen into margin call zone.  Once retail investors start getting market calls, the bottom falls out.  Brokers have LOC, usually hedged against these dislocations, but retail traders are not and get washed out.  it's also dangerous to short as short cover rallies after gains can be violent (PTON this week).  GME probably won't go BK as company can sell stock to idiots to pay bonds, but stock will be near $0.  GME will slowly liquidate other assets to pay salaries and drift into obscurity.         
Title: Re: GME deathwatch - how to profit?
Post by: Blender Bender on January 23, 2022, 02:21:06 PM
I was wondering if inflation and higher bond yields would hurt meme stocks.

Vanguard Growth (VUG) -13% YTD
GME -28%
AMC -34%

At some point in 2022 I expect markets to get too pessimistic, and stop punishing growth stocks.  I guess then we'll find out if retail investors will keep these stocks going or not.

Please do not put VUG next to GME or AMC. VUG i not a meme (disclaimer: i do not hold any VUG at this moment).
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on January 23, 2022, 03:03:37 PM
These and many other stocks have fallen into margin call zone.  Once retail investors start getting market [you mean margin? - BMJ] calls, the bottom falls out.  Brokers have LOC, usually hedged against these dislocations, but retail traders are not and get washed out.

Are you saying the retail apes are leveraged long? That was not my impression.

But it *is* an incredibly interesting thing to watch to see what happens with Diamond Hands HODLers as the whole market goes down. (If it does, but as one of my favorite thread tells us: top is in.)

I'm also suddenly incredibly curious to see if meme stocks and crypto will be shown to be correlated.

Editing to add:
Quote
GME probably won't go BK as company can sell stock to idiots to pay bonds, but stock will be near $0.  GME will slowly liquidate other assets to pay salaries and drift into obscurity.

I think this claim is about as raised-eyebrow-worthy as the "GME is worth the current price" arguments. Gamestop is sill a brick and mortar business; a shrinking one, but "to the moon" predictions aside, they seem to be controlling debt and costs as their business model declines. Last I looked, which admittedly has been a few months at least.
Title: Re: GME deathwatch - how to profit?
Post by: EscapeVelocity2020 on January 23, 2022, 05:42:35 PM
...
Editing to add:
Quote
GME probably won't go BK as company can sell stock to idiots to pay bonds, but stock will be near $0.  GME will slowly liquidate other assets to pay salaries and drift into obscurity.

I think this claim is about as raised-eyebrow-worthy as the "GME is worth the current price" arguments. Gamestop is sill a brick and mortar business; a shrinking one, but "to the moon" predictions aside, they seem to be controlling debt and costs as their business model declines. Last I looked, which admittedly has been a few months at least.

Stonks either go to the moon or to zero, there is no such thing as going sideways for, like, weeks on end...
Title: Re: GME deathwatch - how to profit?
Post by: DaTrill on January 24, 2022, 02:02:35 PM
These and many other stocks have fallen into margin call zone.  Once retail investors start getting market [you mean margin? - BMJ] calls, the bottom falls out.  Brokers have LOC, usually hedged against these dislocations, but retail traders are not and get washed out.

Are you saying the retail apes are leveraged long? That was not my impression.

But it *is* an incredibly interesting thing to watch to see what happens with Diamond Hands HODLers as the whole market goes down. (If it does, but as one of my favorite thread tells us: top is in.)

I'm also suddenly incredibly curious to see if meme stocks and crypto will be shown to be correlated.

Editing to add:
Quote
GME probably won't go BK as company can sell stock to idiots to pay bonds, but stock will be near $0.  GME will slowly liquidate other assets to pay salaries and drift into obscurity.

I think this claim is about as raised-eyebrow-worthy as the "GME is worth the current price" arguments. Gamestop is sill a brick and mortar business; a shrinking one, but "to the moon" predictions aside, they seem to be controlling debt and costs as their business model declines. Last I looked, which admittedly has been a few months at least.

Margin calls.  There is massive leverage in the system and gets ugly when it unwinds.  These rallies are most likely margin call money being brought into the market and shorts covering.   
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 25, 2022, 06:11:09 AM
I was wondering if inflation and higher bond yields would hurt meme stocks.

Vanguard Growth (VUG) -13% YTD
GME -28%
AMC -34%

At some point in 2022 I expect markets to get too pessimistic, and stop punishing growth stocks.  I guess then we'll find out if retail investors will keep these stocks going or not.
Please do not put VUG next to GME or AMC. VUG i not a meme (disclaimer: i do not hold any VUG at this moment).
I left out an assumption I'll explain, but first some bad news for you: VUG holds AMC shares.  So the meme stock AMC is actually a part of Vanguard Growth Index.
https://finance.yahoo.com/quote/AMC/holders?p=AMC

What I left unsaid is that growth stocks are hurt most by inflation.  Meme stocks don't even have their future earnings to rely on - they only have WSB.  So growth stocks (VUG) are hit by inflation, and it appears meme stocks (AMC, GME) are hit even harder by inflation.  That's why VUG was there, to show the impact of inflation YTD.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on January 25, 2022, 09:25:23 AM
Is AMC still a meme stock? I haven't been paying attention. At what point do GME, AMC, and BB cease to be meme stocks?

GME clearly to my eyes is still priced as a "meme stock" in that the reason for its current price is due to either or both a belief that it is being secretly and massively held short and that its currently-nebulously-defined future (not current) business model will pay off.

AMC is not at its low, but it's almost back to early 2019 levels. I haven't bothered to look, but if they're still in business I presume they have cut lots of costs and otherwise made adjustments since then.

Looking at BB...I can't really tell just by looking at the graph if it's still meme-inflated or not. I'm still holding 10 shares (or was it 20?) of BB because I don't mind letting it sit ignored for years (unlike GME). I bought in because meme hype and because I know they have some enterprise software products aside from the dead phones, and I seem to have bought in at its very top, yay. But I don't care enough to try to figure out what the P/E or any other measure of value is, because Google just has a dash there when I search BB.
Title: Re: GME deathwatch - how to profit?
Post by: YttriumNitrate on January 25, 2022, 10:01:03 AM
Is AMC still a meme stock? I haven't been paying attention. At what point do GME, AMC, and BB cease to be meme stocks?
AMC's market cap is still over 10X its 2019 market cap. So, yes: still a meme stock. Not sure where I would put the cutoff (3x, 5x, etc.) but in my opinion it's still well into meme territory.
https://companiesmarketcap.com/amc-entertainment/marketcap/ (https://companiesmarketcap.com/amc-entertainment/marketcap/)
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on January 25, 2022, 10:01:41 AM
But I don't care enough to try to figure out what the P/E or any other measure of value is, because Google just has a dash there when I search BB.

