Reddit and GameStop

Yes, I posted about it in the other thread. Son #1 almost doubled his money yesterday and he's followed the main Reddit thread for a year. Here's the screenshot of the main guy's account yesterday. He started with $50K a year ago, only GME plays.

 

Better jump on Express...

 

PS that means his $23M at the close yesterday i likely sitting north of $50M today. Less than 3 weeks ago, his balance was at just under $3M.

The GME memes/videos on Reddit are pretty damn funny... especially regarding the busting of Melvin Capital on their short positions.

 

I've been watching for a week. It's something to behold.
And here I was patting myself on the back for being up 24% for the month.

 

Couple of good Twitter threads on this:

 

They're expecting it to crash....most likely by the close on Friday. They f*cked over the hedge fund bigtime. It's a very interesting story.

I'd like an education (@Detroitgator ??) on how to trade options, calls, etc. I'm afraid to do it because I don't fully understand it.

Also, can someone post the link to the reddit thread?

 

https://www.reddit.com/r/wallstreetbets/

"Like 4chan found a Bloomberg Terminal"

 

I'm watching Bloomberg right now...some of the big boys are getting pissed putting restrictions on...f vck them

 

Pretty much says it:

 

I only wish my balls would have dropped a little earlier this morning....but at least I'm positive overall thanks to a little Blackberry and Express...

 

Then don't do it!

FWIW, I wouldn't touch GME right now. The "smartest" play right now would be to set up conditional orders for its inevitable crash to reality. That said, good luck trying to short sell it, I doubt anyone on here is using a trading platform that would have any available short positions. You could buy puts, but, "fire bad!" It's now below its 21, 50, and 100 moving averages, so it's likely rolling over, but I would stay away... ALL the algos are on it now.

 

I wasn't suggesting getting into GME - just an lesson trading shorts, options, calls, etc. I mostly just buy and sell (or buy and hold).

 

So normally you buy a stock that you think is going up, and sell it when it hits the target, right? In this case you sell a stock that you think is going down, and buy it when it hits the target. There's no real difference, except when you short a stock you have to pay a cost to borrow the stock to sell to someone else, and that carries a percentage that is typically .30% or so per year, so relatively small. But in the case of a hard to borrow stock, the rates will be much higher, and is usually calculated daily, if you can borrow it at all.

The other factor to consider is risk. If you go long (buy) a stock, you have at risk the entire amount of your purchase, in the case that the stock goes to zero. If you short a stock, you theoretically have unlimited risk to the upside, so you have to do things to mitigate the risk. Your brokerage will require additional margin to cover this, and you may wish to purchase protective options to further mitigate your risk.

Lastly, if the stock is a dividend stock, you'll be responsible for paying any dividends that the stock pays to the buyer. Your broker will debit your account when this time comes, so it pays to remain aware of ex-dividend dates to avoid this happening to you.