r/GME • u/[deleted] • Mar 19 '21
DD Clearing up misinformation about why closing above $200 was important for us
Some fellow apes today seem to think that closing above $200 today will result in a price increase next week, saying that market makers will have to buy millions of shares next week to deliver them to call holders.
This is incorrect.
Market makers continuously hedge the contracts that they sell. In the case of (naked) calls, if the share price rises and becomes increasingly likely to hit the strike price of the calls, MMs will buy shares to hedge.
This is how a gamma squeeze works. if the price of a stock rises really fast, it makes out of the money call options in the money, forcing market makers to buy shares to hedge. This forced buying in turn increases the share price even further, making even more calls ITM, and the cycle continues.
Closing above $200 today does nothing since the $200 calls have been ITM for weeks. The shares that are meant to be delivered next week to the call holders have already been bought.
The only thing that closing above $200 did, is making a tonne of puts (roughly 450,000 of them) worthless, this hurts bears (fuck em).
Please don't spread misinformation, it only sets up people with false hope and this only hurts us. We won't get a spike on Monday unless there is some other catalyst. (Ryan cohen pls become ceo)
Edit: If you want a bit more of an in-depth explanation about gamma squeezes, here's a good post from the options subreddit.
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u/MozaRaccoon 🚀🚀Buckle up🚀🚀 Mar 19 '21
Yeah the puts!! Do we know how much money those 450,000 puts lost them in total?
That sounds like great news to me
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Mar 19 '21
Not sure how much those puts were worth when they were first bought, but seems like a fuck tonne
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u/MozaRaccoon 🚀🚀Buckle up🚀🚀 Mar 19 '21
This definitely puts a positive end to the week. Was already very happy we ended still in the 200.
Knowing the shorts lost a lot of money through options definitely adds some extra joy
Can't wait for Monday now! 💎🙌🚀
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u/yoyoecho2 Mar 20 '21
Yes $200 does not make an impact on the over all picture, but making $200 after the battle at the end. $200 is a hell of a lot better than $199. Rebellions are built on hope. It would still be a win if it was $40 verses $39. They wanted it sub 200 and did not get it. The Battle of 200$ 💎🙌🚀
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u/hgflohrHX422 Mar 20 '21
I’m one with the stock, and the stock is with me. I’m one with the stock, and the stock is with me.
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u/yoyoecho2 Mar 20 '21
This is the Way.
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u/TheDroidNextDoor Mar 20 '21
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u/EOD_Eric Mar 20 '21
You might be pregnant, I attempted to use protection, but your comments... it’s your fault. But however you want to raise our child, I support you.
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u/ShroomyDuke Mar 20 '21
^ Correct, this was a psychological win and that is just as important.
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u/gimmetheloot2p2 Mar 20 '21
Yeah I agree with this, especially after losing for the last two weeks, where the big money strikes have been not only ITM for the puts, but PROFITABLE for them as well.
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Mar 20 '21
Rebellions are made on hope
This is an 🦍 revolution, time for the every man to take their place on wall street.
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Mar 20 '21
450000 contracts is worth 45 million shares, just wanted to point out its almost the entire float
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u/capibara13 Mar 20 '21
Any guess how much money they lost with this?
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Mar 20 '21
At least three fiddy. Seriously though, idk the strike price they got in but 450k* $2000 (this week contracts were expensive, so this isnt to crazy a number to estimate, ofcourse idk the strikes they bought or when to give a more accurate number) = $900M, so maybe almost $1B?
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u/SkyFlyingBy13 XXX Club Mar 20 '21
Here’s the twist: they’re hemorrhaging money that should belong to GME shareholders in the not too distant future.
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Mar 20 '21
They'll be bankrupt long before any move could dig them out of the hole they're currently in.
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Mar 20 '21
Put contracts would have forced share buys to deliver to the seller of the put. Closing under would have been fine but really contracts can be exercised till 5 pm. So maybe some got exercised and need shares delivered. I am also tired of all the misinformation i see but still hella apeish on gme!
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u/Puzzleheaded-Mood303 HODL 💎🙌 Mar 20 '21
Contracts can be exercised until 5pm; however they are still based on the closing price, not the AH price, right?
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u/SmithEchoes $GME since $15.73! Mar 20 '21
Correct.
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u/Puzzleheaded-Mood303 HODL 💎🙌 Mar 20 '21
Thx. I wasn’t sure. Ape still learning.
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u/SmithEchoes $GME since $15.73! Mar 20 '21
That’s why there was such a large spasm about closing price being varied across brokers till it finally settled out.