BB's P/E ratio is not listed because it has negative earnings.  Negative 86 cents per share on a TTM basis according to the Yahoo Finance statistics page, which is over 10% of the current stock price.

Also negative YOY revenue growth for the quarter, negative ROA, negative ROE, negative margins.

Wowzers.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on January 25, 2022, 10:27:19 AM
AMC's market cap is still over 10X its 2019 market cap.

Wait, what? I have a severe misunderstanding of something here. If market cap is the outstanding value of shares, how is market cap around 8x or more its 2019 value while the price per share is more like 3x?

Or more specifically, on April 20, 2019, market cap per that chart was $1.57B. On Jan 24 2022 it's $9.22B, a 487% rise in market capitalization. The price for AMC on April 18, 2019 was $16.05. On Jan 24, 2022 it closed at $16.64, a 3.68% rise in price.

The 2019 dates don't line up perfectly, but I promise neither rose or fell significantly in that time frame to throw the point off here.

A quick Google search suggests that AMC did not split in that time frame. Did it issue tons of new shares?

(My reflex objection was to be that market cap is not a value indicator, but for so many reasons I don't really want to start a discussion on value.)

BB's P/E ratio is not listed because it has negative earnings.  Negative 86 cents per share on a TTM basis according to the Yahoo Finance statistics page, which is over 10% of the current stock price.

Also negative YOY revenue growth for the quarter, negative ROA, negative ROE, negative margins.

AMC's P/E was also a dash, so maybe they have negative earnings, too...probably another good reason to not try to argue value when talking about meme stocks.
Title: Re: GME deathwatch - how to profit?
Post by: YttriumNitrate on January 25, 2022, 10:37:30 AM
A quick Google search suggests that AMC did not split in that time frame. Did it issue tons of new shares?
Yep.

Quote
AMC Entertainment Holdings shares outstanding for the quarter ending September 30, 2021 were 0.513B, a 376.65% increase year-over-year.
AMC Entertainment Holdings 2020 shares outstanding were 0.117B, a 12.89% increase from 2019.
AMC Entertainment Holdings 2019 shares outstanding were 0.104B, a 20.19% decline from 2018.
https://www.macrotrends.net/stocks/charts/AMC/amc-entertainment-holdings/shares-outstanding (https://www.macrotrends.net/stocks/charts/AMC/amc-entertainment-holdings/shares-outstanding)
Title: Re: GME deathwatch - how to profit?
Post by: DaTrill on January 25, 2022, 11:56:47 AM
Shares can be created due to options issued, vested, all kinds of other reasons, so comparing market cap over time is treacherous for any comparison. 
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on January 25, 2022, 01:22:15 PM
Wow, that is nuts. Outstanding shares of AMC stock increased a few multiples. BB and even GME didn't seem to go that kind of crazy with outstanding share counts. They seemed to jump around maybe by 20% in the past year or two.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 26, 2022, 11:10:45 AM
Is AMC still a meme stock? I haven't been paying attention. At what point do GME, AMC, and BB cease to be meme stocks?

This isn't a perfect proxy for "meme stocks" but Google searches are way down:
https://trends.google.com/trends/explore?q=amc&geo=US (https://trends.google.com/trends/explore?q=amc&geo=US)
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on January 26, 2022, 02:42:11 PM
That's actually a decent measure as, to me, meme stocks are driven largely by the conversation around it.

At first I thought AMC still seemed very high, but if you go back before the pandemic it seems to be back to around where it was pre-pandemic, so I guess people are searching for it actually looking for movie info and not investment info.

Still, with new shares it still seems quite inflated.

It is interesting to compare the GME, AMC, and BB surges.
Title: Re: GME deathwatch - how to profit?
Post by: clifp on January 26, 2022, 03:12:35 PM
Schwab wouldn't let me do anything with GME.

But they would let me write naked in the money calls on AMC

So I wrote Dec calls at $20, and Jan 35, in the summer. I bought the Dec calls back in middle Dec at a nice profit, and the Jan 35 expired farout of the money. I was hoping the stock would rally into the 30s, because I was going to write some April calls.  But now that stock is down to $16, I think it is harder to make money. It is basically a $3-5 dollar stock, but I think there will be support among the reddit crowd once it breaks $10.

Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 26, 2022, 03:23:37 PM
Schwab wouldn't let me do anything with GME.

But they would let me write naked in the money calls.

So I wrote Dec calls at $20, and Jan 35, in the summer. I bought the Dec calls back in middle Dec at a nice profit, and the Jan 35 expired farout of the money. I was hoping the stock would rally into the 30s, because I was going to write some April calls.  But now that stock is down to $16, I think it is harder to make money. It is basically a $3-5 dollar stock, but I think there will be support among the reddit crowd once it breaks $10.

AMC?

I wrote some Mar GME $300 calls this week.
Title: Re: GME deathwatch - how to profit?
Post by: clifp on January 26, 2022, 03:28:04 PM
Yes, my calls were on AMC.

I must have forget to to save my edit, sorry for the confusion.

Who is your broker.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on January 26, 2022, 03:36:37 PM
Yes, my calls were on AMC.

I must have forget to to save my edit, sorry for the confusion.

Who is your broker.

Interactive Brokers

It requires paying attention in case they increase the margin at a moment's notice.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on January 27, 2022, 10:25:56 AM
Interactive Brokers

It requires paying attention in case they increase the margin at a moment's notice.

So it's an apt name, then!
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on January 27, 2022, 11:26:18 AM
Interactive Brokers

It requires paying attention in case they increase the margin at a moment's notice.

So it's an apt name, then!

Really that's any broker though. There's no rule against maintenance margin whiplash.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on January 27, 2022, 12:00:04 PM
I wrote some Mar GME $300 calls this week.

