Quote:
Originally Posted by Idigmygirls
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 $100,000 per share. There is no limit when a short squeeze takes place. That's what's happening now.
So, sell GME at a few hundred bucks at your own peril. It could cost you millions to try to make a few hundred.
**THIS IS NOT INVESTMENT ADVICE** I am not qualified or licensed to provide any investment advice. I'm merely giving my opinion on what I think might be happening, but you should not rely on anything I have said in this post to be either accurate or true.
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Unfortunetly you didn't read the post completely, I mentioned the following thing at the end of the post :
The only condition : AVOID LEVERAGE so the thing you said 'losing millions to make a few hundred' is not possible .If you don't understand why,read about Leverage.
Also,the number written by you are irrational,for example '10.000$' that'd mean people would put 650 BILLION $s in the 'game' ,if you find people able to do this,and also have this liquidity then you are GOD.
Please do more research before posting.
P.S. : I can GUARANTEE what I wrote in the first post,by GUARANTEE I really mean 100%, and I'll cut my P*nis if it doesn't happen that way(which is based on math).
P.S.2 : I closed some shorts(opened at 406) in 230 ,I'm looking forward to selling again ,hopefully again from around 400$/share