It has >5,000 stores, primarily in malls, across North America, Europe, and Australia.
The business has struggled to modernize, hurting its financial and stock performance.
THREAD: The story of the week in finance is how a group of retail traders at @wallstreetbets, with assists from @ElonMusk and @Chamath, took down the establishment short sellers at GameStop.
A thread on the underlying mechanics of the $GME saga...
It has >5,000 stores, primarily in malls, across North America, Europe, and Australia.
The business has struggled to modernize, hurting its financial and stock performance.
It really came to the forefront after RC Ventures, an entity managed by Chewy founder @ryancohen, disclosed a large position and assumed three board seats.
"We are excited to bring our customer-obsessed mindset and technology experience to GameStop and its strategic assets...expanding the ways in which it delights customers and by becoming the ultimate destination for gamers."
Since then, the stock has surged to ~$200 per share and captured the public imagination.
But how did it happen?
There are two dynamics at play: a short squeeze and a gamma squeeze.
This occurs when short sellers (those betting against a stock, like Melvin Capital here), are forced to buy stock to exit/cover their shorts.
I wrote a primer on the short squeeze, which you can find below. https://t.co/xKDUscvQup
Short Squeeze 101
— Sahil Bloom (@SahilBloom) August 5, 2020
If you follow financial markets (or if you watch Billions), you've heard the phrase "short squeeze" used quite frequently.
But what is a "short squeeze" and how does it work?
Here's Short Squeeze 101!
\U0001f447\U0001f447\U0001f447
As usual, let's simplify it here for everyone to understand.
A gamma squeeze is all about options contracts and their indirect impact on the underlying stock.
For a primer on options, see my thread below. https://t.co/jU7gEt9sf7
1/ Options 101 - Call Options
— Sahil Bloom (@SahilBloom) July 14, 2020
Over the last few months, with the rise of Robinhood and the day trading boom, options trading has been featured prominently in the news (for better or for worse).
But what is an option and how does it work?
Here\u2019s Options 101 - Call Options! pic.twitter.com/wH6IijE7wf
You pay them a bit of money (the premium) and they make a commitment to deliver you the underlying stock at a future date for the strike price of the option.
It's a pretty simple transaction.
If $GME rises above your strike price, they will have to buy the stock at the market price and sell it to you for the strike price, incurring a (potentially large!) loss.
The amount of stock she buys is based on the "Delta" - a ratio of how much the option price moves relative to a $1 move in the stock.
As Delta and Gamma rise, the market maker gets more and more nervous!
She has to buy more stock to hedge the risk of the option being exercised in the money (i.e. with the underlying price above the strike price).
As call option purchasing volumes suddenly surged (thanks to @wallstreetbets @chamath and @ElonMusk), market makers had to purchase a lot of $GME stock to hedge.
This set in motion a self-fulfilling prophecy…
As the price of $GME went up, the Delta and Gamma of $GME call options rose.
This meant market makers had to buy more stock, further driving up the $GME price!
Reflexivity!
With $GME, we had both (1) a short squeeze - short-sellers frantically buying the stock to close/cover their shorts and (2) a gamma squeeze - call option market makers frantically buying the stock to hedge their exposure.
Result: 👇
For more on this topic, I highly recommend reading @matt_levine's "Money Stuff" newsletter on the topic. https://t.co/5nxzRyTaee
If you're out of the loop - this is the (hilarious) story of a subreddit (wall street bets) taking down a multi-billion dollar hedge fund... get your popcorn ready \U0001f37f
— Shaan Puri (@ShaanVP) January 26, 2021
1/ An Allegory of Finance
— Sahil Bloom (@SahilBloom) July 18, 2020
I have been posting a lot of educational (and humorous!) threads on finance, money, and economics.
My mission is simple: to demystify these concepts and make them accessible to everyone.
All of the threads can be found below. Enjoy and please share!
More from Sahil Bloom
Short Squeeze 101
If you follow financial markets (or if you watch Billions), you've heard the phrase "short squeeze" used quite frequently.
But what is a "short squeeze" and how does it work?
Here's Short Squeeze 101!
👇👇👇
1/ First, the basics.
The "short" in "short squeeze" refers to the concept of short selling.
The basics are covered in my thread below.
https://t.co/xecJYNCxMs
TL;DR - short selling is a way of betting against a stock - i.e. betting that its price will decline.
2/ "Short interest" is a measure of how heavily an asset is shorted by the market.
It is the total number of shares that have been sold short (borrowed and sold), but have not yet been covered (bought and returned).
It is usually measured as a % of the # of shares outstanding.