Interactive Brokers

It requires paying attention in case they increase the margin at a moment's notice.
I lost money selling GME calls last year when Feb volatility spiked.  From that experience I have 2 pieces of advice for someone doing the same:
(1) limit your position sizes.  It's not free money if WSB fans return.
(2) place "stop loss" orders to protect yourself and DO NOT CANCEL them like I did... to buy more.
Title: Re: GME deathwatch - how to profit?
Post by: Financial.Velociraptor on March 06, 2022, 12:24:15 PM
I'm finally in as a (modified) short.  On 22FEB22, with GME trading around 119, I sold the 19JAN24 150 call (naked) and bought the 19JAN24 115 put. I took a net debit of 2.75 per share and bought two spreads.  I have $550 at risk below 150 underlying (I'm bold not crazy).  I take profits at all prices below 112.25 at expiry.  Current price has me 68 cents per share in the green.  If expiry had been Friday, I would have made 126 dollars.  I'll be starting a space cowboy rocket company to compete with Elon and Jeff any day now...

Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 06, 2022, 04:52:16 PM
I'm finally in as a (modified) short.  On 22FEB22, with GME trading around 119, I sold the 19JAN24 150 call (naked) and bought the 19JAN24 115 put. I took a net debit of 2.75 per share and bought two spreads.
After the last Dec 8 earnings report, GME stock fell.  Given the large gap between fundamentals and stock price, I would guess analysts will do the same thing at the next earnings call.  That happens in just over 2 weeks, on March 25.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 06, 2022, 08:06:59 PM
GME is such a meme retread at this point and yet it is still vastly overpriced. It seems like bear spreads could be used to generate a steady series of wins, but I don’t recommend unlimited-loss-potential positions like @Financial.Velociraptor got into. Logic only gets you so far with GME.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 08, 2022, 02:26:55 PM
Next question: Will higher interest rates kill meme stonks?

When I think about the meme stock phenomenon, I imagine desperate millennials and gen Z'ers priced out of homes, stuck with student loan debt for irrelevant degrees, earning McWages working for "boomers", and facing an investment environment where the indices are loaded with large cap tech stocks at insane valuations and low interest rates on bonds.

Financial desperation plus the urgency of getting out of their unhappy situations led them to reject the approach of MMM and accept a belief that gambling was the only way anyone could get out of the working class. Living in the parents' basement for 15 years until FIRE just doesn't appeal. In their minds, the people taking the MMM approach are taking a much bigger gamble by working so long and betting long term, running their own clock out either way. The plan of gambling a year's savings at a time until hitting it big seems safer in their minds, because they've lived through two decades of crises and watched buy-and-holders get wiped out each time (certain personalities don't pay attention to the larger trends or think of strategies as something done for decades at a time).

This time next year, we could have a fed funds rate of 1.5% or 2%, inflation at 5-7%, and expectations of more inflation and rate hikes ahead.

Stocks might have much better fundamentals due to earnings growth and lower PE ratios. Thus, on a purely technical basis, buying and holding stocks and bonds will look more attractive, relative to gambling. Additionally, we'll have much better historical data about the poor performance of meme stock portfolios. By this logic, fewer people will be chasing GME or AMC in desperate hope that last year's internet trend will come back, because it will finally make more sense in their minds to B&H index funds. There are already people on WSB cracking jokes about how doing the exact opposite of WSB would yield one a nice return. Maybe the moment is passing?

On an emotional basis though, the volatile events of early 2022 may convince many in the WSB crowd that the indices are more risky than ever, just like the volatile events of 2020 did. The WSB crowd may become even more convinced that their best opportunity lies in lucky options trades or stock picks. Yet, rising rates will necessarily change things. Stocks with most of their hypothetical cash flows in the distant future, like Tesla or Peloton, may go out of favor, and maybe dividend stocks like oil companies or innovative blue chips such as legacy automakers with electric models will take their place. This will seem like a new way to gamble, and so unlike the ways people lost all their money in 2021-22. Maybe we'll see more of the old rationale: "I'll sell puts on this high yielding stock and double down my put premiums until I'm assigned, and if I can do this for X rounds before assignment then the dividends will cover my retirement".

What do you think? Were meme stocks an artifact of high-valuation, low interest rate times or are they a reaction to anxieties that will be more acute now than ever before? Will meme stocks pivot from nearly defunct retailers and tech unicorns to optioning more stable companies?
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on March 08, 2022, 02:55:59 PM
I think both meme stocks and crypto are products of extra money looking for a place to be spent. In both cases, the only reason they performed as investments were because more people buying in on hope alone.

I kind of expect it to all come crashing down at once, over the course of a few weeks or months. As more people need to cash out to cover other wants or needs, fewer people are buying in, and prices start to fall, then I think the masses start to get conservative and start pulling out which just devastates all the speculative investing. Starting when? I have no idea.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 08, 2022, 03:02:05 PM
Just seems like there's a helluva lot of money to be made in bear spreads on soon-to-be-bankrupt meme stonks as interest rate hikes and inflation fears tank the broader market. That narrative is essentially set for the next few months, IMO.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 09, 2022, 04:24:06 PM
Just seems like there's a helluva lot of money to be made in bear spreads on soon-to-be-bankrupt meme stonks as interest rate hikes and inflation fears tank the broader market. That narrative is essentially set for the next few months, IMO.
Isn't bankruptcy an extreme view?  Except for "soon-to-be-bankrupt", I would agree with your overall point.  The subject of this thread, GameStop, is sitting on $1.4 billion in cash, and debt of less than half that amount.
https://finance.yahoo.com/quote/GME/key-statistics?p=GME
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on March 10, 2022, 12:11:04 PM
$1.4b in cash, but $9b in market cap and negative earnings. Not sure bankruptcy is the end game, but a lot of investor unhappiness in the future short of any secret short squeezes or magic reinvention moon launches.

I'm not going to bet on decline, though. I'm just distantly observing.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 11, 2022, 08:28:55 AM
Yes, bankruptcy is a strong term for companies which were able to use the short squeeze of 2021 to extract several years of coverage for operating losses from investors. That doesn't mean their business models are functional. Reselling antique physical-format games or running old-fashioned movie theaters is never going to justify these valuations, and I didn't see any compelling new products or strategic directions arising out of the 2021 jubilee. More likely, the executives of these companies will spend their careers entrenching each other and winding down their war chests, or maybe making some acquisitions, which are known to destroy value. This direction is less likely to result in them losing their jobs than doing something radical.

