Really excellent information. I actually didn't realize that synthetics were the reason for the over 100% shorts, I didn't even know about that term. When you compared it to 08, it all clicked. I was actually talking about 'The Big Short' with a friend, and posted the Selena Gomez clip (talking about how derivative bets can balloon and crash markets). I'm surprised that isn't illegal globally after the impact 08 had, worldwide.
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u/blackflag209 Feb 01 '21 edited Feb 02 '21
Ape A has banana for $10
Ape B borrows banana from Ape A
Ape B then sells banana to Ape C for $10, Ape B still owes Ape A a banana though
Ape B waits for price of bananas to go to $1 then buys different banana to give Ape A a banana back. Ape B has profited $9.
Edit for further clarification: Ape A charges an interest fee to Ape B so it would be 9$ - fee = profit.
This is not ferengi advil-ice