Jump to content

GME - Game Stop Corp

cmattporter

By cmattporter
in Investment Ideas

 Share

Recommended Posts

  • Replies 647
  • Created
  • Last Reply

Top Posters In This Topic

Popular Days

Top Posters In This Topic

Popular Days

Posted Images

compoundinglife Newbie

compoundinglife

Posted
Posted

One of the obvious observations I have from the GME saga is how hard it is to determine what the short interest actually is on a highly shorted stock. You have companies like S3 that build products and systems just to figure this out. It seems like the root cause of this is the T+2 settlement lag. This creates a huge hole for naked shorting and probably other nefarious activity. Even getting the settlement time down to EOD would be a big improvement. I don’t think real time settlement is possible any time soon given the volume (HFTs etc...). It appears options are settled same day, why is the DTCC still living in the Stone Age? Am I missing something? Or is it just sloth.

 

I once spent some time researching a tax topic known as "shorting against the box" which back in the day was used to defer capital gains indefinitely.  The technique involved indefinitely delaying realized gains of the appreciated security by instead shorting an offsetting amount of that security. 

 

I believe that the "against the box" technique was addressed by the tax code in the late 1990s, but it still left open a rule stating that the capital gains event didn't occur until shares were delivered.  And so was born the naked shorting nonsense where a hedge fund could delay capital gains trading an oscillating stock like Fairfax Financial Holdings with an attendant growing naked short interest due to the reluctance of delivering physical shares for tax purposes.

 

Interesting. Looks like the code changed in 1997 with the constructive sale rules. Looks like collars with a 15% band or greater are considered by tax accountants to not be constructive sales.

Link to comment
Share on other sites
stahleyp Newbie

stahleyp

Posted
Posted

with options expensive, has anyone risked just straight shorting this at this point of 300+ price?

 

You can pretty much buy whatever right now and make money due to IV. What’s it 300+% now? I traded around a bit and then ended up using the gains to buy some $20 Jan 2023 puts. Nothing substantial though.

 

I have friend who have no investing experience, piling into this thing with calls and shares. Same with AMC and other stocks.....who’s the idiot? Depends what timeframe you look at and how lucky you get.

 

How's this guy doing?

Link to comment
Share on other sites
  • 2 weeks later...
UNF2007 Newbie

UNF2007

Posted
Posted

I'm not so sure this is being driven by retail investors. The retail induced short squeeze story makes sense, until you think about the volume/$$ that was traded near the peak. Today's move makes even less sense in the light of a group of retail traders who were seemingly all in and acting in a coordinated fashion, only to get crushed, now to have access to massive liquidity to drive the price and volume up 2X. Anyone else think the retail narrative is a bit fishy?

Link to comment
Share on other sites
Okta Newbie

Okta

Posted
Posted

I just do not know what is going on. Besides valuation, risk of cornering the market is another reason to allocate less to the USA. Rule of law was the main reason of outperformance of the US markets in my opinion.

 

It should be investigated who exactly bought GME: quants, hedge fonds, just retail guys? I believe it was illegal to go long with the only reason of forcing someone else to buy at a higher price. The typical retail investor can just plead being dumb enough, but if sophisticated investors bought they should be punished. Especially, if they also tried to push the stock via spreading false rumors like short interest is so and so, when in reality no one afaik has the data.

[disclosure: lost some money betting on the price of GME to go down, at time of posting: no position, but may change any minute].

Link to comment
Share on other sites
Spekulatius Newbie

Spekulatius

Posted
Posted

I just do not know what is going on. Besides valuation, risk of cornering the market is another reason to allocate less to the USA. Rule of law was the main reason of outperformance of the US markets in my opinion.

 

It should be investigated who exactly bought GME: quants, hedge fonds, just retail guys? I believe it was illegal to go long with the only reason of forcing someone else to buy at a higher price. The typical retail investor can just plead being dumb enough, but if sophisticated investors bought they should be punished. Especially, if they also tried to push the stock via spreading false rumors like short interest is so and so, when in reality no one afaik has the data.