In the bigger picture, I've become more interested in still-overpriced meme stocks due to the deterioration of the macro environment:

*7.9% inflation!
*0.25% federal funds rate AFTER next week's meeting!
*an oil shock
*a price of wheat shock
*the Fed being too slow to stop stimulus in 2021, letting inflation expectations get established
*heightened risks of a financial crisis due to bank commodity or Russian market exposures

Rates will have to go way up in the next 2 years to catch inflation, which puts holders of stocks or bonds in a position of fighting the fed. Earnings growth would have to be spectacular to maintain NPV amid a 3-6% increase in the discount rate. Highly leveraged companies are going to have to spend down earnings and deleverage in order to optimize their capital structure for a higher-rate environment, or else risk becoming zombie shells. Unemployment and consumer spending are currently the strongest areas of the economy, but for how long?

Yes, the stock market always climbs a wall of worry, but this year seems like an exceptionally difficult time to make money. The inflation / rising rates dynamic has the potential to drop the S&P from it's current PE ratio of 25.5 (Schiller PE >34!) back to its mean of around 16. And for those predicting a repeat of the 1970's, the PE dropped below 10 during those times and bonds were no safe refuge! "Short-duration stocks" like dividend stocks, REITs, and MLPs only seem attractive until you consider the possibility of treasuries exceeding their yields within the next 2 years.

I plan to hedge my long index positions and also maintain some limited-risk net short exposure in 2022. The hedging part is easy, but finding shitty companies to write bear spreads on is tougher. AMC and GME may have dead business models, but their leverage ratio is now low (negative in the case of AMC!) so there might be better candidates. Additionally, short interest in both companies is back above 20%, so another squeeze could occur soon. I'll be watching them for the next squeeze while I search for highly leveraged companies with weak growth, weak pricing power, and inflated prices.
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on March 14, 2022, 07:21:36 PM
Former Nintendo America president left GameStop's board because leadership refused to explain how they would turn the company around (https://finance.yahoo.com/news/former-nintendo-america-president-left-170158039.html)

Oof.

I checked on GME today for the hell of it. Down 15.7% today on this news.

Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 15, 2022, 10:02:55 AM


Down 15.7% today on this news.

He left in March 2021, a year ago.

I don't think this recent interview with him was why the price tanked.

Motley Fool puts it down to a bearish analyst opinion that was released: https://www.fool.com/investing/2022/03/14/why-gamestop-stock-cratered-by-16-today/
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on March 15, 2022, 10:22:39 AM
He left in March 2021, a year ago.

Huh, weird. I checked the date on the article, and there were quite a few other articles in the news list for yesterday. I didn't catch that the leaving was old but the reason was recent. That explains why nobody was talking about it on the subreddits.

Speaking of which, yeah a bunch of posters claimed to have been opportunistically buying the dip and HODLing with their diamond hands. Still.
Title: Re: GME deathwatch - how to profit?
Post by: Financial.Velociraptor on March 17, 2022, 04:30:26 PM
https://finance.yahoo.com/news/gamestop-beats-quarterly-revenue-estimates-200916913.html (https://finance.yahoo.com/news/gamestop-beats-quarterly-revenue-estimates-200916913.html)

Big Miss.  Down 7.7% afterhours.
Title: Re: GME deathwatch - how to profit?
Post by: EscapeVelocity2020 on March 22, 2022, 11:00:28 AM
and GME is back from the dead, once again!  Just hit 115, up 23% (and counting) for the day.  If options trading on meme stocks isn't gambling, I don't know what is.

Even before I had chance to send, it hit 116...
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 26, 2022, 05:33:39 AM
"GameStop stock had two material insider purchases last week.
The larger one was by GameStop (ticker: GME) Chairman Ryan Cohen, who paid $10.2 million for 100,000 shares on March 22."
https://www.barrons.com/articles/gamestop-stock-buy-51648147173

On March 22, GME stock soared about +29%, and then +8%/day for the following two days.  The Chairman of GameStop's board bought 0.1% of it's market cap, so the stock soared +50%.

GameStop is a retail store and promises.  I view the promises as hype, and would point to Mar 22-25.  Others view these promises as the future - but the company refuses to lay out it's plans for that future.  Are vague mentions of NFTs enough?

A number of NFT marketplaces exist and have a long lead over GameStop, who started hiring less than 6 months ago.  Marketplaces favor the early big company (Amazon, eBay), not the one who hasn't begun.

I'd like to avoid doing anything with GME stock in my brokerage accounts, but posting here is free.  Instead of shorting 1 share of GME, I'll post in here when I think it's a good time to sell short (or I might forget entirely, which would be even better).
Title: Re: GME deathwatch - how to profit?
Post by: BigMoneyJim on March 26, 2022, 02:14:27 PM
I think I timed my GME game perfectly. I bought when I thought it was worth a flier on a short-term short squeeze meme to the tune of a couple of shares, and then i sold when I got tired of watching to see if the short was going to happen, and I only lost...hell I forget, $200? $400? Something like that. And I'll never transact in GME again.
Title: Re: GME deathwatch - how to profit?
Post by: Financial.Velociraptor on March 29, 2022, 10:11:13 AM
My timing was really bad.  Put 2,530 of more capital in trade to roll my now in the money 150 short call up to 200.   
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 29, 2022, 10:13:11 AM
My timing was really bad.  Put 2,530 of more capital in trade to roll my now in the money 150 short call up to 200.
Seems like a bad bet to me. But idk the short term, it can get wild either direction.

Disclaimer: Long GME.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 29, 2022, 01:15:34 PM
I'm doing my "short via post" of GME at 187.12 / share.  I haven't done anything in my brokerage accounts, I'm just pretending to short 1 share of GME here, in this thread:
Consider me to suddenly have $187.12 cash and -1 GME share.

It's a bit better if you keep me honest by quoting me - then I could in theory edit this post later, but not the quoted post by someone else.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on March 29, 2022, 03:51:56 PM
I'm doing my "short via post" of GME at 187.12 / share.  I haven't done anything in my brokerage accounts, I'm just pretending to short 1 share of GME here, in this thread:
Consider me to suddenly have $187.12 cash and -1 GME share.

It's a bit better if you keep me honest by quoting me - then I could in theory edit this post later, but not the quoted post by someone else.

