This is an extension of my DD series on GME. If you haven’t read them and have time, they will provide some background on my previous predictions, some of which have already come true. In this post, I’ll share my thoughts on what I think is going on, plus some tips to manage your positions and exits.
TL;DR: Shorts are in but likely want to get out. And they want to get out at the best price possible. See tips for managing positions.
Previous Important Posts
- EndGame Part 1 (DTC Infinity) covered the short positions, the float, and potential snowball impacts of increasing prices, and argued that part of the reason that shorts haven’t closed was that it was pretty much impossible for shorts to close
- EndGame Part 2 covered Cohen, fair market cap analysis, and potential investors, in which I talked about the amazing mid-to-long term potential for GME.
- HEY SEC, if you’re reading please read this one \- After the Citron tweet, I shared this fan fiction on what looked like blatant market manipulation by shorts on the day of the tweet, and offered some education on strengthening your position. This one got buried and is worth reading.
- EndGame Part 3 covered the gamma squeeze, potential shady tactics by MMs, and some tips for staying safe.
What’s happening with the price?
We’re still gamma squeezing
Many media outlets are reporting this as a “short squeeze”. They’re only partially right, as if Melvin isn’t lying they’ve already been squeezed out.
However, the reality is so far we’ve been Gamma squeezing - repeatedly - and some shorts have been casualties along the way.
See this post for a deeper explanation, but the essence of it is that market-makers have to buy shares to hedge the calls they sell. The more calls people buy, the more shares they MMs have to hedge with. As I explained in part 1, GME has ultra low liquidity, i.e. there’s waaaay fewer actively traded shares than what shorts need to buy to cover with, and then when you get lots of people buying calls and shares in the hot new stock it just removes more availability from the market.
As a result, when MMs buy shares to hedge, it moves the price of the underlying up. Combine that with the buying pressure of people piling into a stock climbing 100% a day, shorts getting liquidated, and it’s a perfect storm.
Today, GME closed at $347 (before the after market selloff, but i’ll get to that soon).
320 calls were added yesterday. Similarly, when 115cs were added we squeezed to >115 in two days. Same story with 60c’s etc.
Remember this commentary from EndGame part 3 on Friday’s price action:
Notice how the stock dropped from a high of $75 on Friday to below 60 - the highest expiring SP for the 1/22 options, and stayed tight in range for the rest of the day**. Now, for compliance reasons, MM are required to be neutral by EOD, so 20 minutes before close, MMs had to buy back all their short positions, which led to the strong close above 60.
All this led me to believe that the real fair market price for GME was above $65. *Without the market makers interference, GME wou