3/ A "short squeeze" occurs when a heavily-shorted asset experiences a rapid upward price movement.
When this happens, short sellers may be forced to close their short positions (i.e. buy the stock and return it to the broker), further accelerating the upward price movement.
4/ Let's look at a simple example to show this in action.
We will use Tesla, one of the most heavily-shorted stocks in the world.
Imagine the stock price is $1,000 per share. This seems crazy. Ricky Rational decides to short the stock at this level.
If you follow financial markets (or if you watch Billions), you've heard the phrase "short squeeze" used quite frequently.
But what is a "short squeeze" and how does it work?
Here's Short Squeeze 101!
👇👇👇
1/ First, the basics.
The "short" in "short squeeze" refers to the concept of short selling.
The basics are covered in my thread below.
https://t.co/xecJYNCxMs
TL;DR - short selling is a way of betting against a stock - i.e. betting that its price will decline.
1/ Short Selling 101
— Sahil Bloom (@SahilBloom) July 6, 2020
With the markets continuing to rally, there has been more talk of \u201cshorting\u201d or \u201cshort selling\u201d stocks.
But what does that mean and how does it work?
Here\u2019s a quick educational primer: Short Selling 101 pic.twitter.com/JTrJmuY7fI
2/ "Short interest" is a measure of how heavily an asset is shorted by the market.
It is the total number of shares that have been sold short (borrowed and sold), but have not yet been covered (bought and returned).
It is usually measured as a % of the # of shares outstanding.
3/ A "short squeeze" occurs when a heavily-shorted asset experiences a rapid upward price movement.
When this happens, short sellers may be forced to close their short positions (i.e. buy the stock and return it to the broker), further accelerating the upward price movement.
4/ Let's look at a simple example to show this in action.
We will use Tesla, one of the most heavily-shorted stocks in the world.
Imagine the stock price is $1,000 per share. This seems crazy. Ricky Rational decides to short the stock at this level.
From a young age, we are taught to view the world as black and white.
But many of life’s most important truths appear contradictory on the surface.
THREAD: 15 powerful paradoxes (on growth, business, careers, and life):
Sprezzatura (“Studied Carelessness”)
You have to put in more effort to make something appear effortless.
Effortless, elegant performances are often the result of a large volume of effortful, gritty practice.
Simple is not simple.
Slow Down to Speed Up
Want to speed up? Try slowing down.
Slowing down gives you the time to be deliberate with your actions.
You can focus, gather energy, and deploy your resources more efficiently.
It allows you to focus on leverage and ROI.
Move slow to move fast.
Learn More to Know Less
The wisdom paradox - the more you learn, the more you are exposed to the immense unknown.
This should be empowering, not frightening.
“The more I learn, the more I realize how much I don't know.” - Albert Einstein
Embrace lifelong learning.
Shrink to Grow
Growth is never linear.
In order to grow, sometimes you need to shrink.
Shedding deadweight may feel like a step back, but it is a necessity for long-term growth.
This principle applies to your career, startup, or life.
One step back for two steps forward.
But many of life’s most important truths appear contradictory on the surface.
THREAD: 15 powerful paradoxes (on growth, business, careers, and life):
Sprezzatura (“Studied Carelessness”)
You have to put in more effort to make something appear effortless.
Effortless, elegant performances are often the result of a large volume of effortful, gritty practice.
Simple is not simple.
Slow Down to Speed Up
Want to speed up? Try slowing down.
Slowing down gives you the time to be deliberate with your actions.
You can focus, gather energy, and deploy your resources more efficiently.
It allows you to focus on leverage and ROI.
Move slow to move fast.
Learn More to Know Less
The wisdom paradox - the more you learn, the more you are exposed to the immense unknown.
This should be empowering, not frightening.
“The more I learn, the more I realize how much I don't know.” - Albert Einstein
Embrace lifelong learning.
Lifelong learning is a competitive advantage.
— Sahil Bloom (@SahilBloom) June 6, 2021
But contrary to what you\u2019ve been told, lifelong learners are built, not born.
THREAD: 20 lifelong learning habits you can start developing today.
Shrink to Grow
Growth is never linear.
In order to grow, sometimes you need to shrink.
Shedding deadweight may feel like a step back, but it is a necessity for long-term growth.
This principle applies to your career, startup, or life.
One step back for two steps forward.