I'll take the $187.12 and "buy via post" a fractional share of VTI at it's value as of the same date and time as the above post.  I now "own" $231.32 / $187.12 = 1.236 shares of VTI.

I'll reinvest dividends into more VTI; I'm not sure what margin rate @MustacheAndaHalf is "paying".
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 30, 2022, 09:18:36 AM
I'm doing my "short via post" of GME at 187.12 / share.  I haven't done anything in my brokerage accounts, I'm just pretending to short 1 share of GME here, in this thread:
Consider me to suddenly have $187.12 cash and -1 GME share.

It's a bit better if you keep me honest by quoting me - then I could in theory edit this post later, but not the quoted post by someone else.

I'll take the $187.12 and "buy via post" a fractional share of VTI at it's value as of the same date and time as the above post.  I now "own" $231.32 / $187.12 = 1.236 shares of VTI.

I'll reinvest dividends into more VTI; I'm not sure what margin rate @MustacheAndaHalf is "paying".
If I really sold short 1 share of GME at IBKR, they would charge me an interest rate based on the cost to borrow that stock from someone else, which can be expensive.  My guess would be 25%/year, rather than the very cheap 1.83% margin rate IBKR Pro charges.

You have $187.12 cash and VTI is $231.85/share... so putting in fractional shares:
0.807073534 shares of VTI

I guess I'll follow your idea with a different level of aggression, and go with 3 shares of ARKW at $92.33/share.
2.02664356 shares of ARKW

Both of which are funded by -1 GME share, which requires us to buy it back later.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 30, 2022, 09:23:41 AM
If the past is any guide, the recent peak might be a good time for a bear spread in GME. We're in another short squeeze, but I seriously doubt it is anything like the magnitude of 2021 and I seriously doubt many people have moon ambitions for GME. They have short term gain ambitions because getting out in time is what worked last time. I wonder how quickly GME management can act to issue more shares into the squeeze like they did last time, undermining their own diamond hand fans.
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 30, 2022, 09:24:41 AM
Upper management is buying more for their personal holdings, not selling.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 30, 2022, 09:38:19 AM
Upper management is buying more for their personal holdings, not selling.
More precisely: "GameStop Stock Skyrockets After Billionaire Ryan Cohen Buys Another $10 Million In Shares"
https://www.forbes.com/sites/jonathanponciano/2022/03/23/gamestop-stock-billionaire-ryan-cohen-buys-shares/?sh=2961d9511d67

Ryan Cohen invested $11.1M, and another board member invested a rounding error of that amount.  Most of the board members ("upper management") bought nothing - the only reason this made the news was Ryan Cohan's purchase of 100,000 shares of GME.
https://finance.yahoo.com/screener/insider/COHEN%20RYAN

More importantly, why is a Ryan Cohan putting 1% of his wealth into GameStop stock worth a +45% jump in the stock price over 1 week?  It's more evidence GameStop trades on hype, not substance.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on March 30, 2022, 09:47:53 AM
I'm doing my "short via post" of GME at 187.12 / share.  I haven't done anything in my brokerage accounts, I'm just pretending to short 1 share of GME here, in this thread:
Consider me to suddenly have $187.12 cash and -1 GME share.

It's a bit better if you keep me honest by quoting me - then I could in theory edit this post later, but not the quoted post by someone else.

I'll take the $187.12 and "buy via post" a fractional share of VTI at it's value as of the same date and time as the above post.  I now "own" $231.32 / $187.12 = 1.236 shares of VTI.

I'll reinvest dividends into more VTI; I'm not sure what margin rate @MustacheAndaHalf is "paying".
If I really sold short 1 share of GME at IBKR, they would charge me an interest rate based on the cost to borrow that stock from someone else, which can be expensive.  My guess would be 25%/year, rather than the very cheap 1.83% margin rate IBKR Pro charges.

You have $187.12 cash and VTI is $231.85/share... so putting in fractional shares:
0.807073534 shares of VTI

I guess I'll follow your idea with a different level of aggression, and go with 3 shares of ARKW at $92.33/share.
2.02664356 shares of ARKW

Both of which are funded by -1 GME share, which requires us to buy it back later.

I'm disqualifying myself, for two reasons:

A.  I can't math.
B.  I don't want to own -1 GME; I thought it was just a free $187.12.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 30, 2022, 09:57:40 AM
Upper management is buying more for their personal holdings, not selling.
More precisely: "GameStop Stock Skyrockets After Billionaire Ryan Cohen Buys Another $10 Million In Shares"
https://www.forbes.com/sites/jonathanponciano/2022/03/23/gamestop-stock-billionaire-ryan-cohen-buys-shares/?sh=2961d9511d67

Ryan Cohen invested $11.1M, and another board member invested a rounding error of that amount.  Most of the board members ("upper management") bought nothing - the only reason this made the news was Ryan Cohan's purchase of 100,000 shares of GME.
https://finance.yahoo.com/screener/insider/COHEN%20RYAN

More importantly, why is a Ryan Cohan putting 1% of his wealth into GameStop stock worth a +45% jump in the stock price over 1 week?  It's more evidence GameStop trades on hype, not substance.

Maybe because Cohen and co. saw an opportunity to trigger a short squeeze and then issue more shares at the inflated prices?
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 30, 2022, 09:58:30 AM
...
I'm disqualifying myself, for two reasons:

A.  I can't math.
B.  I don't want to own -1 GME; I thought it was just a free $187.12.
Fair enough.  Many fans of GME talk about the short positions being too high, so it might be useful for me to mention some of what happens when someone really shorts the stock.

In my IBKR account, I would select "GME" and action "sell short", entering "1" for the shares.  Doing that yesterday would show a position of -1 GME in my account, and $187.12 more cash in the account.  I'm selling first, and buying later.

IBKR allws clients to loan their shares, so another client might have GME shares they're willing to loan.  IBKR takes 1 GME share from that client and sells it on the market, meeting the need to sell one share of GME short.  That other person's account will not show a change: they are owed 1 GME share, and if they sell it IBKR will begin the search anew.

I think something similar happens outside IBKR if they lack shares - they to go institutions or other brokers in search of shares to borrow and sell short.

