/biz/ - Business & Finance

>>27195244
>Be Hedge fund
>See price is rising slowly on Jan 11 to Jan 21 when you're shorting
>Realize you might be in some risk
>Buy OTM calls at eg. $100 when you were shorting at $20 to match the number of shares you're shorting
>The stock, driven by people jumping on a trend, rises to 100
>Exercise your calls so you now own stock.
>Lose call premiums, plus [share count * $80], but stop bleeding money.
>Close your short position out by returning the shares you just bought to the person you borrowed from when you shorted.
>Be free

The shorts that haven't closed are new people and funds looking looking at a $325 pricetag on Gamestop shares, knowing they can safely run the above strategy against you, cover their downside risk and be confident that when it inevitably drops to something like 5-30 dollars when all this ends, they'll get to profit greatly on the decline and mass sell-off.

Given that the current price at 325 is almost wholly driven by speculation right now, this is a fairly safe bet; and once the selloff begins these shorts will be massively profitable.

This is why you've seen short interest go up to 300% - it's not "because of "the nerve of hedge funds, to double down on their old position!!!", the line I've seen here and on WSB - it's because they're correctly seeing a now EVEN MORE overvalued stock, and are happy to bet against a pump-and-dump driven by internet hype, continuing to go up "forever".