# Reddit users trying to manipulate stocks
**URL:** https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627
**Category:** Miscellaneous and Personal Stuff I Must Share
**Created:** [January 27, 2021, 6:14pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627 "2021-01-27T18:14:22Z")
**Posts on this page:** 20
**Page:** 3
### Author:  [@Gyrate](https://boards.straightdope.com/u/Gyrate)
#### Post date: [January 28, 2021, 12:20am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/41 "2021-01-28T00:20:38Z")
> [@Dr.Colossus](#):
>
> So what I don’t understand is how this eventually pays off for the little guys who are bullying the big guys. Like, the stock is artificially high, and they need someone to buy it while it’s high to cash out…right? GAMESTOP can’t/won’t rebound as a company, so ultimately how does anyone make real money off this…?
> [@filmore](#):
>
> It’s kind of like a pyramid scheme right now. As long as people keep buying, the stock will keep going up. But eventually this game will come to an end and the stock will crash. Then whoever still has stock will likely lose a lot of money. The trick is to know when to sell. If you sell now, you take your profits and go home. Hang on too long and you can lose a lot.
Also known, rather uncharitably, as the [Greater Fool Theory or Greater Idiot Theory](https://www.investopedia.com/terms/g/greaterfooltheory.asp). The idea is not to be the fool left holding the stock when its value crashes.
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### Author:  [@sitchensis](https://boards.straightdope.com/u/sitchensis)
#### Post date: [January 28, 2021, 12:31am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/42 "2021-01-28T00:31:56Z")
The idea is the infinite squeeze (see VW 2008). A short squeeze that just keeps going up. (It has obviously has to stop at some point). At the beginning 140% of tradable stock was in a short position. The WSB crowd are trying to set up a play in which the price goes up and the shorters have to buy to cover. So the price goes up, and more shorters have to buy. Eventually the price is very high and there is not enough tradable stock to cover (remember 140%). So the price gets very very high.
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### Author:  [@sitchensis](https://boards.straightdope.com/u/sitchensis)
#### Post date: [January 28, 2021, 12:33am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/43 "2021-01-28T00:33:40Z")
Thanks for your help **FP**. Great explanations.
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### Author:  [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)
#### Post date: [January 28, 2021, 12:40am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/44 "2021-01-28T00:40:35Z")
> [@SenorBeef](#):
>
> So wouldn’t it basically be free money right now to short the stock for a few weeks?
Be very careful. It obviously wasn’t worth $150 yesterday, but if you’d tried to short it for a few weeks starting yesterday, you’d be in a world of hurt. The market can remain irrational longer than you can remain solvent.
> [@](#):
>
> How would someone actually go about doing that? Like, what sort of account do you have to create with who?
The safe way to do this is to buy put options at a price somewhere below the current price and above what you think the price will be at some point in the future. A put option is a legal right to sell stock at a given price, but not an obligation.
So, for example, say you buy a 2-week put option with a strike price of $200. This costs you, right now as I’m typing this, about $80, and gives you the right to sell 100 shares of the stock for $200 in the next two weeks. If any time in the next 2 weeks the price of GME goes below $200, you can exercise your option and make the difference (if it goes to $199.20, you break even, any less and you make money).
If you don’t exercise the option, then at the end of 2 weeks your option is worth nothing. But you can only lose the $80 you put in.
> **[(GME) Call Put Options](https://www.nasdaq.com/market-activity/stocks/gme/option-chain/call-put-options/gme---210212p00200000)**
>
> Find the latest Call Put Options data for GameStop Corporation Common Stock (GME) at Nasdaq.com.
You can buy options from standard financial brokerages, although you generally have to apply to be able to trade options because they are weird and complicated and inexperienced people can get absolutely routed if they do it wrong.
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### Author:  [@TheGunIsMightierThanThePen](https://boards.straightdope.com/u/TheGunIsMightierThanThePen)
#### Post date: [January 28, 2021, 12:55am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/45 "2021-01-28T00:55:17Z")
Good and clear summary, **iamthewalrus\_3** , but minor nitpick:
> [@iamthewalrus\_3](#):
>
> (if it goes to $199.20, you break even, any less and you make money)
The break-even price is actually $120 ($200 strike price - $80 option price).
Speaking of which, _daaayyyuuum_, I knew the implied volatility would be big, but this is practically saying that the market is expecting the stock to drop 65% (from today’s closing price of $347.51) in just two weeks!
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### Author:  [@octopus](https://boards.straightdope.com/u/octopus)
#### Post date: [January 28, 2021, 1:11am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/46 "2021-01-28T01:11:17Z")
Well that’s different. The elites make the rules. I wrote what I wrote precisely because the elites are going to protect themselves.
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### Author:  [@octopus](https://boards.straightdope.com/u/octopus)
#### Post date: [January 28, 2021, 1:13am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/47 "2021-01-28T01:13:25Z")
Let’s see how long it takes the big players and their political servants to squash that noise. Remember, rules can be interpreted in an infinitely malleable way when necessary or desirable.