If you sold 1 share GME short yesterday, and changed your mind today, you would then select that position and "buy to close".  The $187.12 cash would drop by the market price of GME $177.18 now, and you would have 0 GME shares and $9.94 cash left from shorting the stock.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on March 30, 2022, 10:04:50 AM
Upper management is buying more for their personal holdings, not selling.
More precisely: "GameStop Stock Skyrockets After Billionaire Ryan Cohen Buys Another $10 Million In Shares"
https://www.forbes.com/sites/jonathanponciano/2022/03/23/gamestop-stock-billionaire-ryan-cohen-buys-shares/?sh=2961d9511d67

Ryan Cohen invested $11.1M, and another board member invested a rounding error of that amount.  Most of the board members ("upper management") bought nothing - the only reason this made the news was Ryan Cohan's purchase of 100,000 shares of GME.
https://finance.yahoo.com/screener/insider/COHEN%20RYAN

More importantly, why is a Ryan Cohan putting 1% of his wealth into GameStop stock worth a +45% jump in the stock price over 1 week?  It's more evidence GameStop trades on hype, not substance.
Maybe because Cohen and co. saw an opportunity to trigger a short squeeze and then issue more shares at the inflated prices?
I wonder what the SEC would do in that case.  All he did was buy shares - not recommend the stock, and then he hurt his own position by diluting the stock.

I believe GameStop's Chairman has over 1.3 million shares of GME stock, or somewhere between 1/5th and 1/4th of a billion dollars worth.  If he prints more shares, he loses a lot of money.

There's also this weird dynamic between people like him and Elon Musk, where their fans follow their hints.  So Ryan Cohan has more power making hints about NFTs than he does if he breaks that relationship by diluting shares.

I recall when GME was up in the $300 - $450/sh range, he didn't do anything.  So it seems like something he won't do, and reflects his belief in turning the company into something other than a retail chain.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on March 30, 2022, 10:26:08 AM
Upper management is buying more for their personal holdings, not selling.
More precisely: "GameStop Stock Skyrockets After Billionaire Ryan Cohen Buys Another $10 Million In Shares"
https://www.forbes.com/sites/jonathanponciano/2022/03/23/gamestop-stock-billionaire-ryan-cohen-buys-shares/?sh=2961d9511d67

Ryan Cohen invested $11.1M, and another board member invested a rounding error of that amount.  Most of the board members ("upper management") bought nothing - the only reason this made the news was Ryan Cohan's purchase of 100,000 shares of GME.
https://finance.yahoo.com/screener/insider/COHEN%20RYAN

More importantly, why is a Ryan Cohan putting 1% of his wealth into GameStop stock worth a +45% jump in the stock price over 1 week?  It's more evidence GameStop trades on hype, not substance.
Maybe because Cohen and co. saw an opportunity to trigger a short squeeze and then issue more shares at the inflated prices?
I wonder what the SEC would do in that case.  All he did was buy shares - not recommend the stock, and then he hurt his own position by diluting the stock.

I believe GameStop's Chairman has over 1.3 million shares of GME stock, or somewhere between 1/5th and 1/4th of a billion dollars worth.  If he prints more shares, he loses a lot of money.

There's also this weird dynamic between people like him and Elon Musk, where their fans follow their hints.  So Ryan Cohan has more power making hints about NFTs than he does if he breaks that relationship by diluting shares.

I recall when GME was up in the $300 - $450/sh range, he didn't do anything.  So it seems like something he won't do, and reflects his belief in turning the company into something other than a retail chain.

There's a lot more scrutiny applied when insiders sell shares vs. when they buy shares, so maybe this explains why Cohen didn't sell high when he had the chance. It's possible that a lot of GME's executive compensation is tied to the stock price, so he wins money on the side any time he can pump the stock.

Also, IDK if execs are able to hedge their stock purchases. E.g. if the insiders could sell a bunch of ITM call options right now, they might not be going as all-in as first appears.

Lastly, if the executives can set off a short squeeze and pump GME's stock from $80 to $170 just by buying a few million dollars worth of shares at $80, and then GME can issue a few tens of millions of dollars in stock at $170 before the price falls back to $80, then the dilution would have less an effect on their stock values than the new cash on the balance sheet. That is to say, the -10% impact on my price per share due to 10% dilution might be less than the impact of the enterprise value increasing 15% due to all the new cash collected at the top of a short squeeze.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on March 30, 2022, 12:09:10 PM
...
I'm disqualifying myself, for two reasons:

A.  I can't math.
B.  I don't want to own -1 GME; I thought it was just a free $187.12.
Fair enough.  Many fans of GME talk about the short positions being too high, so it might be useful for me to mention some of what happens when someone really shorts the stock.

In my IBKR account, I would select "GME" and action "sell short", entering "1" for the shares.  Doing that yesterday would show a position of -1 GME in my account, and $187.12 more cash in the account.  I'm selling first, and buying later.

IBKR allws clients to loan their shares, so another client might have GME shares they're willing to loan.  IBKR takes 1 GME share from that client and sells it on the market, meeting the need to sell one share of GME short.  That other person's account will not show a change: they are owed 1 GME share, and if they sell it IBKR will begin the search anew.

I think something similar happens outside IBKR if they lack shares - they to go institutions or other brokers in search of shares to borrow and sell short.

If you sold 1 share GME short yesterday, and changed your mind today, you would then select that position and "buy to close".  The $187.12 cash would drop by the market price of GME $177.18 now, and you would have 0 GME shares and $9.94 cash left from shorting the stock.

Lolz.  I know how short sales work, thanks.  I'm just scatterbrained and really not paying attention much to GME, since I don't short, don't do options, don't buy individual stocks, don't try to time the market, and don't play with meme stocks.  I'm mostly just here for the entertainment value with a 1% chance and effort to set my friend rebs straight. ;-)
Title: Re: GME deathwatch - how to profit?
Post by: arebelspy on March 30, 2022, 12:09:44 PM
I'm mostly just here for the entertainment value with a 1% chance and effort to set my friend rebs straight. ;-)

<3

I appreciate you. :)
Title: Re: GME deathwatch - how to profit?
Post by: clifp on March 30, 2022, 03:00:26 PM


There's a lot more scrutiny applied when insiders sell shares vs. when they buy shares, so maybe this explains why Cohen didn't sell high when he had the chance. It's possible that a lot of GME's executive compensation is tied to the stock price, so he wins money on the side any time he can pump the stock.