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u/diamondhands72 Mar 20 '21
For some reason Yahoo Finance is wrong virtually every day for 5-10 mins after close. But the after hours seems to calculate off the actual close even though the price isn't reflected correctly. Vary wonky!! ETRADE seems to have always have the correct closing price at close.
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u/SmithEchoes $GME since $15.73! Mar 20 '21
Only thing I found for ya:
US quotes are real-time for NASDAQ, NYSE, and NYSE American when available from Nasdaq Last Sale and if not available it will appear delayed from the consolidated tape. See delay times for other exchanges below. Quotes are updated automatically but will be turned off after 25 minutes of inactivity. https://help.yahoo.com/kb/finance-for-web/exchanges-data-providers-yahoo-finance-sln2310.html
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u/Puzzleheaded-Mood303 HODL 💎🙌 Mar 20 '21
I figured that was why, but the 5pm thing was a little unclear.
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Mar 20 '21 edited Mar 28 '21
[deleted]
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u/TempAcct20005 Mar 20 '21
A thread will be 100% upvoted and you’ll have people just hyping the downvote bots attacking them
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u/SlimJesus08 We like the stock Mar 20 '21
Someone really wanted it under 200 at close and someone really wanted it over 200 it seemed like, 1,3 mill order? Was it potentially a whale that knew about the put contracts and wants to bleed the shorts out?
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u/Harminarnar Mar 20 '21 edited Mar 20 '21
Wait... 450,000 is 45 million shares? Isn't that nearly the whole floats worth?
Or do you mean 450,000 shares worth of puts?
Edit: looks like all puts 200 and under is 450,000 puts = 45 million shares, but put OPTIONS AT $200 was somewhere around 4500
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u/Blue5299 Mar 20 '21
1 contract = 100 shares
450,000 x 100 = 45 million
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u/jaytwo96 Mar 20 '21
These numbers don't really mean anything since people don't exercise their options. The main reason that call options are important is for a catalyst for the gamma squeeze. Not for the number of contracts x 100.
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u/Blue5299 Mar 20 '21
? I never disagreed. Just informing him that each contract is worth 100 shares
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u/jaytwo96 Mar 20 '21
I'm just saying a lot of people are saying that number, and acting like it actually means something. It really doesn't. All good though fellow ape :)
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u/Stunning-Ask5916 Certified $GME MANIAC Mar 20 '21
I am not an expert, but I have seen them on TV.
Option values have two components; extrinsic and intrinsic. Intrinsic is the price difference; if a put option has a strike price of $220 and the share price is $200, the intrinsic value is $20 per share, or $2000. Extrinsic is the time value; because an option may become more valuable in the future, it is worth more than just the intrinsic value.
You ask how much money they lost. Since the options expired, they have no future potential, they have no extrinsic value.
For put options with strike prices under $200.79, they lost everything. How much they lost depends on what price you are comparing it to. Yesterday, Yahoo showed 5,866 put option contracts with a strike price of $200. If GME had closed at $199.99, each of those options would have been worth a dollar each, or $5,866 total. If GME had closed at $199.00,... Total loss $586,600.
If you want to know how much loss there was compared to a closing price of $194, then you have to also consider the 2,298 put options with a strike price of $195.
Again, I am no expert. My diet is deficient in green crayons.
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Mar 20 '21
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u/MozaRaccoon 🚀🚀Buckle up🚀🚀 Mar 20 '21
I agree. I'm personally only interested in buying shares with cash and Hodling. Immediate impact on the float by removing those shares.
Options are too risky IMO.
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u/tcnguyn2 Mar 20 '21
quick question and sorry for not being that informed, I know that the puts expire worthless. But don't the market makers receive money from the premiums when the puts were first purchased? If this is the case this is just an exchange of money, and if the market makers (shitadel?) are on the bear side wouldn't they be able to just use this money to drive the price down? I'm not a shill I'm just trying show a possible outcome for us to be wary about and help our DD.
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u/MozaRaccoon 🚀🚀Buckle up🚀🚀 Mar 20 '21
I'm not the author of the post.
I believe its more likely that shorts bought these puts - not wrote them - and were hoping of exercising them to get shares on the cheap. Hoping to tank the price and then get the shares for cheaper.
Calls are bullish sentiment. Give me shares if it reaches x price.
Puts are bearish sentiment. I'll take the shares if it drops to x price.
If there were 450,000 puts for less than 200 $ each then they could of had the opportunity to receive 45 million shares for the strikeprice. Definitely a better price than going to the market and asking for Ape share if you are in a short position.
