A short is a "put," which is a type of stock option. An option is a bet that the stock price will either be higher (a call) or lower (a put) than a specific stock price by a certain date. After that date, the option expires. If the stock has not hit or surpassed the target price, you lose the bet.

When you buy an option, it's technically a contract where you borrow 100 shares of the stock and only pay interest. If you short sell (buying a put option) against a stock in huge volume (thousands of puts), you're locking up shares from being sold higher which applies artificial downward pressure on the stock. It's market manipulation, and a corrupt SEC allows it for specific hedge funds. It's also an all-or-nothing bet, so if they lose, they lose big.

This is what the Gamestop issue is about. Someone discovered the stock was being shorted because it was artificially low, then rallied thousands of people on Reddit to buy the stock and apply counterpressure against the short sellers. This caught the short sellers (hedge funds) off guard, so they doubled down and put more money in the pot. The Reddit investors continued to push back by buying more. This is called a bear trap.

By "covering," it simply means there comes a point where the hedges cannot keep shorting the stock. They have a ticking clock costing them money by the month, and they will run out. When they fail to cover, the downward pressure disappears, then the stock blows up and the short sellers lose everything.

A short is a "put," which is a type of stock option. An option is a bet that the stock price will either be higher (a call) or lower (a put) than a specific stock price by a certain date. After that date, the option expires. If the stock has not hit or surpassed the target price, you lose the bet.

When you buy an option, it's technically a contract where you borrow 100 shares of the stock and only pay interest. If you short sell (buying a put option) against a stock in huge volume (thousands of puts), you're locking up shares from being sold higher which applies artificial downward pressure on the stock. It's market manipulation, and a corrupt SEC allows it for specific hedge funds. It's also an all-all-nothing bet, so if they lose, they lose big.

This is what the Gamestop issue is about. Someone discovered the stock was being shorted because it was artificially low, then rallied thousands of people on Reddit to buy the stock and apply counterpressure against the short sellers. This caught the short sellers (hedge funds) off guard, so they doubled down and put more money in the pot. The Reddit investors continued to push back by buying more. This is called a bear trap.

By "covering," it simply means there comes a point where the hedges cannot keep shorting the stock. They have a ticking clock costing them money by the month, and they will run out. When they fail to cover, the downward pressure disappears, then the stock blows up and the short sellers lose everything.

A short is a "put," which is a type of stock option. An option is a bet that the stock price will either be higher (a call) or lower (a put) than a specific stock price by a certain date. After that date, the option expires. If the stock has not hit or surpassed the target price, you lose the bet.

When you buy an option, it's technically a contract where you borrow 100 shares of the stock and only pay interest. If you short sell against a stock in huge volume (thousands of puts), you're locking up shares from being sold higher which applies artificial downward pressure on the stock. It's market manipulation, and a corrupt SEC allows it for specific hedge funds. It's also an all-all-nothing bet, so if they lose, they lose big.

This is what the Gamestop issue is about. Someone discovered the stock was being shorted because it was artificially low, then rallied thousands of people on Reddit to buy the stock and apply counterpressure against the short sellers. This caught the short sellers (hedge funds) off guard, so they doubled down and put more money in the pot. The Reddit investors continued to push back by buying more. This is called a bear trap.

By "covering," it simply means there comes a point where the hedges cannot keep shorting the stock. They have a ticking clock costing them money by the month, and they will run out. When they fail to cover, the downward pressure disappears, then the stock blows up and the short sellers lose everything.

A short is a "put," which is a type of stock option. An option is a bet that the stock price will either be higher (a call) or lower (a put) than a specific stock price by a certain date. After that date, the option expires. If the stock has not hit or surpassed the target price, you lose the bet.

When you buy an option, it's technically a contract where you borrow 100 shares of the stock and only pay interest. If you short sell against a stock in huge volume (thousands of puts), you're locking up shares from being sold higher which applies artificial downward pressure on the stock. It's market manipulation, and a corrupt SEC allows it for specific hedge funds. It's also an all-all-nothing bet, so if they lose, they lose big.

This is what the Gamestop issue is about. Someone discovered the stock was being shorted because it was artificially low, then rallied thousands of people on Reddit to buy the stock and apply counterpressure against the short sellers. This caught the short sellers (hedge funds) off guard, so they doubled down and put more money in the pot. The Reddit investors continued to push back by buying more. This is called a bear trap.

By "covering," it simply means there comes a point where the hedges cannot keep shorting the stock. They have a ticking clock costing them money by the month, and they will run out. When they fail to cover, the stock blows up and the short sellers lose everything.