Also, IDK if execs are able to hedge their stock purchases. E.g. if the insiders could sell a bunch of ITM call options right now, they might not be going as all-in as first appears.

Lastly, if the executives can set off a short squeeze and pump GME's stock from $80 to $170 just by buying a few million dollars worth of shares at $80, and then GME can issue a few tens of millions of dollars in stock at $170 before the price falls back to $80, then the dilution would have less an effect on their stock values than the new cash on the balance sheet. That is to say, the -10% impact on my price per share due to 10% dilution might be less than the impact of the enterprise value increasing 15% due to all the new cash collected at the top of a short squeeze.

Generally, speaking CEO, need to plan their stock sells months in advance.

I don't think SEC rules prohibit outright hedging with options but I know most big companies, put restrictions at the VP/corporate officer level and above. Selling covered calls is ok, but any type of net short position would be prohibited.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 02, 2022, 01:32:10 PM
Many fans of GME talk about the short positions being too high, so it might be useful for me to mention some of what happens when someone really shorts the stock ...
Lolz.  I know how short sales work, thanks.  I'm just scatterbrained and really not paying attention much to GME, since I don't short, ...
I didn't mean to talk down to you, sorry about that.  I was mostly aiming at anyone else who didn't know how it works.


Maybe because Cohen and co. saw an opportunity to trigger a short squeeze and then issue more shares at the inflated prices?
... If he [Cohen] prints more shares, he loses a lot of money.
... I recall when GME was up in the $300 - $450/sh range, he didn't do anything. 
There's a lot more scrutiny applied when insiders sell shares vs. when they buy shares, so maybe this explains why Cohen didn't sell high when he had the chance.
...
Cut out some sections to focus on the context of my comment: I was saying GameStop didn't print more shares when Cohen could have encouraged the board to do that, so I suspect he won't be creating a new share offering.

AMC took the other route, issuing shares to obtain much needed cash it needed to continue operating.  AMC later allowed people to buy AMC movie tickets with Dogecoin, so I don't think the share offering was a cynical move - AMC needed the lifeline.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on April 02, 2022, 01:36:10 PM
Many fans of GME talk about the short positions being too high, so it might be useful for me to mention some of what happens when someone really shorts the stock ...
Lolz.  I know how short sales work, thanks.  I'm just scatterbrained and really not paying attention much to GME, since I don't short, ...
I didn't mean to talk down to you, sorry about that.  I was mostly aiming at anyone else who didn't know how it works.

No worries, thanks for the reply!
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 07, 2022, 09:32:37 AM
I'm doing my "short via post" of GME at 187.12 / share.  I haven't done anything in my brokerage accounts, I'm just pretending to short 1 share of GME here, in this thread:
Consider me to suddenly have $187.12 cash and -1 GME share.

It's a bit better if you keep me honest by quoting me - then I could in theory edit this post later, but not the quoted post by someone else.
GME has dropped over 8% today, falling below it's average for the past year.  Since I can't predict WSB, I'm closing this "short via post position.  According to Yahoo finance right now:

Quote
143.73  -12.91 (-8.24%)
As of 11:25AM EDT. Market open.
https://finance.yahoo.com/quote/GME/

I owe $0 of short interest thanks to this being a fake thing.  So I take the original $187.12 from the short position, and close my -1 share of short GME stock by purchasing one share at $143.73, leaving me with $43.39 (fake) profit from the short position.

I did a fake short sale, waited for 23% of drops, and closed the position - all in this thread: no actual GameStop shares were harmed.
Title: Re: GME deathwatch - how to profit?
Post by: secondcor521 on April 07, 2022, 09:46:26 AM
I'm doing my "short via post" of GME at 187.12 / share.  I haven't done anything in my brokerage accounts, I'm just pretending to short 1 share of GME here, in this thread:
Consider me to suddenly have $187.12 cash and -1 GME share.

It's a bit better if you keep me honest by quoting me - then I could in theory edit this post later, but not the quoted post by someone else.
GME has dropped over 8% today, falling below it's average for the past year.  Since I can't predict WSB, I'm closing this "short via post position.  According to Yahoo finance right now:

Quote
143.73  -12.91 (-8.24%)
As of 11:25AM EDT. Market open.
https://finance.yahoo.com/quote/GME/

I owe $0 of short interest thanks to this being a fake thing.  So I take the original $187.12 from the short position, and close my -1 share of short GME stock by purchasing one share at $143.73, leaving me with $43.39 (fake) profit from the short position.

I did a fake short sale, waited for 23% of drops, and closed the position - all in this thread: no actual GameStop shares were harmed.

I would have hedl ( ;-) ) on to VTI, but if I closed it out at about the same timestamp (11:32 ET), I'd have lost about $7 or so.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on April 07, 2022, 10:27:00 AM
I have some short April 220 calls that I'll let expire. Things were looking grim last week when the after-market spiked because of the stock split announcement but the exuberance settled.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 07, 2022, 11:00:11 AM
I have some short April 220 calls that I'll let expire. Things were looking grim last week when the after-market spiked because of the stock split announcement but the exuberance settled.
Keeping positions small is really important, and somthing I screwed up earlier.

Taking my 10 day profit and assuming that happened 36 times in a row, you get an annualized gain of +172,319%.  Which is to say 23% is an amazing return for a year, let alone 10 days.
Title: Re: GME deathwatch - how to profit?
Post by: bacchi on April 07, 2022, 12:13:06 PM
I have some short April 220 calls that I'll let expire. Things were looking grim last week when the after-market spiked because of the stock split announcement but the exuberance settled.
Keeping positions small is really important, and somthing I screwed up earlier.

Taking my 10 day profit and assuming that happened 36 times in a row, you get an annualized gain of +172,319%.  Which is to say 23% is an amazing return for a year, let alone 10 days.

Yes, I'm only short 3 calls. And I wasn't pleased when it looked like I was going to buy them back at ~$3000 each.