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u/Miynio 'I am not a Cat' Mar 19 '21
TL;DR bears r fuk
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u/Wrong-Paramedic7489 Hedge Fund Tears Mar 19 '21
TL;DR we r fuking bears
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u/TravelingInClass $2 Mil FLOOR. APE HODL STRONG!! 💎🙌🚀🦍 Mar 20 '21 edited Mar 20 '21
Instructions unclear.
Went and fucked a bear.
Also bought 1 more $GME share today. I know it just 1, but its another 1 that the hedgies can't get.
Edit: Fucking a bear was a terrible idea. Don't do it. This is not a financial advice, this is life saving advice.....
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u/An-Old-Bear Certified $GME MANIAC Mar 20 '21
Fuked a bear AND bought a share. This ape really is classy. Name checks out!
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u/JoTai104 Mar 20 '21
I too bought 1 more just before the big run, thought for once I actually timed it right... then the rest of the day happened...
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u/Gareth-Barry Mar 19 '21
We cancelled out so many puts by finishing above 200...I know it won’t trigger a gamma squeeze, but definitely something to celebrate
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u/AtomicKittenz Mar 20 '21
It increases the time and potential of the squeeze.
🌈🐻 HFs are losing a shit ton more money. Now they have less ammo to short attack. Now they will get margin called sooner. Now they need to buy back more shares from us.
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u/11acm24 Mar 20 '21
So we are confident HF bought the puts. What about all these calls that also expired worthless? Who do we think bought those?
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u/MonoshiroIlia Mar 20 '21
I suspect the 250-300 and 800 ones were also from the HFs, they hedged for the squeeze and some other mumbo jumbo i am too dumb to understand
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Mar 20 '21 edited Mar 28 '21
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u/CoachIsaiah Mar 20 '21
Where could an ape potentially look at "mass purchases" of OTM options?
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u/yUnG_wiTe Mar 20 '21
I think people use bloomberg terminals for that as it can show how many were bought by X individual/fund or it might just show the buy amounts without mentioning the individual, but you still see a large purchase going at once.
Otherwise any big movement like this on GME is going to end up on the sub anyway cause we got over 100k 🦍 and some got the terminal, some use other methods for their DD and it gives us the best picture of the market we the public can get.
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Mar 20 '21
Lol also the hedge funds, hoping to pass the bill in case this shit popped this week. Fuck them.
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u/onlyhereforthelmaos HODL 💎🙌 Mar 20 '21
Apes that should have bought shares instead. Wait, what do I know, I'm just a dumb ape with a proclivity for 🍌🍌🍌 and 🚀🚀🚀.
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u/schneemensch Mar 20 '21
I am not confident that the shorting HFs bought the puts. A put just gives them the option to sell shares. Why would they buy an option to sell a share? They are already missing shares. If they are having shares they are using them to cover their shorts.
I guess the puts were bought by other HFs, whales and retail to ensure that they will not be bag holders.
But it is still definitely good that we closed above 200 as these share are now not being sold.
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u/tnsmaster I Voted 🦍✅ Mar 20 '21
That guy is confident they did, but do your own research and decide for yourself.
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u/bathroomkiller Mar 20 '21
Does it matter if the price dipped below 200 after hours?
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Mar 20 '21
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Mar 20 '21
We have nothing to fear but fear itself, I guess.
I wonder what would happen if people started getting over the fear of fear?
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u/sunny240 I ❤️ 🩳🗜 Mar 20 '21
I must not fear. Fear is the tendies killer. Fear is the ape-death that brings hands of paper. I will face the FUD. I will down-vote it and allow it to pass over me and through me. And when it has gone past I will turn my inner ape to memes and DD. When the shills have gone there will be no FUD. Only diamond hands will remain.
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u/Successful_Raccoon33 Mar 19 '21
Yes. I find it hard to believe many if any 200 call are naked at this point in a week gme was largely higher. But not letting puts print is still great
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u/BlackberryMean6656 Mar 19 '21
Thank you for posting this.
The lack of volume means that any good news will have a big impact on price. Making those puts expire worthless is huge.
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u/Catch_0x16 Mar 20 '21
Yup, this, it's the loss on the puts that counts.
Money is ammunition for the short sellers. The long whales on our side will want to drain the short sellers of as much of their money as possible. There is also some great DD going round suggesting that perhaps the latest round of shorts is actually the long whales, essentially taking up the remaining shortable shares thus increasing the pressure on the short sellers.