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I just finished Eric Adler's The Battle of the Classics, and wanted to say something about Joel Christiansen's review linked below. I am not sure what motivates the review (I speculate a bit below), but it gives a very misleading impression of the book. 1/x
The meat of the criticism is that the history Adler gives is insufficiently critical. Adler describes a few figures who had a great influence on how the modern US university was formed. It's certainly critical: it focuses on the social Darwinism of these figures. 2/x
Other insinuations and suggestions in the review seem wildly off the mark, distorted, or inappropriate-- for example, that the book is clickbaity (it is scholarly) or conservative (hardly) or connected to the events at the Capitol (give me a break). 3/x
The core question: in what sense is classics inherently racist? Classics is old. On Adler's account, it begins in ancient Rome and is revived in the Renaissance. Slavery (Christiansen's primary concern) is also very old. Let's say classics is an education for slaveowners. 4/x
It's worth remembering that literacy itself is elite throughout most of this history. Literacy is, then, also the education of slaveowners. We can honor oral and musical traditions without denying that literacy is, generally, good. 5/x
As someone\u2019s who\u2019s read the book, this review strikes me as tremendously unfair. It mostly faults Adler for not writing the book the reviewer wishes he had! https://t.co/pqpt5Ziivj
— Teresa M. Bejan (@tmbejan) January 12, 2021
The meat of the criticism is that the history Adler gives is insufficiently critical. Adler describes a few figures who had a great influence on how the modern US university was formed. It's certainly critical: it focuses on the social Darwinism of these figures. 2/x
Other insinuations and suggestions in the review seem wildly off the mark, distorted, or inappropriate-- for example, that the book is clickbaity (it is scholarly) or conservative (hardly) or connected to the events at the Capitol (give me a break). 3/x
The core question: in what sense is classics inherently racist? Classics is old. On Adler's account, it begins in ancient Rome and is revived in the Renaissance. Slavery (Christiansen's primary concern) is also very old. Let's say classics is an education for slaveowners. 4/x
It's worth remembering that literacy itself is elite throughout most of this history. Literacy is, then, also the education of slaveowners. We can honor oral and musical traditions without denying that literacy is, generally, good. 5/x
Master Thread of all my threads!
Hello!! 👋
• I have curated some of the best tweets from the best traders we know of.
• Making one master thread and will keep posting all my threads under this.
• Go through this for super learning/value totally free of cost! 😃
1. 7 FREE OPTION TRADING COURSES FOR
2. THE ABSOLUTE BEST 15 SCANNERS EXPERTS ARE USING
Got these scanners from the following accounts:
1. @Pathik_Trader
2. @sanjufunda
3. @sanstocktrader
4. @SouravSenguptaI
5. @Rishikesh_ADX
3. 12 TRADING SETUPS which experts are using.
These setups I found from the following 4 accounts:
1. @Pathik_Trader
2. @sourabhsiso19
3. @ITRADE191
4.
4. Curated tweets on HOW TO SELL STRADDLES.
Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on
Hello!! 👋
• I have curated some of the best tweets from the best traders we know of.
• Making one master thread and will keep posting all my threads under this.
• Go through this for super learning/value totally free of cost! 😃
1. 7 FREE OPTION TRADING COURSES FOR
A THREAD:
— Aditya Todmal (@AdityaTodmal) November 28, 2020
7 FREE OPTION TRADING COURSES FOR BEGINNERS.
Been getting lot of dm's from people telling me they want to learn option trading and need some recommendations.
Here I'm listing the resources every beginner should go through to shorten their learning curve.
(1/10)
2. THE ABSOLUTE BEST 15 SCANNERS EXPERTS ARE USING
Got these scanners from the following accounts:
1. @Pathik_Trader
2. @sanjufunda
3. @sanstocktrader
4. @SouravSenguptaI
5. @Rishikesh_ADX
The absolute best 15 scanners which experts are using.
— Aditya Todmal (@AdityaTodmal) January 29, 2021
Got these scanners from the following accounts:
1. @Pathik_Trader
2. @sanjufunda
3. @sanstocktrader
4. @SouravSenguptaI
5. @Rishikesh_ADX
Share for the benefit of everyone.
3. 12 TRADING SETUPS which experts are using.
These setups I found from the following 4 accounts:
1. @Pathik_Trader
2. @sourabhsiso19
3. @ITRADE191
4.
12 TRADING SETUPS which experts are using.
— Aditya Todmal (@AdityaTodmal) February 7, 2021
These setups I found from the following 4 accounts:
1. @Pathik_Trader
2. @sourabhsiso19
3. @ITRADE191
4. @DillikiBiili
Share for the benefit of everyone.
4. Curated tweets on HOW TO SELL STRADDLES.
Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on
Curated tweets on How to Sell Straddles
— Aditya Todmal (@AdityaTodmal) February 21, 2021
Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on Straddles
Share if you find this knowledgeable for the benefit of others.
