a 'short' is walstreetese for "wager to fail"; it's literally a wager. it's a little more complicated than that, with a contractual obligation to buy something later at today's price, but that's basically it. and also everyone's the bookie except the odds are weighted towards the players instead of the house because it's wall street not vegas and they don't have to be quite as scrupulous because there's no gaming comission to step on their shit if they cheat too blatantly.
anyway, they bet on how other people would bet and then r/WSB said "LOL fuck you we're gonna do the opposite lets make this work" and did and some rich people lost at a particularly shady game of roulette. or more like poker where you can see everybody's cards at all times.
theoretically, but if that got out, they would get stepped on because capitol would band together to put it down. this can only happen once in a blue moon without the oligarchs uniting or just declaring that the people lose by fiat. or get bailed out. or whatever. this mostly worked because nobody actually believed it would.
A 'short' is the name for a type of stock trade. Basically, I have 10 shares in Company A. You borrow those shares and promise to give them back at the end of the week. Then you sell those shares, because you think they will be worth less at the end of the week and you can buy them back cheaply. If you're right, the difference between the price now and the price in a week's time is your profit on every share that you're shorting. If you're wrong, you can lose money because you have to buy the shares back even if they're more expensive now.
There were a bunch of shorts on GameStop shares, so a meme-y stock trading subreddit realised they could inflate the price and -- no matter what -- those shorts would mean that someone had to buy their super expensive shares. They pushed the share price through the roof and are now raking in money due to it. Because some of the people shorting the stock are doubling down and buying up even more shorts, WSB (the subreddit) is still keeping the price high.
It would be market manipulation if they were deliberately setting out to raise the price by spreading false information, using insider knowledge, etc. As it is, all that's happening is a bunch of redditors are telling each other to buy GameStop shares because they're a good investment. The price is going up because WSB folks are willing to buy at prices much higher than the 'real' long-term value of a GameStop share.
Wait so is the timeframe on a short always one week? Also, is the short, as a "financial instrument", supposed to facilitate any real, useful function, or is it a construct used exclusively to gamble with?
In practice, the short seller will borrow the stock in exchange for some small amount of interest, sell that stock, and as long as they keep paying the interest they might take a long time to buy the stock back and return it. The lender can usually request the stock back at short notice, however.
Shorts are part of a complicated web of financial instruments that are supposed to a) stabilise stock prices, in the sense that they keep stock prices close to the 'real' value of the stock, and b) allow traders with better market knowledge to make money at the expense of traders with worse market knowledge. They're 'useful' in that sense.
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a 'short' is walstreetese for "wager to fail"; it's literally a wager. it's a little more complicated than that, with a contractual obligation to buy something later at today's price, but that's basically it. and also everyone's the bookie except the odds are weighted towards the players instead of the house because it's wall street not vegas and they don't have to be quite as scrupulous because there's no gaming comission to step on their shit if they cheat too blatantly.
anyway, they bet on how other people would bet and then r/WSB said "LOL fuck you we're gonna do the opposite lets make this work" and did and some rich people lost at a particularly shady game of roulette. or more like poker where you can see everybody's cards at all times.
deleted by creator
theoretically, but if that got out, they would get stepped on because capitol would band together to put it down. this can only happen once in a blue moon without the oligarchs uniting or just declaring that the people lose by fiat. or get bailed out. or whatever. this mostly worked because nobody actually believed it would.
Depends on the float -- how many shares are circulating -- some stocks have billions of shares, and how many shares the short sellers are shorting.
If they are shorting more than the float than this can happen.
A 'short' is the name for a type of stock trade. Basically, I have 10 shares in Company A. You borrow those shares and promise to give them back at the end of the week. Then you sell those shares, because you think they will be worth less at the end of the week and you can buy them back cheaply. If you're right, the difference between the price now and the price in a week's time is your profit on every share that you're shorting. If you're wrong, you can lose money because you have to buy the shares back even if they're more expensive now.
There were a bunch of shorts on GameStop shares, so a meme-y stock trading subreddit realised they could inflate the price and -- no matter what -- those shorts would mean that someone had to buy their super expensive shares. They pushed the share price through the roof and are now raking in money due to it. Because some of the people shorting the stock are doubling down and buying up even more shorts, WSB (the subreddit) is still keeping the price high.
deleted by creator
It would be market manipulation if they were deliberately setting out to raise the price by spreading false information, using insider knowledge, etc. As it is, all that's happening is a bunch of redditors are telling each other to buy GameStop shares because they're a good investment. The price is going up because WSB folks are willing to buy at prices much higher than the 'real' long-term value of a GameStop share.
deleted by creator
Wait so is the timeframe on a short always one week? Also, is the short, as a "financial instrument", supposed to facilitate any real, useful function, or is it a construct used exclusively to gamble with?
In practice, the short seller will borrow the stock in exchange for some small amount of interest, sell that stock, and as long as they keep paying the interest they might take a long time to buy the stock back and return it. The lender can usually request the stock back at short notice, however.
Shorts are part of a complicated web of financial instruments that are supposed to a) stabilise stock prices, in the sense that they keep stock prices close to the 'real' value of the stock, and b) allow traders with better market knowledge to make money at the expense of traders with worse market knowledge. They're 'useful' in that sense.