GameStop + Robinhood + Reddit

[Fat Charlie]

Originally Posted by ME_Andy

I'm curious if anybody can even think of a single good reason to have options and derivatives.

Something to do with efficiently allocating capital to... Oh, wait, it's a parasitic way to make money from people who are trying to allocate capital efficiently while distorting and risking the whole system. Sorry, my bad.

[Fat Charlie]

Originally Posted by JSH

I've never heard Musk come out against people that take a long position in Tesla - just those that take the short position.

Actually, it's one of his most common tweets: Elon Musk Says Tesla Share Price Is Too High

If you could time his tweets, you'd be the short selling king. But he does a great job building the company, which is the real long position.

[rmay635703]

Originally Posted by Fat Charlie

I'm a big fan of stocks, of owning shares in a company or in a mutual fund. I'm fine with speculation too.

But the last paragraph of this article has a very important bit of information:


So for every GameStop share out there, 2.6 shares were sold short. What kind of a system, what kind of government-regulated system, lets there be 2.6 shares sold short for every one share that .

Speculation by its nature WILL ALWAYS lead to fraud.

That is why made up games of short selling and derivatives rationally by their nature aren’t possible to regulate consistently or fruitfully

It’s similar to why glass segal existed , yet we thought we knew better and in short order have had 2 massive economy tearing events in 10 years with another forming 10 years later.

The non-sense in housing right now would have never been possible under glass segal and the government just pouring money at rates unseen to prevent 1999/2009 will only create a larger disparity and crash down the road.

Large swaths of the countries homes/apartments are being bought by a couple bailed out companies which should strike fear in anyone with a brain.

[ME_Andy]

Originally Posted by JSH

When you short a shock you borrow the shares, sell them, with a contractual agreement to replace those shares within a specific time. However, the person you sold the shares to can also loan them to someone else, who loans them to someone else....

That makes sense. Thanks.

Again, 260% of float was short. What happens when it's time to replace the borrowed shares and there just aren't enough to go around? How is that possible?

(Assuming the contracts all have the same end date)

[RedDevil]

I watch Hyperchange since a couple of weeks.
I like his take on this. I also like that I do not have to increase the video speed

https://www.youtube.com/watch?v=cmCjg668ebI

I bought a pair of AMC shares (another overshorted stock experiencing a short burn) just to have a toe in the water. It has been going up, for now.

[Piotrsko]

Originally Posted by ME_Andy

That makes sense. Thanks.

Again, 260% of float was short. What happens when it's time to replace the borrowed shares and there just aren't enough to go around? How is that possible?

(Assuming the contracts all have the same end date)

That time of reckoning is why some stock goes massively expensive and some going bust. The truth be told, I am not sure if you buy the concept or if the stock does physically change of ownership. I still get legal notices and dividends on my holdings.

[JSH]

Originally Posted by ME_Andy

I'm curious if anybody can even think of a single good reason to have options and derivatives.

No. It is just gambling.

Supporters claim that they can be used as a hedge against market volatility. You can buy an option at a low cost to hedge against your main position. My take on that is if you are so overextended in your position that you need to buy insurance if it fails then you should dial it back to what you can afford.

[JSH]

Originally Posted by ME_Andy

That makes sense. Thanks.

Again, 260% of float was short. What happens when it's time to replace the borrowed shares and there just aren't enough to go around? How is that possible?

(Assuming the contracts all have the same end date)

The contracts can't have the same end date. You can only loan stock in the window that you own it. Loaning it outside that window is illegal.

It can all fall apart if people in the chain can't afford to buy back the stock and default. Say if the stock you bought and shorted at $20 suddenly jumps to $450 a share in a week.

[Fat Charlie]

Originally Posted by JSH

No different than me loaning Frank $10, Frank loans it to Jack, and Jack loans it to Sam. There are twice as money dollars loaned than actually exist.

Originally Posted by JSH

The contracts can't have the same end date. You can only loan stock in the window that you own it. Loaning it outside that window is illegal.

There's a big difference between borrowing a fiat currency from the government that makes it and borrowing a share of a company. If I borrow more stock than actually exists, do I outvote the current Board and take control? No, because that's silly, you can't do that.

But it's what Wall Street does, and it's a problem.

[redneck]

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Found on another site...

Lol... 😂








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