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Wally Fairway

By Wally Fairway
in Business and Markets

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Hank_Hill
Hank_Hill

Haven't mentioned it because didn't need naysayers because it is stupid, but I'm a med student doing this almost purely on my student loans while they're at zero interest. I've made +$20k since Decemb

Hank_Hill
Hank_Hill

The real treasure is the friends we make along the way

BradInATX
BradInATX

As long as 700% APR payday loans exist, you can fuck right off with "protecting people from themselves".

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Posted
Posted
16 minutes ago, closetohumping said:

damn, not a stonk but did i miss out on GME or what lmao

there were ~70M shares short

avg recent historical volume is 7M/day

last week with 1 gap up, started trading 50M/day

friday and today with gigantic moves, it traded 150M/day

 

have the shorts covered?  nobody knows

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RCRanger03

RCRanger03 1049

Posted
Posted (edited)
On 10/9/2020 at 4:27 PM, RCRanger03 said:

Status Report:

100% Green on: $FPVD (now a R/M into BigToken), $PFMS (Lazar, Squeaky Clean Shell ready for 10Q next week)

Slightly Green on: $FRSX, $UPWT (Ticker Name Change, BCorp app pending), $FONU, $SNVP (Custodianship Granted, awaiting PR of R/M company and/or current filings)

Slightly Red on: $CMGO (XA deal pending, OTCQB uplisting pending), $MEDH (Filings supposedly uploading as we speak), $PFWIQ (Lazar)

Way Red on: $ALPP (but still long, haven't reduced position but haven't been adding this dip)

Stockpiling: $XMET (Lazar, 11/6 courtdate)

If I had played my positions in this post from October with a little more confidence I'd be a millionaire right now... 

FPVD my entry was .0015 and it was running .003 at the time of this post. Today is running in the .011s

FRSX my entry was 0.80 and it was running 1.20 at the time of this post. Today is running in the $8 - $9 range (sadly I got caught on an overnight limit sell and sold out at $2ish)

PFMS my entry was 0.002 and it was at .004 at the time of this post , got absolutely slaughtered by a massive R/S on acquisition that fell through. Finally back around to my entry

ALPP my entry was .08, then I avg down to .06, and it was at .04 at the time of this post should have continued to avg down to .04. Today is running in the $4.40 - 4.70 range

XMET my entry was .0002, at the time of this post was barcoding .0002 - .0003. Today is running .004 - .005

SNVP my entry was .0008 averaged up and then back down, Today stuck in the .0007 - .0008 range

MEDH my entry was .029 averaged down to .01. Today is .015 - .017 range

UPWT became OWUV and went up .07 I sold some and it came back down to .01 - .02 Today back in the .03s

FONU took a small profit (put it in FPVD when it fell back down to .0016) it's up today

PFWIQ came out even

CMGO took a loss

 

Edited by RCRanger03
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BTW

BTW 370

Posted
Posted

A little afternoon profit taking happening in ALPP at the moment, one could definitely expect this.  Also, the coulda, woulda shoulda department.  I imagine that several of us would be millionaires if we had not sold positions we held at some point over the last year.  I'm focusing my attention forward and upward for now.  I'm still trying to figure out a stop-loss strategy to lock in some of profits, but don't want to miss out on a run if it takes a dip before taking off again. 

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Blotto

Blotto 23428

Posted
Posted (edited)
1 hour ago, Anastasis said:

I defy you to find a better dopamine pusher than selling naked calls on a stock that has traded between 40 and 160 in the last 3 days. 

lulz

image.png.2262f73a91d0b364b0b66cb091afc5c2.png

You guys have some balls. 

Also my BBRW sell order at .0065 hit (was in at .002). Terrible stonk to hold, fantastic stonk to trade. Will wait for its inevitable drop to do it all over again. 

Edited by Blotto
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Hank_Hill

Hank_Hill 18486

Posted
Posted
2 minutes ago, Eastwood said:

Beware the gamma squeezes, fellas. Don't get burned.

Just so I'm understanding this ( I clearly don't fully understand this) the gamma squeeze is what occurs if the price exceeds the max call price ($115) correct? So just sell before then if it gets to that point?

