What we know: Archegos went under in 2021 because of their GME short position. That basket of swaps was passed on to Credit Suisse, who then collapsed in 2023, and has since been absorbed by Swiss banking behemoth UBS. So now UBS is in the hot seat. They're a "too big to fail" and the Swiss gov is sweating bullets.
We also know: Someone with deep pockets has been spending tens of millions of dollars the past few days, buying GME $20 call options with a June 21 expiration. There are 485k call option contracts (48.5 million shares) with expiration dates ranging from May 31 to July 19.
What we also know: GME executed an ATM 45 million share offering Friday. We don't know if those shares were sold on the open market, or sold in a private deal, to an undisclosed buyer.
Here's the speculative part, so grain of salt, etc: Supposedly, a UBS trader claims that UBS is the buyer for "more than 2/3" of those 485k contracts, and they're going to exercise them, to buy their way out of the Archegos>Credit Suisse>UBS black hole. He states that buying that many shares would put UBS above the SEC's insider limit of 10% ownership, so that's why GME issued the 45m share offering today, in a friendly deal, to increase the float just enough so that UBS can skirt under the 10% rule.
If this speculation is true, then what? Hard to say, but consider that UBS is just one of many big money players holding a GME toxic short position, and the MOASS thesis has always been that whoever acts quickly and gets out first (buys enough shares to close their short position) can survive. It will cost them greatly, but they can survive, while most of the rest are then screwed. Imagine Musical Chairs, but UBS wipes out most of the chairs in one fell swoop, in the first go around, and all the other players are left without a seat.
What that scenario could mean for shareholders: The large buys by UBS would raise the share price, which would then put the current (huge) option chain ITM (in the money) which would trigger a cascading series of higher price jumps (like going up stair steps) as each higher strike price then becomes ITM. And all this is very conveniently timed, because CAT (Consolidated Audit Trail) oversight goes into effect on May 31.
There's no way to know yet if this UBS rumor is legit, but from what's been happening the over the past few days it does seem very plausible, and if it's legit then we will know soon.
Well, let' s think this through.
If this solved UBS' s woes then at a certain point, they will want to exit that market, dumping such shares on the market, causing the opposite effect, stock price decrease.
O, it would then come in handy if someone would have the options at a lower price, no?
To issue more stock to facilitate UBS, the question arises: Is GME in the business of investment banking? Why would UBS' s troubles be GME' s?
What does the SEC have on GME or it's officers that causes such a nicety?
In effect, it only seems that current actual stockholders may profit from a higher price temporarily.
Now what would happen? Are the HODLERS still HODLERS and in the game? Or are they being shafted by GME as a thank you for keeping the stock afloat?
That’s not how shorting works. When you short a stock you borrow the share and sell it. To close the short you must buy back the share and return it to whom you borrowed it from. When UBS exercises these calls they will only be in possession of the shares until they close the short which is usually a short period of time. Whomever has lent out these shares has been holding for a long time and likely won’t be selling them while the price is squeezing.
Saying all this, those were highly probable naked shorts meaning the shares never existed in the first place. So when the naked shirt is closed out the share will just cease to exist.
Literally nothing can stop what is coming.