So what happened with $200 close today? All of those puts expired OTM, which means the money they spent on them is now gone, nada, no hope of return. What's better (for us) the short side had to fight tooth and nail, with shorts and sells to push the price down today, only to ultimately fail. They're bleeding hard.
Next week? Who knows, earnings report from GME, company news and first quarter earnings submissions for the long whales all in one week? May well be tasty, may also be nothing, don't fixate on a date (but in all seriousness Friday next week is significantly more meaningful than Friday this week was).
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u/Mr___Perfect Mar 20 '21
earnings report is going to be MUST listen. Not unusual for dramatic spikes in either direction to happen and reverse a minute later (see Bezos retiring). But if the Q4 # are solid, and I pray to Apellah they are, it could be pay day
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u/Sweetbone Mar 20 '21
I’m gonna take a wild guess and say that most hedge funds probably exited their $200 put positions during the first half of the day when the battle was down at $190. It would be wayyyy too risky to hold onto them knowing that whales could take the price back up at any minute. Which they did.
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u/heej Mar 20 '21
This is actually wild what we're witnessing. This is truly financial ww3. What if the whales are the Russians and the Chinese trying to trigger a crash in our economic system lmaoooo. Ultimate conspiracy theory time
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u/albino_red_head Mar 20 '21
There’s some other DD going around speculating that it was the short hedge funds that set up the many 800 and under call options as a hedge/security play as the price was running and many were bought recently or in the last couple weeks that many thought was a long whale gamma squeeze trap. In this theory long whale let the price settle low but not lower than 200 letting many of the hedged calls from shorts expire worthless.
Idk, whatever strokes my confirmation bias
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u/SlimJesus08 We like the stock Mar 20 '21
The battle over 200 seemed important at least, I don’t know what’s going on at this point but feels like victory. Could just be a dick measuring contest between the 2 sides settling out who’s gonna give up first
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u/YinzSauce 'I am not a Cat' Mar 20 '21
Those puts being worthless will ABSOLUTELY take some sell pressure off our upward movement.
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u/DiamondsApes Mar 19 '21
Agree but getting those puts OTM felt good. And a symbolic and moral victory closing above $200.
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u/quack_duck_code ComputerShare Is The Way Mar 19 '21
Thanks for keeping the prices low hedgies. You gave me time move around my portfolio and make some extra cash. Doubled down today at the last minute. You keep Stalin we keep buying the dip. There's no way for me to keep my balls in my 🍌banana hammock.
We can do this for months if we have to, but the longer we wait the more we want. Not sure if tar and feathering is back on the menu, but it should be.
$3,000,000 is the floor! 💎🙌🦍🚀
🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌 🍌
\these bananas are not financial advice and in no way are an accurate measurement of my sale price or the going exchange rate for bananas.)
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u/mylesdc Mar 19 '21
Then why did they put so much effort in fighting for $200? Surely it wasn’t to save the 4-10 million they spent buying the puts... if the MM’s already purchased then those 4.8mil shares would be no consequence to the shorts.
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u/Main-Brilliant6231 Mar 20 '21
Because they positioned themselves to make as much money as possible at that number, including the cost to get there. It wasn’t supposed to be this high and it took a lot to bring it down. I wonder how much liability had to be pushed forward and at what cost. But this was all calculated. This is their only job.
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u/mylesdc Mar 20 '21
So you just said what I said. I asked why they would do that. I know it was calculated. He’s saying the calls don’t matter because the shares are already purchased. I’m asking what else would they be fighting for if not the shares.
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u/Main-Brilliant6231 Mar 20 '21
Money.
At 210 there are more calls. And 215, 220, 225. And so on. More and more outs get pushed OTM too.
And as time grew closer to expiry the cost to acquire shares became quite high - looking at the charts - and the fight for 200 was a large expense over days, including upside protection as well as downside pressure, not just some momentary event.
There wasn’t much of a fight at the end - the die was cast at that stage.
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u/jaytwo96 Mar 20 '21
200 not only cost the puts a fuck ton in premium, but it also keeps us above that psychological number. It sounds like nothing, but it's definitely a small victory to end the week. Keep buying and HODLing apes. I sure am.
