I'm glad this place has quieted down enough for some actual DD written by a monkey with a keyboard and Adderall.
Disclaimer: I am that monkey. Let me explain to you what happened, play by play. I will give you illiterates who hate reading a spoiler up front:
We were within approximately 30 seconds of triggering a nuclear bomb that would have blown up the market.Do I have your attention? Here goes:
Yesterday, new call option strike prices were added all the way up to $570. Do I have to go over gamma squeezes again? Really? We've been over this: when deep out-of-the-money call options start being gobbled up and the price starts moving towards being in-the-money, the call writers have to hedge their risk of having their sold calls exercised, typically by buying stock. This creates upwards pressure on the market. We've been seeing these movements all week.
Yesterday after market, you probably saw that coordinated effort to drive the price down and spook retail investors into a mass sell-off. It didn't work.
Last night, Robinhood sent out a message to users: you could no longer enter into new options. You could exercise them if you had the collateral (money in the account) to do so. Very interesting and the first sign of pants-shitting fear.
Today, the market opened very strong. It opened so strong that we were looking at a self-perpetuating gamma squeeze all the way up way past $570.
At approximately 9:58 am, the stock had reached $468 in a parabolic move.
Two minutes earlier, at 9:56 am, Robinhood tweeted that they were not allowing users to buy GME stock, but they would allow selling.
The trend instantly halted and started a collapse downwards, before picking up a bit, especially after some retail was allowed back in.
Okay, now that you are clear on the facts, understand this: The market ran out of liquidity today, or was threatening to get close enough that they killed it. What does that mean? It means they ran out of shares and/or capital. They wouldn't let you buy new shares because we were burning through all the shares on the market.
I saw an unsubstantiated post from a user (u/zshub) who said a market sell order executed at $2600 for him. Do you get the severity of the situation, if that's true?It means the buying was getting to the point where it was just about to put INFINITE pressure on the price of the shares. It means virtually any ask was getting bid.
How do you get infinite upwards pressure? A gamma squeeze triggering the mother of all short squeezes, just like we predicted. The call writers need shares to hedge. Retail is still buying more. The short sellers need over 100% of the float back. Add these together. There were more shares needed than existed on the open market. That's what a liquidity crisis is.
Listen to thisto this remarkable (if infuriating) interview where the chairman of Interactive Brokers admits that they didn't have the capital to pay out the winners (us), so they took their ball and went home. DO YOU GRASP HOW INSANE IT IS THAT HE SAID THEY NEEDED TO SHUT DOWN BUY ORDERS TO "PROTECT THE MARKET"? Hello! He's not talking about the market for GME shares. He's talking about the entire market! The New York Stock Exchange. The NASDAQ. All that.
Remember the movie Snowpiercer? Do you remember that scene where the lower class people realize the soldiers who oppress them have no bullets? Go to the 1:00 minute mark of this link:https://www.youtube.com/watch?v=EH1EtiOhr6o
It kick starts a full blown rebellion. They have no bullets. It's the exact same in this market: No capital. No shares. Infinite losses inbound.
TL;DR: For all you who will just skip to the bottom to ask, "Do I get my tendies now?" the answer is this: they NEED NEED NEED your shares. Do you get that? HOLD. Like the guy in the movie, scream, "They're out of bullets!" and create a stampede. That's how we win.
They needed your shares so badly that they literally risked PRISON TIME to get them. They tried robbing you, and I'm not even exaggerating. They were within 30 seconds of all being wiped out today.
Credit:u/PlayFree_Bird
(20min delay)