Quote:
Originally Posted by SeoDealer
These are my 2 newest analyzes : https://www.facebook.com/permalink.p...935 486669964 .
I'll just copy paste :
While the idea from #wallstreetbets is nice,and indeed it gave the little man a little bit of cash from the big guys that always screw them over. Unfortunetly any rational man can figure out that this will not last,especially because they chosen weak stocks.
And a trade we're suggesting today : #Sell #GameStop ,around 400$/share . To be more precise,it might get to 500,or 600,or whatever, but it is a certainty that it will go back below 100 and maybe below 50 too.Especially since volumes are getting weak.
So : easy money. The only condition : AVOID LEVERAGE. |
This is a trade that will bankrupt whomever tries it.
I wouldn't touch shorting these stocks. The whole point of the Capital Raid is that these particular stocks are from weak companies. The way the trade works is this:
Big hedge funds have massive short positions in poor quality stocks like GME.
The raiders from WSB buy the stock - with complete disregard for the "fundamental" value of the underlying company (this is a purely financial play that is not at all concerned about traditional valuations).
The hedge funds, who have huge short positions, can suffer theoretically infinite losses (there is no limit to how high a stock can go, and if you are short, it means that you have sold a stock that you don't own with the promise of buying it back later).
As the stock price goes up, the hedge funds are required to do one of two things: either 1) they must buy the stock at the current price to close out their "short"; or 2) they must put up cash (margin call) that will cover the paper losses and then pray that the stock goes down.
As hedge funds buy back their stock to close out short positions, it further increases demand for the stock, raising the price.
Because the raiders do not sell the stock they purchased, the available pool of shares that could be purchased by hedge funds to close their positions gets smaller and smaller, and the price increases become exponential.
Right now, there is a demand for about 130% of the available stock. That's what is required to "close out the shorts." That means that the stock could go to $1000 or $10,000 or $100,000 per share. There is no limit when a short squeeze takes place. That's what's happening now.
So, sell GME at a few hundred bucks at your own peril. It could cost you millions to try to make a few hundred.
**THIS IS NOT INVESTMENT ADVICE** I am not qualified or licensed to provide any investment advice. I'm merely giving my opinion on what I think might be happening, but you should not rely on anything I have said in this post to be either accurate or true.