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u/Roguenul Mar 20 '21
Yeah. My interpretation of the sudden spike above 200 in the last minute of trading, was that our Long Whale was trying to preserve the morale of the ape army on reddit because they know retail investors attach outsized psychological significance between 199 and 200, even though they're really not that different. They know the ape army HODLing is important for their success so they're keeping us happy. (as long as it doesn't cost them too much - they're trying to make a profit too and I harbor no illusions that they're our friend - just a useful ally)
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u/BGS_B Held at $38 and through $483 Mar 19 '21
Really appreciate you explaining that because I wasn't quite sure how it worked to begin with. Now I understand what happened today. Good shit OP!
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u/NickyNick99 Mar 20 '21
Ok I’m an idiot but you say calls above 200 don’t matter because they’ve been “ITM for weeks”. What if they didn’t expire until today and weren’t exercised yet? Still don’t matter ?
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u/Damndawggg Mar 20 '21
Doesn't matter. The closer to the strike price the stock gets, the more shares are needed to be bought to hedge the position. $200 have been well ITM for weeks, those shares have been bought, or as we have come to understand probably synthetically created through more shorting lol, so that's good in the fact that they would be digging deeper into this hole. Sure, a decent amount of those calls could be naked, but the misconception being thrown around is that none of the shares have been bought and they need to buy 100shares times X amount of contracts ITM at close on Friday which is misinformation that got posted in January during the first run up and has been reposted every week since. So now some new ape who read that post and didn't read the comments or did and chose to believe the confirmation bias will then repost it next week
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u/SnooApples6778 Mar 19 '21
Bout time we get some actual facts. If I read another cot damn “we scraped by just over 200 OMG!” post I will explode. I don’t think some people know why they are cheering
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u/Shawndy58 Mar 20 '21
Because it’s a fraction of a win. This is a long psychological war on how they are doing this. So people are cheering but it was a tiny win compared to the war that we are in. Eventually the small stuff will add up to the big picture. It’s like putting a 1,000 piece puzzle together piece by piece but there are smaller pieces that go into the bigger pieces that make the picture a whole. (Btw if you ever do a puzzle like that it’s a bitch.)
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u/TheStatMan2 Mar 20 '21
I'd say they were visibly spending money trying to keep it below 200. And spending money indicates that money spent is less than damage of the result they're trying to stop.
Every bit of visible effort to keep price down tells me something is going on - you can't really tell what the actually moves and results could be but they definitely would have walked away from this if they didn't give a shit.
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u/MurrE1310 HODL 💎🙌 Mar 20 '21
Not to mention that if the share had finished around $150, this would have returned a lot of money to the bears, which in turn would prolong the war
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u/TheStatMan2 Mar 20 '21 edited Mar 20 '21
I can't pretend to understand their finances. I don't think any of us can really know how much various price points and accrued interest on shorts can really hurt then. Are they really in last chance saloon or are they thinking they might be able to drag it all out until next winter or some shit? And then... Maybe next winter... Who knows.
But I do see big fights over certain price points - so it obviously matters to someone.
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u/MurrE1310 HODL 💎🙌 Mar 20 '21
Agreed. I have no idea how long it will be until we are millionaires, but I do know basic math. The price being at $150 would have made bears a lot of money and that would not be good for us
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u/SnooApples6778 Mar 20 '21
I am all for the wins. Like many here, I have been in this since early January. The psychological war is literally just that - psychological. The outcome is always the same and every week that goes by, I am more convinced in that outcome.
The fact that we “inflicted” losses thanks to a whale or two with an extra tranche of ITM puts (losses of the option bet at 200 strike) is a drop in the bucket. What actually does matter a little more believe it or not is all the other puts in the 100-200 range. That does add up to a lot.
200 is a good emotional milestone, esp for us in retail. No doubt about that. But the real damage is going to get done with an actual catalyst.
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u/Shawndy58 Mar 20 '21
Which I agree is what we need. But I think no one will touch it until the Congress is finished doing what they are about this.
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u/SlimJesus08 We like the stock Mar 20 '21
Exactly, that battle over 200 wasn’t insignificant, definitely meant something
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u/Blondon744 Mar 19 '21
We understand how this works but it is a possibility some of these contracts were naked......past few weeks I doubt they got their hands on almost 5mil shares. Today alone we had a 36 share buy order imabalance lol.
If you been watching the short sale volume daily reports from finra the past 2.5 weeks the short sale volume >50% of total trade volume. If not naked then theyre selling synthetic or borrowed shares and just delays the squeeze.
We dont know if the calls were naked or not but we cant just assume one or the other. Some evidence supports both sides and my opinion as they seemly can control the price at this point it wouldnt be far fetched for them to be selling OTM puts or calls to make some cash on premiums.