I need to stick to spreads. Less profit but far less stress.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on April 07, 2022, 01:12:48 PM
It's an interesting dynamic watching the broader markets fall due to interest rate hikes and the meme stock markets rise due to the expectation of short squeezes. If the short squeezes didn't last in the banner year of 2021, it would be bold to suggest they would last in 2022 with the headwind of rising rates.
Title: Re: GME deathwatch - how to profit?
Post by: jim555 on April 07, 2022, 06:10:43 PM
It's an interesting dynamic watching the broader markets fall due to interest rate hikes and the meme stock markets rise due to the expectation of short squeezes. If the short squeezes didn't last in the banner year of 2021, it would be bold to suggest they would last in 2022 with the headwind of rising rates.
Meme stacks are going to get crushed in a Fed QT.  They went up in the froth of the gigantic QE of 2020.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 08, 2022, 09:10:39 AM
I have some short April 220 calls that I'll let expire. Things were looking grim last week when the after-market spiked because of the stock split announcement but the exuberance settled.
Keeping positions small is really important, and somthing I screwed up earlier.
Yes, I'm only short 3 calls. And I wasn't pleased when it looked like I was going to buy them back at ~$3000 each.

I need to stick to spreads. Less profit but far less stress.
Unfortunately I don't need to imagine that scenario.... -2075% returns, anyone?

This was just over a year ago.  My starting position was small and had a 90-95% profit before I picked up nickels in front of the steamroller.  In the chart below, I closed it out with +30.68% profit instead, taking substantial losses on everything else.

Here's the numbers to go with the mistakes I mentioned above:

   The Fad Fund         price      orig price      gain / loss   
   AMC $22 call 2023         $458.00      -$199.56      -129.50%   
   GME $800 call Mar 12         $1,926.00      -$144.63      -1231.67%   
   GME $800 call July 16         $5,000.00      -$229.90      -2074.86%   
   GME $950.00 call 2022         $4,713.00      -$6,799.12      30.68%   

The most dramatic first: the July 16 calls at a -2075% loss.  I canceled my stop loss to lose more... I mean buy more calls.  That's a really bad combination.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 08, 2022, 09:31:18 AM
Even as I closed my positions, I was confident it wouldn't last - but I was not 100% confident, and had already screwed up getting to that point.  With appropriately small positions, I would have just waited it out.

When I originally sold a GME call (a short call position), nobody here thought that would end well.  Ironically, that's the +31% profit.  During the weekend when GME was nationwide news, I was confident every hedge fund and institutional investor would know about it by Monday.  I predicted that GME stock would try to rise Monday, and get hit back down by selling - which is what I saw when I watched the markets that day.  So I acted, and $850 strike calls with an appropriate position size.  I limited my risk with "stop loss orders" to close my position if I was wrong.  And then I dropped the discipline.

Later I assumed institutional investors were permanently watching GME stock, and would respond to any short squeeze with selling.  But I can't point to any evidence in the stock market - unlike my earlier disciplined approach.  I just thought selling GME calls was free money, backed by instituional selling.  But the biggest mistake would definitely be position sizing.

That was spoiled by the second short squeeze in GME, where the price never even reached $400/share, let alone my $800 strike price.  But the volatility make these $800 calls go up 10x in price, which convinced me to close positions at huge losses.  If I had appropriately sized my earlier position, I could have done it again in the second short squeeze.  That's the other problem: my large position meant I was taking losses during anoter opportunity to short a small position in GME calls and wait.
Title: Re: GME deathwatch - how to profit?
Post by: ChpBstrd on April 08, 2022, 11:34:54 AM
Even as I closed my positions, I was confident it wouldn't last - but I was not 100% confident, and had already screwed up getting to that point.  With appropriately small positions, I would have just waited it out.

When I originally sold a GME call (a short call position), nobody here thought that would end well.  Ironically, that's the +31% profit.  During the weekend when GME was nationwide news, I was confident every hedge fund and institutional investor would know about it by Monday.  I predicted that GME stock would try to rise Monday, and get hit back down by selling - which is what I saw when I watched the markets that day.  So I acted, and $850 strike calls with an appropriate position size.  I limited my risk with "stop loss orders" to close my position if I was wrong.  And then I dropped the discipline.

Later I assumed institutional investors were permanently watching GME stock, and would respond to any short squeeze with selling.  But I can't point to any evidence in the stock market - unlike my earlier disciplined approach.  I just thought selling GME calls was free money, backed by instituional selling.  But the biggest mistake would definitely be position sizing.

That was spoiled by the second short squeeze in GME, where the price never even reached $400/share, let alone my $800 strike price.  But the volatility make these $800 calls go up 10x in price, which convinced me to close positions at huge losses.  If I had appropriately sized my earlier position, I could have done it again in the second short squeeze.  That's the other problem: my large position meant I was taking losses during anoter opportunity to short a small position in GME calls and wait.

^ Solid advice. The bigger one's position, the easier it is to be forced out on a temporary move. Small positions have a certain optionality to them if you can let them ride to the bitter end, or maintain enough buying power to roll them if worse comes to worse. The logic of small speculative positions butts up against our mind's tendency to seek certainty. It's the high conviction plays, as the gamblers call it, that sink ships.

One more lesson should be learned from @MustacheAndaHalf 's experience: Never, ever, ever write naked short calls. Plenty of money can be made and lost in spreads without the reverse-lotto-ticket effect that would wreck an entire portfolio. At least with short puts the stock can only go to zero.
Title: Re: GME deathwatch - how to profit?
Post by: MustacheAndaHalf on April 08, 2022, 11:48:08 AM
...
Later I assumed institutional investors were permanently watching GME stock, and would respond to any short squeeze with selling.  But I can't point to any evidence in the stock market - unlike my earlier disciplined approach.  I just thought selling GME calls was free money, backed by instituional selling.  But the biggest mistake would definitely be position sizing.
...
One more lesson should be learned from @MustacheAndaHalf 's experience: Never, ever, ever write naked short calls. Plenty of money can be made and lost in spreads without the reverse-lotto-ticket effect that would wreck an entire portfolio. At least with short puts the stock can only go to zero.
No, the lesson is position sizing, which is what I stated and another poster confirmed.  In a book about volatility I saw 300% listed as extreme... GME calls reached 4,000% volatility - an order of magnitude beyond anything expected.  And even then, with a small position you could just wait.

You could also have a "stop loss order", which I mentioned earlier.  You specify the price at which you consider losses too great, and that "stop loss" becomes a market order to limit losses.  Small position sizes with stop loss orders can be used to limit the impact, and limit the losses in someone's overall portfolio.