The GameStop Short-Squeeze Explained

The GameStop Short-Squeeze Explained

What Is The GameStop Short Squeeze?

What is happening right now with GameStop ($GME) is the dawn of a new paradigm in trading and investing in the stock market.

This Friday (1-29-21) and Monday (2-1-21) will be the greatest short squeeze of all time. A biblical squeeze for the ages. Finance students will study this happening for the rest of time.

For anyone who doesn’t know what a short squeeze is, here is what is happening:

Basically, a bunch of hedge funds have been shorting GameStop’s stock because they saw it as a failing mall retailer. And they’ve been getting fat, happy and very complacent. This will be some of their undoing.

When you short a stock, you are betting that the price will go down. Naked shorting is when you are betting a stock will go down without having the underlying security to cover your bet. This is important because if the price goes up enough beyond your short, you will be forced to cover you short position by buying the underlying security at whatever price you can get it at.

If you short a stock at 5 and the stock goes to 10, you then have to buy the stock at 10, in effect losing the 5 point spread between your short price and the actual price.

The really insane part: hedge funds are shorting 140% of $GME shares.

140%

This means there is not enough outstanding shares to cover the shorts.

GameStop is the #1 most shorted
stock on the market right now.

As of today, GameStop was the most traded stock on the market. More $GME shares and options were bought today than Apple ($AAPL) or even Tesla ($TSLA).

And the price as of writing this is 220, a +143 point change, a +92% increase today!

And now that Jim Cramer, the Wall Street Journal and CNBC have been putting out stories on /r/wallstreetbets, I expect more ‘retail traders’ to pile into $GME, if not for the promise of huge gains then to stick it to the Wall Street hedge funds that have been sticking it to all of us for years.

Think about it, these billion dollar hedge funds short stock on struggling companies HOPING it will hurt them even more, while snickering and getting fabulously right in the process.

And that is why this is personal for a lot of people. It goes beyond just wanting to make a good trade. I’ve seen people going all in at all time highs just to finally get one over on a parasitic hedge fund, who are all feeding on the carcass of the middle class.

Well, I’m all for it, and only wish I had bought more shares to begin with.

The memes, gains and schadenfreude will be glorious!

Fellow investors: buy, hold and we will all win together.

And tell your friends too.

Happy Investing,
Will R Compton
Founder, Investing Alpha Inc.

P.S. Tell all your friends to buy and HOLD $GME shares until Monday (1-26-21)

P.P.S. I’m not a professional, do your own research, none of this is advice, just the opinion of some guy on the internet.

ThinkorSwim Down Again? Do This NOW

What’s Wrong With ThinkorSwim?

A bunch of people are reporting Think or Swim desktop version is “glitching” on them this week.

Every platform has technical problems at some point.

It is bad timing though with Schwab’s aquisition of TDAmeritrade with the express purpose of using Think or Swim as their trading platform.

Could be a symptom of wider problems, hopefully not, but we will find out shortly.

I’m going to watch carefully today and maybe get ready to switch brokers in the near future.

Introducing The New Finance And Investing YouTube Channel

Introducing The New Finance And Investing YouTube Channel

Hi, my name is Will Compton and I’m so excited to be with you here right now. On this channel we’re going to be talking everything finance, investing in the stock market, options trading, investing in real estate, personal finance, making more money and financial news.

My main goal with this channel is to provide you with an absolute huge amount of value, giving you the knowledge you need to make smart investing decisions.

I also want to grow a community of like-minded, long-term growth investors who can be a brain-trust for me and eachother.

I want to form a long-term mutually beneficial relationship.

I’m so excited to be starting this journey, there’s going to be a lot more videos coming and some other stuff in the works. There’s going to be some green days and some red days but we’re going to get through it together while making some mad gainz.

If you’re still watching this and any of that sounded something that might be up your alley, hit the subscribe button and I’ll see you in the next video.