People talked about $GME a whole bunch in January, but I don't think you realize just what is happening in the market and how this one stock could result in the greatest transfer of wealth in human history... so, I give you this thread:

Why is GameStop a game changer?

It all begins with the fact "retail is dying" people buy things online, games now have downloadable content and you don't need to by disks or cartridges any more. So, people don't visit the store as often. The storefronts are tired and 20 years old, and profits were spent on buying back 30$ of its stick to keep the price from dropping so much they get delisted. They went from 100 million shares to 70 million shares (20 million of which are owned by insiders and can't be freely traded). Then about 35 million of the remaining 50 million shares are owned by big investment and index funds, while the remaining 15 million shares are owned by retail investors. Average folk like you and me who are too poor to be invited by a hedge fund but put these shares in our meager portfolios or 401k.

It is important that you remember that there are only 50 million shares that can trade.

Now, to stay afloat GameStop issued some bonds and the first big set of bonds (imagine as of they took out a multimillion mortgage on their entire busoness) scheduled to mature do so in the next week or so. Sometime last year some shit ass hedge fund bros saw $GME struggling, then got hit by the pandemic and decided it was time to short the shot out of the stock and become kajillionaires. They borrowed the stock, millions of shares of it, from the index funds and then sold it expecting the price to crater and then scooping up the cheap shares and giving them back to the people they borrowed them from. If $GME were to bankrupt, then they wouldn't even need to give back the shares or even declare capital gains. Billions in profit tax free! So, fully expecting GameStop to default on their bonds, they shorted, and they borrowed more and they shorted, and they borrowed some more and they shorted... but who was buying the shares? Regular dorks like us. Retail investors, were buying and hoarding the stock.

By January the shares on GameStop had been shorted something like 140%... how does that happen?

Well, once the stock is borrowed and shorted, and someone like me buys the shares, I would get counted as an owner and the fund from which the shares were borrowed gets counted as an owner too. Then, the stock sits in my brokerage account and my broker lends the stock to a hedge fund and shorts it again. So someone else bought the shares and they're counted as an owner, I'm counted as an owner, and the index fund is counted as an owner... before long this had gotten out of control and the index funds wanted their shares back, but the price of the stock had risen above what the HFs had shorted it for, and the retail owners refused to sell. This is called a "short squeeze" and the result was the stock going from $2.57 to $480 in a year. It wasn't that $GME generated business that warranted such a high price, but the fact that the HFs got out over their skis and their greed hoisted their Petar. Eleven hedge funds went bankrupt and the biggest, Melvin Capital was down 53%! The stock fell and bottomed out around $40 a share, but it wasn't done, more HFs loans were due and they had had buy the stock and give it back to their lenders, so the price spiked again last week to around $200.

This caused a new problem: options markets.

Options markets are weird to the average person. Basically, people have the stock in 100 share blocks, and sell "options to buy" known as "call options" where you purchase the right to buy the stock at at a set price of the market for that stock goes up. For example: an options writer makes an "out of the money" (OTM) option for $GME back at Christmas for $80 a share that has a date of February 26th. This means if someone buys that option at like $1 a share for 100 shares and by February 26th the stock is more than $80, they can exercise that option and get all $100 shares for below market value at $80 a share. The options writer MUST sell them those shares OR ELSE.

Well, when a stock is trading at $20 and the options writer sells an $80 option, the don't actually own the shares because who expects a shitty stock like $GME to shoot up 300+%? This is called a "naked option" and the options trader now has to find the shares to fulfill the order. The problem is that he only got paid $81 per share and last Friday shares were $100 each. So the options guys are hemorrhaging money because the stock went from $40 to $100 in three days and all the contracts due on 2/26 from $100 on down were now "in the money" (ITM). On top of this, a whole bunch of short sellers were doing naked shorts, meaning they were selling stock they didn't have on the promise that in two days they will find the shares and deliver them, betting that the price would drop and they could find cheap shares to fulfill their order.

As it stands, between the shorts, naked shorts, and naked call options, the rich douchebags have to find something in the neighborhood of 200 million to 500 million shares to fill their orders. There are only 50 million physical shares in existence, all now in the hands of retailer investors who are refusing to sell... and millions more naked shares from call options will be ITM come tomorrow afternoon if the price remains above $100.

Every evening after the market closes the brokerages do some accounting with the clearing houses.

They even their books see that x-number of shares moved here and y-dollars moved there and sometimes they find that 3 million shares are supposed to move from a hedge fund account with brokerage A to accounts with brokerage B, but the HF account with brokerage A only has 2 million physical shares to give. This is known as a "failure to deliver" (FTD). So, brokerage A looks at their other accounts and sees that there are another million shares owned by their customers and loans these 1 mil shares to the hedge fund to give to brokerage B, and A's hedge fund account has 21 days to find 1 million more shares OR ELSE.

This or else is big, because if 21 days pass, and the hedgfund hasn't found the shares, brokerage A is required to liquidate the hedge fund's assets and buy the stock at any price to fulfill their obligation. If the retail investors demand $1 million a share, then brokerage A has to pay $1 million a share and liquidate $1 million of the hedge fund's assets to pay for it. The same goes for the options writers. If they go 21 days from when they sold the shares and don't deliver, they now have to liquidate assets and pay any price for these shares... and they all have to do this hundreds of millions of times, because remember, there are 200 to 500 million naked/synthetics shares out there but only 50 million physical shares. They don't know if they will get a physical share or a synthetic one when someone offers to sell and they have to keep buying until all orders are filled.

Hedge funds and entire options markets will go bankrupt.

If there are 500 million shares shares bought at $100,000 each, then these groups have to come up with $50 trillion. No one has that kind of money. So, they will be liquidated pit of existence, and then the insurance companies and the clearing house themselves will have to start buying shares with their $63 trillion insurance fund (which is basically just the federal reserve printing money).

The entire global economy is only $87.8 trillion... and for a brief few days $GME has the power to not only be a $7 trillion company making Ryan Cohen possibly the world's first trillionaire, but to essentially see almost all the cash on earth go to fulfilling a whole bunch of shitty bets a bunch of douchebros made filter into the hands of poor schlubs from reddit who called their bluff. Something like 63 multibillion hedge funds could face annihilation.

It takes $1 million in liquidity and a yearly salary of $200k or more to invest in most HFs. Much of the 1% is about to lose all their wealth to a bunch of potty-mouthed degenerates from internet message boards, and the fear is palpable.

Thus, potentially the greatest transfer of wealth in human history is but days or weeks away!

P.S. you'll notice that you will not see CNBC or FBC talk about the dire implications of all of this. I really hope that @Marketplace and @kairyssdal go into depth with what is about to happen this month with this really weird, once-in-a-lifetime storm that is brewing.

P.P.S. for every $1 GameStop is up at from last Friday another 20,000 or more contracts are "in the money" that options guys have to scramble to find. All the failure to delivers from last Friday have until the 19th before they start facing the OR ELSE part of their bet.

Forbes has stepped in with their analysis:

https://www.forbes.com/sites/georgecalhoun/2021/03/05/gamestopgamestonk-has-nothing-to-do-with-the-madness-of-crowds/?sh=52ad50125d0b

https://threadreaderapp.com/thread/1367743123279867909.html

https://twitter.com/TheHoustonWade/status/1367743123279867909

https://gab.com/ChrisAndDebbie/posts/105843091153552267

TL/DR: The $GME Stonk Scheme Appears To Be A Once In A Lifetime Way To Hit TPTB Where It Hurts And Take That Which They Hold Dearsest ... What Do We Have To Lose By Gaining Here?