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Incredulity

Incredulity 11559

Posted
Posted
13 minutes ago, Hank_Hill said:

Just so I'm understanding this ( I clearly don't fully understand this) the gamma squeeze is what occurs if the price exceeds the max call price ($115) correct? So just sell before then if it gets to that point?

Its going to give you a headache.
 
 
Context

What happened last week with GME stock price and option was a combination of a gamma squeeze [1] and infinite short squeeze [2]. For the first time in financial history all GME call options are in the money (ITM) because the highest call strike price set by the CBOE for Januaray 29, 2021 is $60.

Note: A primer on gamma squeeze:

https://www.reddit.com/r/wallstreetbets/comments/l2t9bf/gme_i_think_this_is_a_gamma_squeeze_where_dealers/

Market Maker [1] are in a condition never observed in financial history. Hundred of thousands of retail are buying the GME 60C across the options calendar and MM can't hedge properly because there are not enough GME shares to buy to properly financially hedge (accounting for the interest rate to borrow)

Market Structure
To summarize the market structure:

  1. Few GME shares to hedge.

  2. Hundreds of thousands of are buying the GME 60C because of the infinite short squeeze.

  3. January 29, 2021 60C call option are the highest one on the option change for that date.

  4. Conditions for Infinite Gamma Squeeze & Infinite Short Squeeze

As you may now realize --(MM and brokers) hope you don't -- there is a gap in the market structure that leaves them (MM/Citadel) vulnerable to massive losses.

Infinite Gamma Squeeze

Should million of retails buy the Januray 29, 2021 60C weekly on Monday, this will create an infinite gamma squeeze because MM still can't properly hedge, and are forced to buy shares at whatever price to hedge. MM doing so, forces brokers to margin call the shorts caught in their infinite short squeeze. Both conditions are pro-cyclical and feed on each other in an infinite feedback loop so long as more an more retails buy the GME 60C.

There is a chance that MM can dump the shares they bought to hedged the gamma steepening and call buying [1]. However, doing so does not make them market neutral. It effectively turns MM into a hedge fund. SEC may allow them to get away from this momentarily.

However, after the MM dump shares in an attempt to stop the infinite gamma squeeze they will be net short GME shares and unhedged/not market neutral. If after the MM dump, retails continue to buy GME shares up to the $60 price, MM will be caught in a exponentially worse gamma squeeze, which should GME go pass 60C (gamma bump) on the week of January 25, it would turn into the one of biggest tail risk event for the MM/Citidal.

tldr;

There is a gap in the market structure so that if millions of retails buy Januray 29 GME 60C on January 25 2021, there is a high probability of both an infinite gamma and short squeeze. This has never happened in financial history. And should millions of retail buy the January 29 GME60C 2021, the losses for MM but profits for retail will be massive. Retails could see 100000% return on their weekly GME Januray 29 call options at the highest strike price.

Edit1: Apparently there may be higher call prices for the January 29 2021 option chains. Fundamentally, this analysis is still correct. Should millions of retail all choose a common higher call strike price to buy (higher than 60C), the gamma squeeze will be triggered when that prices is hit.

Example:

Should millions of retail buy the January 29 70C or January 29 75C, and the infinite short squeeze continues. If the GME 70C or 75C is hit, GME share price enters a gamma squeeze.

What the MM are hoping for are twofolds:

  1. They scare retails to sell below $60. This alleviates the infinite gamma squeeze. Or;

  2. Retails don't all buy the same call options. But given that retail loves high risk, I hypothesize they will all choose the furthest OTM call options.

GME at 60 is the Maginot line next week. Should it go to 75, gamma and infinite short squeeze continues. Should it fall below it, MM have won a strategic victory.

Edit2:

For gamma squeeze, you look at the open interest (OI) and strike price. Should the share price get close to the price with a highest open interest, that's when the gamma steepening occurs as probability goes to 1. MM have to buy shares to remain neutral as the options are now ITM.

References

[1] https://www.reddit.com/r/wallstreetbets/comments/l2t9bf/gme_i_think_this_is_a_gamma_squeeze_where_dealers/

[2] https://www.reddit.com/r/stocks/comments/l21gpz/infinite_short_squeeze_explained_blue_appron_case/

[3] https://ca.finance.yahoo.com/quote/GME/options?p=GME

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