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### Author:  [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)
#### Post date: [January 28, 2021, 1:16am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/48 "2021-01-28T01:16:46Z")
> [@iamthewalrus\_3](#):
>
> You can buy options from standard financial brokerages, although you generally have to apply to be able to trade options because they are weird and complicated and inexperienced people can get absolutely routed if they do it wrong.
What sort of requirements are on that? I know with a margin account you need proof of assets and income and that sort of stuff, but what do you need to have an option trading account?
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### Author:  [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)
#### Post date: [January 28, 2021, 1:19am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/49 "2021-01-28T01:19:49Z")
Does anyone have a reasonable guess what Ryan Cohen’s original plan was? (I’m assuming what has unfolded was not part of that plan.) He seems to have been aware that GameStop had a dying business model back when he bought into the company.
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### Author:  [@Heffalump\_and\_Roo](https://boards.straightdope.com/u/Heffalump_and_Roo)
#### Post date: [January 28, 2021, 1:26am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/50 "2021-01-28T01:26:14Z")
1. . 2. . 1
From the Reddit sub to the SEC: (spoilered because of language)
[Just read a New York Times article saying the SEC is reviewing this sub and what is going on…🎮🎮🎮🎮🎮 (SEC PLS READ)](https://old.reddit.com/r/wallstreetbets/comments/l6c5tg/just_read_a_new_york_times_article_saying_the_sec/)
To the SEC retards in this sub: go fuck yourself. Why don’t you start investigating why companies can shut down trading so their hedge fund buddies don’t lose money. But when people lose money it’s completely ok. Eat a dick.
From Twitter, [baffled industry expert](https://twitter.com/Neil_Irwin/status/1354438588151328776):
> [@](#):
>
> Trying to make sense of the Gamestop thing as a 42 year old who has covered econ and markets for 20 years, I feel like Don Draper sitting back and trying to listen to the Beatles, then giving up after a short while, confused and discomfited.
“Hey, this is not how this is supposed to work” /s lol
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### Author:  [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)
#### Post date: [January 28, 2021, 2:08am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/51 "2021-01-28T02:08:08Z")
> [@Mighty\_Mouse](#):
>
> In the past the idea that a sufficient number of “retail investors” would all do this would have been laughable. I think that’s what has changed. These redditorz are buying the stock at some lofty prices, not just the shorts, right? Don’t they eventually have to sell and wouldn’t that crash the stock price?
Their argument is that a lot of short seller contracts that were done by large financial firms end on friday, and these short sellers will ‘have’ to buy the stock on friday no matter how overpriced it is. Thats what I’ve heard.
I ‘think’ gamestops market cap was about 5 billion before all this started (when it was about $70 a share). So if 1 million investors each invest 1k thats 20% of the entire company’s stock being bought up. Its interesting the age we live in.
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### Author:  [@Arcite](https://boards.straightdope.com/u/Arcite)
#### Post date: [January 28, 2021, 2:28am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/52 "2021-01-28T02:28:36Z")
> [@iamthewalrus\_3](#):
>
> So, for example, say you buy a 2-week put option with a strike price of $200. This costs you, right now as I’m typing this, about $80,
This isn’t correct. Options prices are quoted per share of the underlying security, but one contract is for 100 shares of the underlying. So you always multiply by 100. That put option is trading for $8000, not $80.
Another factor here that many people aren’t aware of is that this is not just a short squeeze, but a gamma squeeze:
> **[GameStop's Gargantuan Gamma Squeeze | The Motley Fool](https://www.fool.com/investing/2021/01/26/gamestops-gargantuan-gamma-squeeze/)**
>
> It's not just a short squeeze that's driving the video game retailer's epic volatility.
Basically, when people buy out of the money call options, market makers are taking the other end of that trade, selling those options. In order to hedge their short call position, they buy shares of the underlying. The higher the stock price goes, the more shares they have to buy to keep their position hedged. This creates a feedback loop of its own as the stock price rises. So much of the r/wallstreetbets crowd were able to contribute to this squeeze, not by buying GME stock itself, but merely by buying a bunch of far out-of-the-money call options (back when they only cost a few bucks each.)
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### Author:  [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)
#### Post date: [January 28, 2021, 2:40am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/53 "2021-01-28T02:40:09Z")
Here’s a fucking hilarous Reddit comment that lays it out in very plain English. I can’t recommend it too highly!
> **[r/stupidpol - This isn't idpol at all, but for the socialists here it will...](https://old.reddit.com/r/stupidpol/comments/l32xpz/this_isnt_idpol_at_all_but_for_the_socialists/gkbcqh0/?context=3)**
>
> 154 votes and 53 comments so far on Reddit
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### Author:  [@Heffalump\_and\_Roo](https://boards.straightdope.com/u/Heffalump_and_Roo)
#### Post date: [January 28, 2021, 2:56am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/54 "2021-01-28T02:56:12Z")
CNBC is [reporting](https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddit-board-melvin-capital-closed-out-of-gamestop-short-position-tuesday.html) that Melvin Capital covered their short losses.