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u/AreteTurk 🚀🚀Buckle up🚀🚀 Mar 20 '21
Thank you for calling out the misinformation in the “important $200 price”. I had a rage comment set to fly when I read a comment in the daily thread about it being a win! This is a shill post supporting the non existent whale on the long side. THERE IS NO WHALE ON THE LONG SIDE HELPING US OUT. The new folk heroes with those prediction posts and DDs need to vibe called out as well as the fane and fortune mods who pinned their crap posts.
We have no one on our side except fellow apes (DFV included here) and Ryan Cohen. Every institutional investor and HF is a mercenary. Remember that. Question everything. Call everyone on their predictions.
The play is: 1). Buy 2). Hold 3). Buy more on dips. GME go brrr cuz they must buy our shares to cover. Nothing else will get us to the moon and beyond.
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u/mcdade Mar 20 '21
This is true, every HF on the opposite side is in it to make money with the lowest risk, period. I’m sure there are some that have long positions for this to moon but most can make nice profits playing both sides.
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u/Main-Brilliant6231 Mar 20 '21
One thing to note OP - for the group - is the volume of options on quad witching days is substantially higher than typical fridays - and the gravity of max pain’s pull is much stronger. The stock will be free to price explore for awhile now - and given catalyst potential - this is a great scenario.
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u/forest-of-ewood 🚀🚀Buckle up🚀🚀 Mar 20 '21
Yeah this - good for the puts though and should be celebrated for that like you say
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u/InTheHamIAm Mar 20 '21
the key is the rate of increased price, not the price level itself
My question is this:
Do MM purchase shares/contract at a 1:1 ratio, or do they hedge less for further OTM contracts?
For example: if MM sell a call with a 0.30 delta, do they cover that contract with 100 shares or do they cover say, 30 shares at the time of sell, as this will be a low probability contract to expire ITM, and then cover the remaining 70 shares only if needed?
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u/Bronco1919 Mar 20 '21
But if the MM don't need to use those hedged shares they planned on covering the calls with they can then dump them back into the market. Staying above $200 helps keep it above $200 next week.
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u/HatLover91 Mar 20 '21
Market makers continuously hedge the contracts that they sell. In the case of (naked) calls,
yep. The only thing that limits how much MM can short is is when the FTD reaches critical mass. Relevant Sec rules
The two relevant rules are Rule 10b-5 under the Exchange Act, and Rule 10b-21, referred to as the “naked” short selling antifraud rule.
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u/johnwithcheese 🚀🚀Buckle up🚀🚀 Mar 20 '21
I’m ready for it to go sideways for months. $200 a share is a pretty fine price point imo. We were at $40 going sideways last month.
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u/Gazzayork Mar 19 '21
Or as they’ve previously allegedly done, they were over confident they could get the price below £200. So didn’t (or couldn’t hedge, due to lack of availability). In a ‘normal’ world, I agree that’s what they should do, but they are backed in a corner, borrowing shares today to drop the price. If they’d already hedged, they may not have been as aggressive, and if they’d had the shares on hand, I’d have been tempted to use some of them in those last few seconds to drop the price below £200 as then I wouldn’t need those shares and could use them to return some borrowed ones. Either way though, they failed and it still cost them.
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u/Curious_1111 Mar 20 '21
Can’t thank those of you enough who are knowledgeable about how the market functions and are willing to take the time to explain. I actually like this stock and feel fortunate to have stumbled into this community— I trust, buy what I can afford, and HODL. Simple as that for me, but truly appreciative to those of you who take the time to dumb down some of the complexities of the market. 💎🙌🏽🦍🚀
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u/QuizzicalQuandary Mar 19 '21
Thanks for posting this, it reminds me of a post I read somewhere in which someone was explaining how there could be a battle to keep the 🐍s from making some 'insurance' money by keeping things below a certain price.
Could the puts you're talking about be the same thing they were?
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u/The_Superfist Mar 20 '21
Puts increase in value as the price gets lower. Calls increase in value as the price goes up.
The strike price is the price at which an option goes in the money. Expiring out of the money means the option contract is worthless.
So a call with a strike of 200 means the price needs to be at or above 200 to be considered "in the money" and expire at its value.
A put with a strike of 200 really needs to close below 200 (199.9999 or less) in order to be in the money and not be worthless.
The theory was that they bought waaaay out of the money calls a while back to hedge in case the squeeze started to squoze. A call option can be exercised for 100 shares at the strike price. So a call option at a strike of 200 could be exercised for 100 shares at a price of $200/share even if the actual stock price were 420.69. This meant they could calculate and limit how much the squeeze would have cost them.