[disclosure: lost some money betting on the price of GME to go down, at time of posting: no position, but may change any minute].

 

Why is buying a stock for whatever reason illegal? What does any of this have to do with the rule of law? Also, if you think the stock is manipulated, why deal with this stock at all? Nobody forces you to play here.

Link to comment
Share on other sites
benhacker Newbie

benhacker

Posted
Posted

I just do not know what is going on. Besides valuation, risk of cornering the market is another reason to allocate less to the USA. Rule of law was the main reason of outperformance of the US markets in my opinion.

 

It should be investigated who exactly bought GME: quants, hedge fonds, just retail guys? I believe it was illegal to go long with the only reason of forcing someone else to buy at a higher price. The typical retail investor can just plead being dumb enough, but if sophisticated investors bought they should be punished. Especially, if they also tried to push the stock via spreading false rumors like short interest is so and so, when in reality no one afaik has the data.

[disclosure: lost some money betting on the price of GME to go down, at time of posting: no position, but may change any minute].

 

 

Why is buying a stock for whatever reason illegal? What does any of this have to do with the rule of law? Also, if you think the stock is manipulated, why deal with this stock at all? Nobody forces you to play here.

 

Spek, not endorsing the op, but stock cornering was a huge issue in the lead up to the 1929 crash.  Much of the 40/34 act and the creation of the SEC was to ensure manipulation was not going to happen.  There were stock pools, covert groups acting in concert, which was made illegal (or it had to be disclosed if you were acting as a group).

 

I don't know the specifics of what kinds of options trades would be illegal, but clearly someone buying huge money in short term calls is at least reason enough to raise an eyebrow about manipulation.

 

It's true that we are all free to avoid names that appear manipulated, and no disagreement, but I do share the general view that lack of a level of consistently enforced rules is a very bad sign for US markets. 

Link to comment
Share on other sites
Okta Newbie

Okta

Posted
Posted

Why is buying a stock for whatever reason illegal? What does any of this have to do with the rule of law? Also, if you think the stock is manipulated, why deal with this stock at all? Nobody forces you to play here.

 

Fictitious example: fund manager A with hundreds of billions AUM thinks GME is worth less than 10$, but short interest is >100%.

A: Let us just buy GME unlimited. Our algo will simultanously buy OTM call options > shares outstanding and we will also go long via contracts for difference overseas and other derivatives issued by banks overseas.

When the price hits $500 we will revoke the right of our brokers to lend out our shares. By then we will own >100% of shares and even start excercising all of our calls at once. To artificially create the illusion of volume our algo will trade back and forth before our endgame, when we just stop selling. The  infinity squeeze will bankrupt the shorts and their brokers (we are short those names by then). This will force the shorts and their brokers to buy GME at any price in the end. The overseas CFD brokers will have hedged by selling short and will also be forced buyers (A is also short overseas CFD brokers and short short HF indexes via total return swaps). A has also contacted foreign powers like Russia and China. He will get a great bonus if his scheme is successfull from oligarch investors. Unbeknownst to A their aim is to discredit the capitalist western system of the USA. Russia is hyping GME via their famous twitter bots.

Link to comment
Share on other sites
  • 2 weeks later...
fareastwarriors Newbie

fareastwarriors

Posted
Posted

GameStop shares jump after retailer taps Chewy co-founder Ryan Cohen to lead e-commerce shift

 

GameStop has tapped Chewy co-founder Ryan Cohen to lead the company’s shift to e-commerce.

 

Cohen will serve as chairman of a new committee created by the board.

 

Cohen’s investment in GameStop helped spark the stock’s wild ride earlier this year.

 

https://www.cnbc.com/2021/03/08/gamestop-shares-jump-after-retailer-taps-ryan-cohen-to-lead-e-commerce-shift.html

Link to comment
Share on other sites
Junto Newbie

Junto

Posted
Posted

Wondering at what level I should buy puts again. Last time I bought them at 300ish.

 

I am thinking this time it will be a clean short opportunity. Appears much more liquidity in the short trade (Fidelity has plenty of shares to short at 2%)

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share
Go to topic listing


×
×
  • Create New...