Can someone explain what has to happen for the short sellers to be forced to buy all available shares which in turn makes the price of the stock “Skyrocket” or “Go to the moon”? It is still confusing to me when it might occur.
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It's not going to happen, because it's all corrupt, but here's how it would work in a world where folks follow the rules:
When you short a stock, what you're doing is selling a stock that you do not have. You still have to get enough shares of the stock by the end of the day to deliver them to the buyer. Where this works to your advantage is if the price of the stock goes down later in the day, because you could have sold a stock for $100 and then bought it for $90, making $10.
But it can also go the other way, where the price of the stock rises after the sale, and you lose money. So you sold the stock for $100 but then it goes up to $110 and you've lost $10.
Now what happens if no one is willing to sell to you? You've got to offer more and more money until someone agrees to sell.
But the market is rigged, so we'll never see gme hit the moon.
They'll halt trading.... Change the rules... Make exceptions...