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New Podcast: GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained

By Jillian Baker

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Show Summary:

The Wall Street Bets community executed a short squeeze through Reddit on stocks like GameStop and AMC Theatres this week. But what is a short squeeze? How did they and others buying stocks and options cause the stock to go up at least in the short term? Is short selling bad? Why potentially some brokers had to halt trading in certain names? A look back to the late nineties when internet chat rooms were pushing stocks. Examples of the little investor turning thousands into millions, and vice versa. How short sellers can root out fraud in companies with examples.  Jay Pestrichelli and Derek Moore get into this and more in this very timely and fascinating episode.

Topics Include:

  • What is a short squeeze?
  • What is the GameStop short squeeze?
  • How did Reddit group Wall Street Bets execute a short squeeze?
  • How some people have made a lot of money
  • How other people may lose a lot of money?
  • What is short interest ratio?
  • What is short interest as percent of float?
  • What is a delta or gamma squeeze in options on stocks?
  • Large in the money option open interest in GameStop at expiration
  • How short selling adds liquidity.
  • What are short days to cover metric?
  • Short sellers uncovering fraud in Amazon Prime documentary the China Hustle.
  • Short sellers with Enron, Nikola, Wirecard
  • Trading halts and liquidity requirements on brokerages
  • Congressional hearings coming on Robin Hood and Wall Street Bets GameStop activity
  • Examples of pump and dump in 2000 by Michael Lewis in New York Times
  • Short selling was found useful even in 1918.
  • How short selling in itself does not bankrupt companies.
  • How short selling that drives price lower can impact ability for secondary equity offering.


Mentioned  in  this   Episode: 

Explaining Delta and Gamma Options Squeeze Robinhood vs Softbank Whale 

Derek Moore’s Book Broken Pie Chart 

Documentary “The China Hustle” on Amazon Prime Video 

Michael Lewis article on 16-year-old penny stock trader 2001 

ZEGA Financial   

Jay Pestrichelli’s Buy and Hedge Book on Amazon