The 2021 Squeeze and the lying SEC
[THIS IS NOT MARKET MANIPULATION AS THIS IS NOT GUIDANCE NOR ADVICE, ITS MORESO DD AND DISCUSSION]
This one might be boring for all you “GME to the moon” apes, who don’t read, so skip this post if that’s you. For everyone else, I’d like to discuss something that keeps getting buried every time it’s brought up. OPTIONS.
I’ve been here since February of 2021, when the squeeze got my attention. I read all the “DD” (most of which was crap btw. Sorry but 99% of you guys don’t know jack and it shows), and from there have watched countless YouTube videos, not just of technical stuff, but of market makers and hedge fund managers talking about what they do. I’ve read SEC filings and reports, company quarterly reports, and books on investing and investment tools. Despite 5 years of this, I’d say I still don’t fully understand it, and continue to lose money putting it in practice, however there’s one thing I’m sure of
OPTIONS
I have learned about how market makers buy and sell options, hedge by buying shares, pin price to maximize losses, make liquidity grabs to take your orders, and so on. It’s all built to give the house the edge. However, tying it back to GME
2021 was a gamma squeeze. I don’t care what the SEC report says, that’s what it was. There’s reports that back up this thinking. They state that the SEC fundamentally misunderstands hedging, they focused on the wrong time frame (late January, and they missed the time of the massive short position buildup), and that “retail hype” was the scapegoat to explain this market mechanic.
And I’m here to tell you, THE SEC ISNT GOING TO POST A REPORT THAT REVERSE ENGINEERS HOW TO MAKE A MASSIVE SHORT SQUEEZE.
Take a minute and go read the report again. The SEC has the balls to say that retail was buying more puts than calls, and that hedge funds were buying and not writing these calls. Think about that. They said RETAIL WAS HEDGING when there was a squeeze. Have you guys seen these ape posts or tried having adult conversations in this sub, or that other snobbystonk sub? Retail doesn’t know how to hedge for shit. They go all in.
I’m saying this because if you understood how options worked, tie that into the short interest, cost to borrow, and FTDs, you start to see it clearly. Hedge funds sold more calls than shares existed. Let’s say there was 480M shares available. If there was 480,000 calls in the money sold, then think about that. If they were exercised, there wouldn’t be enough shares. What do market makers do? Hedge. They buy shares as calls go ITM in case they are exercised. Now how do you get 140% short interest? A mix of a gamma ramp, naked calls sold, and naked shares.
So you start with tracking GME. You watch its options chain. Let’s say price is $8 and you see high open interest at $10. GME has been going up for weeks, so you buy some calls for $10. Other people see it and buy in too. As price nears $10 market makers have to buy shares just in case. As price goes up, people who want cheaper lottery tickets buy the $11, $12, or $15 strikes. As the week ends with the $10 calls ITM, because there was such a huge amount, the next week price goes to $11 then to $12, and screw it, let’s just go to $15 because there’s a lot of open interest that’s causing market makers to hedge. So long as the options buyers aren’t selling their options, the ramp keeps going.
You do keep an eye on cost to borrow, as that tells you if there’s pressure every day and when pressure gets relieved. If cost keeps going up, expect shares to be hard to find. That’s momentum. Track your FTDs on top of that, and look for that T+35 from last month. It gives you an idea of when to expect price jumps.
This is a simplified explanation, but you need to do your own research. I’m just tired in bed trying to do a PSA
So basically,GameStop was cheap, kitty bought in, options were being bought, market makers probably sold them naked, then dr b and cohen came in, and price caused a gamma squeeze as more and more options went itm. I don’t have the data as for some reason it’s hard to find, but I bet the options chain looked crazy during December and January. So many options went ITM and market makers were desperate to hedge by buying shares but no one was selling. That’s what the squeeze was. Think about that interview with Peter what’s his name. “If the longs had known they could recall their shares, it could’ve collapsed the system”
It’s not hard. It’s math. There were more options ITM than physical shares existed. That’s what would’ve sent the price into the stratosphere. Yeah, buying and holding shares helps a tiny bit, but it’s not near the same level as options. It helps if you don’t allow share borrowing, and don’t sell. But retail doesn’t have enough shares for it to really affect a gamma squeeze. When they turned off the buy button, and killed momentum, the options holders closed out. Share buyers sold. That’s a fact. And the closing out of those positions, along with the margin call of 3Billion robinhood got waived, allowed the market makers to short tf out of the stock and reposition. Those FTDs piled up and that’s why price rocketed back up February and march.
All these stupid theories about swaps and hidden short interest are stupid as f. I’m sorry, get mad, but I’m over your guys theories that have no merit to back it up and nothing to research. If you wanna argue this point, make your case instead of just disagreeing.
RK posting his Options 101 meme
RK posting his options in his YOLOs
The WEEKS long ramp ups that are violent
The follow up a month later, usually
It’s all options guys……
Now I’m not suggesting anything, but price isn’t going to skyrocket randomly tomorrow off of “hope” or “swaps”.
While I have your attention, I’d also like to bring up the fact that RK built up his options position in 2024 over a few weeks, quietly. Then he tweeted, and started posting and made his livestream announcement. He positioned, and then built up hype with us dumb apes. I’m not against him at all, but he was manufacturing his own Damm gamma squeeze. How do I know? Because it was working. The moment markets opened that Monday, I bought far OTM calls that I could afford, and price went toward if and beyond. And guess what happened next
GAMESTOP RELEASED EARNINGS IN THE PREMARKET AND ANNOUNCED THEIR SHARE OFFERING
The day of his livestream. I think that’s what the bandages and beat up look were all about. He wasn’t trolling the media on purpose, he got murdered by Ryan cohen . Ryan cohen shortly after came out saying he doesn’t like traders or speculators .
RK was in it for a squeeze, RC said no.
While I do see Ryan Cohen wanting to do what’s best for GameStop, he didn’t care for RK or us. I say us because WE could’ve benefited from a squeeze, a lot of us did. Those who held since then missed out and are probably in the red from that day,
Idc what you vote for with this eBay and dilution, but if you’re like me and want wife changing money , learn the options plays, learn what to look out for, and stop blindly believing in RC. Sure he could make a good plan, and in 5 years your $50,000 turns into $120,000
But I want to 100x m pay returns on the next gamma ramp,
Ty for your time