Hedge funds can short at a variety of prices. One hedge fund at 100$ thinking the stock will drop to 90$; another at 95$ thinking the stock will drop to 80$. Do that enough times and 100% is shorted.

The problem in this case is that the prices of the shares are driven so far out of whack with reality that it creates distrust in the game.

See: Nikola. An obvious fraud from the start. And is small-time car maker Tesla really worth its current value?

“Tesla’s market capitalization has increased by more than $500 billion in 2020, and the company is now worth about as much as that of the nine largest car companies globally, despite selling a small fraction of the volume of cars that they do.”

When the democrats abandon their “incitement to violence” meme, then we can go back to our previous freedom of speech standard. But both sides have to adhere to that standard or its agreeing to a “cage match” where we have to fight by the Marquis of Queensbury rules and they by no restrictions whatsoever.

A failure to hold them accountable, encourages them to advocate for even greater restrictions upon free speech. There will be no end to it until disagreement itself is outlawed. And we are already far too close to that precipice.

What they did wrong was this: they revealed, definitively, that the game is not only rigged, but only some people are allowed to play the rigged game and win.” Fractal Rabbit

Bingo. Whatever the legality, that is the issue.

This comment in the last thread and mine 2 counts down, covers this gamestop trade war topic in more detail.

The SEC is going to be making some new rules about this issue, I’d bet.

The SEC and the Congress critters are the bigger mafia. The mafia will make rules to regulate the mafia, you see.

Your system is… ; )

Liquidating people’s positions without their permission sounds like a bad idea unless those were accounts with big margin debt. Even then, it sounds as if they panicked or were pressured by some authority or hedge funds to stop the run. The SEC is going to be making some new rules about this issue, I’d bet.

I trade options and if they used the option, they would still pay the premium. Then they would have to sell the 100 stock per contract they got. Of course 100 stock x the price of 200-400 USD is… probably not what they can get.

The premium though… was pretty much 0 or .01 or basically 1 dollar per contract, if they bought the contract up at 100-200 when the price was like 15-50. THe premium then would be 100 dollars per 1 contract, every time the stock went up 1 USD above the call option strike price. That’s actually really good. Someone could turn their 20-50k small trading account to 11 million.

Somebody still had to actually buy the stock up to drive thep rice that high however, which was likely the “super short squeeze” that happened. Basically the bigger day traders were adding their capital to the “short squeeze” play. When stock prices go up too fast, they sometimes trigger a squeeze on short sellers, forcing the short sellers to “buy” more stock at bad prices for them.

Fractal Rabbit on January 28, 2021 at 6:34 pm said:
TommyJay,

I don’t believe this case is margin. Could it be? Of course. And I’m sure that people might claim that but I think they’re just giving cover. Time will tell.

Robinhood does offer 2x margin, at 3-5% per year interest, which is actually zero if you don’t hold overnight. The first 1000 USD is interest free on margin.

So if a margin call was made, yes they can force you to sell the stock but… how would there be a margin call for people that bought gamestop at 10-100 USD and the price was at 200-400 USD? That’s like somebody ran out of money. Or rather, ran out of the actual stock because it was borrowed, so they had to sell the actual stock.

I don’t believe this case is margin. Could it be? Of course. And I’m sure that people might claim that but I think they’re just giving cover. Time will tell.