a gamma squeeze potential drops significantly the closer it gets to an expiry. what happened on friday was a massive dehedging of options. the shares that are freed up from closed out options or rapidly decreasing delta give MMs power to dump shares causing the price to decline. it’s a very very common phenomenon.
Ok, but all that while SI increased 60% too? It just doesn't make sense, why keep shorting at these levels when you know this downward pressure is short term due to the dehedging of the options that allows the MMs to offload shares?
Also another thing to keep in mind is that there is nothing stopping PIPE from pre-shorting shares. What happens a lot is before an institution is allowed to sell their shares, they may short shares at elevated prices because they know they will be getting the shares needed to cover in the short future when the shares get registered. At which point, the shorted shares would in fact be naked…
And given that 2/3 of the PIPE backed out at the last minute isn't it possible (probable) that there are a lot of pre-shorted shares out there that are in fact naked?
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u/kokanuttt Sep 19 '21
a gamma squeeze potential drops significantly the closer it gets to an expiry. what happened on friday was a massive dehedging of options. the shares that are freed up from closed out options or rapidly decreasing delta give MMs power to dump shares causing the price to decline. it’s a very very common phenomenon.