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This is what's going on in the Stock market for those who are 
What is Short Selling?
(By an anonymous user)
This will help people understand the
situation, and short selling in general.
A short sell is when you expect a stock
price to decrease in the short term,
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What is Short Selling?
(By an anonymous user)
This will help people understand the
situation, and short selling in general.
A short sell is when you expect a stock
price to decrease in the short term,
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so you
borrow other people's shares and sell them,
on the understanding that you will
repurchase the shares and return them to
the lender.
So you sell other people's shares when the price is, say, $20,
and then rebuy them a few days later for $8.
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borrow other people's shares and sell them,
on the understanding that you will
repurchase the shares and return them to
the lender.
So you sell other people's shares when the price is, say, $20,
and then rebuy them a few days later for $8.
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You pocket the
difference, minus a fee paid to the lender of the shares you
sold.
Hedge funds were trying to do this to GameStop on the
understanding that after they made their move, dumping a
bunch of shares, others would panic and sell their shares,
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difference, minus a fee paid to the lender of the shares you
sold.
Hedge funds were trying to do this to GameStop on the
understanding that after they made their move, dumping a
bunch of shares, others would panic and sell their shares,
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afraid that they are about to lose value. Then the hedge funds would swoop in and purchase those devalued shares to return them to the lenders whose shares they sold.
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But a counterparty got wise and decided to short squeeze their asses by buying up the stock instead of selling, which
forced the price to rise. Now, the hedge funds sold at $20 or whatever, and they have to repurchase those shares at, say,
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forced the price to rise. Now, the hedge funds sold at $20 or whatever, and they have to repurchase those shares at, say,
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$300 to meet the contractual obligation to return an equal number of shares to the lender. They're fucked. The short squeezer, on the other hand, just bought up lots of
shares when they were cheap and drove up the price.
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shares when they were cheap and drove up the price.
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Basically, the hedge fund that attempted a short sale has to buy back the stocks from the squeezer, for a much higher
price. The Big Boyz engage in these shenanigans all the time. But if ordinary people put the squeeze on them, suddenly it's unethical and bad.
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price. The Big Boyz engage in these shenanigans all the time. But if ordinary people put the squeeze on them, suddenly it's unethical and bad.
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