REPOST because I accidently included a relevant YouTube link in an edit (about a DRYS short squeeze) and this caused the automoderator to delete it). Sorry!
Also, since I got feedback I didn't include enough Emojis, here's a rectification:
🚀🚀🚀🚀🚀🦍🦍🦍🌙💎👐
First, let's look at the players involved here.
The shorts
On the short side, we have some hedge funds (most notably Melvin and Citadel) who aimed to make money by shorting gamestop, which they saw as a failing brick and mortar store chain.
The Market Makers (may have some overlap with the shorts)
Marker makers write options (contracts to be allowed to buy (call) or sell (put) shares for a specific price at or before the expiry date). They collect a fee for selling those contracts, but they make the best profit if the contracts expiry worthless, because then they get to keep their fee, and don't need to keep their contract because it wasn't in the money. How does this work? Well, for example when GME was trading around $40, they sold contracts for $800 for the next month or so, never expecting the price of GME to even reach anywhere near $800, so the "fools" who bought the options to buy $800 calls for march 12th and march 19 will be left with worthless calls, or so they thought. (More on this later).
The longs
On the long side, we have you glorious apes 🦍 🦍 🦍, Cohen, and competing hedge funds who are smelling blood and do not hesitate to pull the trigger on Melvin and other shorts, especially if they can make some money while doing so.
Now let's look at the actions that have led up to this.
It all started when the shorts were getting greedy, and with Covid19 thought they could pull the plug on gamestop, which they saw as a failing brick and mortar game store that would go the way of blockbuster. They did not expect gamestop would survive covid, and they did everything in their power to make it so. Shorting the company to the ground, with the goal being to drive the price to $0 for maximum and tax-free profit. It's important to point out that they COULD have covered at $3\~$4 but DID NOT. If they did not cover at $3 or $4, what makes you think they covered at $40\~$400? Hint: they didn't. In fact, they even admitted during the congress hearing to not covering by saying that the last peak to $400+ was just a gamma squeeze. In other words they have not even begun to cover yet.
Then some people liked the stock
Some people have calculated that the real short interest in somewhere between 250% and 967%. (something like 200 million to 500 million shares short). Some people may think this is insane, but if you do the math, you will see that no matter what FINRA says, it's impossible for short interest to be below 200%, and it's more likely to be around 500\~600%. It's hard to find reliable data, but if you just look at the volume and price action, it's obvious that the shorts have only INCREASED since January 28th, not decreased. It is mathematically IMPOSSABLE for the shorts to have covered. It simply doesn't add up.
How the Gamma squeeze will trigger the short squeeze
Some people doubt this could reach $10k or even $100k, just as people doubted it could reach $1000s. But here is why those numbers are not only likely, but MATHEMATICALLY INEVITABLE. (I'm not an expert to so take it FWIW, feel free to call me an idiot, but if I'm right, I'll expect apologies).
First, let's look at the option interest (source: https://www.nasdaq.com/market-activity/stocks/gme/option-chain)
​
|Strike|Open interest March 12th|Open interest 19th|Shares (combined 12+19)|Shares (combined 12+19 cummulative)|
|:-|:-|:-|:-|:-|
|250|3231|2842|607,300|607,300|
|255|563|0|56,300|663,300|
|260|1047|542|158,900