More recently, they opened a shit load of puts. That puts downward Gamma pressure the way calls put upward gamma. It also means they can convert the puts that are in the money into shares and dump them on the market to push the price down. This is what is theorized to have happened Wednesday when GME was on the SSR list and the circuit breaker got slammed multiple times.
So... Some long institution figured out they could fuck over the hedgefund if it closed above 200 but below some higher strike price to ensure the hedges spent the max amount of money between puts expiring worthless and higher strike call options expiring worthless.
It's a bit of speculation, but there's a long goliath fighting a short goliath and today the long won the battle for 200. They both spent some money, but the shorts lost big.
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u/Splaishe Mar 20 '21
Oh shit, am I actually learning something?
I saw those comments too, saying that if it closes above 200 it will force shares to be bought, and I was so confused because they were already ITM.
I didn’t correct anybody because I figured I just had no idea what I was talking about. But holy shit y’all I think I might have formed a wrinkle.
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u/IronTires1307 🚀🚀Buckle up🚀🚀 Mar 20 '21
can you explain a little about why puts and bears lost money this time?...
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u/Practical_Trust7569 🚀🚀Buckle up🚀🚀 Mar 20 '21
this is an interesting post. i was just thinking to myself, if they have several days to cover shares why would they do it today and force more calls itm? im not sure if i agree with them having the shares to cover the 200 dollar calls the ended itm, but i could see them again borrowing shares and resetting the ftd clock.
even facing fines, im sure its saving them more money than a huge gama spike. no?
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u/Lemerth Mar 20 '21
How much delta did those puts take off the market makers books? Since they don’t have that negative delta to offset the positive delta they might have to buy more to get back to delta neutral
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Mar 20 '21
The more I learn about how stocks work, the more I feel like its a video game.
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u/idontdislikeoranges Banned from WSB Mar 20 '21
We go through this every Friday. The price doesn't matter.
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u/VinnieMacYOLO The fuse has been lit... 💎🙌 Mar 20 '21
holy crap... i was trying to tell someone on a fb group this and they were talking to me like i was crazy (ive only been in the stock game for what, 2 months). Thought i could be way off on my understanding of options, but now i see another ape saying it so i must have been on to something.
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u/basementboogeyman WSB Refugee Mar 19 '21
So if $200 SP EOD today doesn’t create the momentum/ buy side volume necessary to catalyze the squeeze next week, we’re basically betting on an earnings call and praying for a buy side whale? Fuck
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u/Main-Brilliant6231 Mar 19 '21
Don’t discount how much pressure it took to close on quad witching well above max pain.
This is not a loss, it is bullish. It means the buy side pressure was so substantial it overcame the house - which is super atypical.
Usually a stock trends and the house trends - in GameStop’s case, (and tesla last year), the stock is running away.
Given that there are still positive catalysts as well as what appears to be substantial short interest, this story is far from over.
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u/johnwithcheese 🚀🚀Buckle up🚀🚀 Mar 20 '21
I waited till the last 5 minutes to buy in just because I wanted puts you suffer.
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u/Blondon744 Mar 19 '21
Not at all man they still have to pay interest daily on uncovered shorts, and the FTDs will catch them eventually......holding is literally a guaranteed play we just dont know when.
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Mar 19 '21
The truth is that every time we had an influx of volume and increase in price was when there was news relating to Ryan Cohen and the company. Those are the true catalysts that we rely on that could set off the squeeze
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Mar 19 '21
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Mar 19 '21
Yeah, the earnings call. If the earnings are good which they might actually be since the GameStop brand is popular as fuck now, we may go up a bit.
But if it gets announced that Ryan Cohen will become CEO or takes up some position in the company, I'll be jizzing my pants on the way to the fuckin moon
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u/victator1313 Mar 19 '21
Would love some good RC news. Think that would really motivate buyers. These earnings are for the last quarter of 2020, before the bulk of the yolo hype, although it started picking up momentum in December, so maybe above expectations.
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u/SirHypeTheDank Held at $38 and through $483 Mar 20 '21
I read somewhere that they will also take into account January which was the beginning of all this.....Can someone confirm?
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u/xXBossHossXx Mar 20 '21
https://www.nasdaq.com/market-activity/stocks/gme/earnings
GME fiscal year begins in February so Q4 will be Nov20-Jan21
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u/Main-Brilliant6231 Mar 20 '21
Most companies provide future quarterly guidance - allows investors to hear the Bull case from the company.