> [@](#):
>
> Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss, the hedge fund’s manager told CNBC.
Redditors are not buying it.
[GME Dedicated Thread - Breaking: CNBC engages in market manipulation - lies about Melvin Capital having already covered positions](https://old.reddit.com/r/stocks/comments/l64xvw/gme_dedicated_thread_breaking_cnbc_engages_in/)
In the meantime, r/wallstreebets was closed for a short time causing a bit of uncertainty. The sub was opened a short time later.
[Wallstreet Bets Set to Private Megathread](https://old.reddit.com/r/Wallstreetbetsnew/comments/l6i4t3/wallstreet_bets_set_to_private_megathread/)
I just had to add this [quote](https://www.washingtonpost.com/business/2021/01/27/gamestop-amc-reddit-short-sellers-wallstreetbets/?utm_source=reddit.com) from the Mooch.
> [@](#):
>
> On Twitter, Anthony Scaramucci, a hedge fund manager who was briefly a Trump adviser, wrote: “We are witnessing the French Revolution of finance.”
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### Author:  [@Olfatbut](https://boards.straightdope.com/u/Olfatbut)
#### Post date: [January 28, 2021, 3:37am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/55 "2021-01-28T03:37:43Z")
I just visited the r/ and it’s pretty crazy. It’s clearly a coordinated effort, albeit decentralized, and I’m not sure that was the case with the 140% shorts. It could have been a bunch of funds just betted on the stock to fail because it was way overvalued afaik.
But I have a second point!
It looks like the same HODL mentality that bought up Bitcoin if not the same people. BTC, like GME, has no value other than scarcity. So what’s the difference? Is GME the new BTC, will it be at $30K in five years with people putting money into it as a safe haven like gold, even after GameStop stores have long since shuttered? I honestly don’t see why not.
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### Author:  [@JohnT](https://boards.straightdope.com/u/JohnT)
#### Post date: [January 28, 2021, 4:07am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/56 "2021-01-28T04:07:25Z")
GME will be the next reserve currency, just you watch!
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### Author:  [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)
#### Post date: [January 28, 2021, 4:13am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/57 "2021-01-28T04:13:23Z")
HAHAHAHAHAHAHA! 🤣 😂 🤣
> **[Financial sector aghast the poors are gaming system designed to be gamed by...](https://www.thebeaverton.com/2021/01/financial-sector-aghast-the-poors-are-gaming-system-designed-to-be-gamed-by-the-rich/)**
>
> “The market must not be manipulated... by anyone whose parents did not get them into Yale or Harvard.”
Also!
[ ](https://i.redd.it/9bz68bk3dxd61.jpg)
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### Author:  [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)
#### Post date: [January 28, 2021, 4:28am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/58 "2021-01-28T04:28:59Z")
> [@Arcite](#):
>
> This isn’t correct. Options prices are quoted per share of the underlying security, but one contract is for 100 shares of the underlying. So you always multiply by 100. That put option is trading for $8000, not $80.
Thanks for the correction. See, this is a good reason to be really cautious with this stuff. Could easily get burned following some random internet advice from someone like me who has no idea what he’s talking about.
So, if you buy that $200 option, you’re really betting that the price is going lower than $120? Wow.
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### Author:  [@sitchensis](https://boards.straightdope.com/u/sitchensis)
#### Post date: [January 28, 2021, 4:47am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/59 "2021-01-28T04:47:27Z")
> [@Gyrate](#):
>
> In the grand scheme of things nobody feels sorry for the hedge funds other than those directly affected by the hit.
That’s a pretty impressive and powerful group of people. Citron’s minimum investments was over 2 million
> [@Heffalump\_and\_Roo](#):
>
> CNBC is [reporting](https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddit-board-melvin-capital-closed-out-of-gamestop-short-position-tuesday.html) that Melvin Capital covered their short losses.
CNBC reported that at the height of after hours trading with the price at ≈ $377. Weird that they chose that time.
There have been price walls built, ladder trading shit that I don’t understand. A loan of ≈3 billion dollars from “a friend”. Bot attacks pushing other stocks. Every news outlet calling these people crazy. Calls for regulation on retail investors. Rich people will do anything to screw you, and they own every avenue to do it.
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### Author:  [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)
#### Post date: [January 28, 2021, 4:51am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/60 "2021-01-28T04:51:10Z")
I hope the whole fucking mess burns down. The stock market is not “the economy” and I’m fucking sick and tired of those shitbirds at the top of the heap tendentiously intoning about how megacorps and hedge funds are “tOo BiG tO fAiL!!1!!!” as they refuse to help the millions starving, losing their homes and dying during a pandemic so they can make a few greedpigs even fatter. Burn, fuckers, burn!
[https://ghionjournal.com/reddit-shredded-wall-street/](https://ghionjournal.com/reddit-shredded-wall-street/)
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