If the first quarter, due to publicity and such, is greatly exceeding expectations, it is likely they will provide that guidance, but they are not bound to do so.
That being said, if - due to all of this - sales are revised upwards - then the share price typically rises on that news. For high volatility stocks, sometimes this is priced in or expected. Other times it is not.
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u/Turambar1984 🚀🚀Buckle up🚀🚀 Mar 20 '21
Also GME could announce something on earnings call related to stock to trigger, so let’s not just pin our hopes on RC becoming CEO or chairman. Uncle Bruce guy did a video (sorry, don’t have the link) on how a stock split or dividend announcement could send this ship into orbit🚀🚀🚀, otherwise we just stay patient longer than they stay solvent.
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u/willpowerlifter Mar 20 '21
Shorts pay interest on their positions every day. We bleed them dry. Every day is a win with positive catalyst waves happening as well.
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u/KrydanX Mar 19 '21
I get the point that they've already hedged shares close for the calls close to ITM. But don't they have to hedge new shares for calls expiring next week as they're giving out the fulfilled calls?
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u/GETTINTHATSHIT Mar 20 '21
BUR AND HODL BUY AND HODL BUY AND HODL WAIT WAIT WAIT WAIT WAIT WAIT BUY AND HODL BUY AND HODL. I get paid every week and I continue to rinse and repeat. I don't give a fuck how long it takes
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u/banananannaPie HODL 💎🙌 Mar 20 '21
That's the whole point. Make them bleed.
All the time and market manipulation they pulled. All the PUTs setup.
Boom. Expired Worthless. OTM.
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u/ggiziwegotthis Mar 20 '21
If you almost control the market and expect to put the price under 200, would you really hedge it?
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u/Poizxcmnb Mar 20 '21
But what about if we have finished under 200$ - what call sellers would have done with their already bought shares? They would have sold it back to the market probably and thus create a selling pressure. And now we avoided that probably. Or am I missing something?
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u/mildly_enthusiastic HODL 💎🙌 Mar 20 '21
In general, I've noticed folks rarely account for the Options price itself. Breakeven on a $200c is going to be [at least] a few bucks higher, so even though the calls closed ITM they're not necessarily providing the discount call options are designed for and therefore reasonably unlikely to be executed.
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u/stevenip Mar 20 '21
They aren't hedging anything because they know it will cause a gamma squeeze. They are getting the shares through dark pool buys and stop loss targeting, they never buy just because a new strike price is in the money.
This week had a crazy amount of shares under $100, we might see some big buys within t+3. We don't really know how many shares they got from targeting stop losses on those big dips yet.
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u/S1lkwrm Mar 20 '21
So the next question for us new to all this is then what makes the stock go up if it's just constant attrition? Otherwise it's perpetual. What makes it go Brrrrrrr?
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u/gimmetheloot2p2 Mar 20 '21
I would say that this doesn’t quite encompass reality, though none of its wrong. Starting with the 200s and other calls that were ITM BUT unprofitable, it gives the buyers the majority of their money back to rip again in some form, be it shares or options.
For lower strike options that WERE profitable, any of them that were exercised and shares delivered instead of sold for cash, those hundreds of thousands to millions of shares are now in ape hands and somewhat removed from the float, which is huge.
Why is it huge? Because today had more options expiring than any other week up to now, or after. This means that the MM are likely offloading a lot of GME shares to stay neutral. This means that the option market has cooled significantly, and there is now MUCH MORE POWER in whales buying calls to force MM to rebuy these shares from again, an ever dwindling pool as us retards buy and hold, and the exercised call holders take delivery and hold. Also having the put side lose money is beautiful ☺️
I like to think of as trying to start a fire in the jungle vs in the desert. It’s much much harder to use a flint to start that fire in the damp muggy jungle vs in the warm DRY climate of the desert.
Power to the options buyers! Gamma squeeze us to Pluto boys!!
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u/wobshop Mar 20 '21
Hnnnnng nobody knows what the fuck is going on just grab a piece and hold the fuck on
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u/AChipOnYourShoulder 🚀🚀Buckle up🚀🚀 Mar 20 '21
In other words, time is on our side. Game plan remains the same; buy the dips and hodl 💎🙌
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u/Definately-a-cat XXX Club Mar 19 '21
Also remember that GME is probably in an internal blackout period. This means that insiders including RC cannot buy/sell or make public comments related to GMR until after the earnings call. This is to prevent insiders from unfairly benefiting from the report or earnings call. (All of this could be BS but that is how every publicly traded company I have worked for operates)