(no title)
BYazfVCcq | 4 years ago
"In seeking to answer this question, staff observed that during some discrete periods, GME had sharp price increases concurrently with known major short sellers covering their short positions after incurring significant losses. During these times, short sellers covering their positions likely contributed to increases in GME’s price. For example, staff observed that particularly during the earlier rise from January 22 to 27 the price of GME rose as the short interest decreased. Staff also observed discrete periods of sharp price increases during which accounts held by firms known to the staff to be covering short interest in GME were actively buying large volumes of GME shares, in some cases accounting for very significant portions of the net buying pressure during a period. Figure 6 shows that buy volume in GME, including buy volume from participants identified as having large short positions, increased significantly beginning around January 22 and remained high for several days, corresponding to the beginning of the most dramatic phase of the run-up in GME’s price."
Meaning shorts covering causing a small increase in price and then retail FOMOd in.
See also the graph on the next page that show short interest dropping from over 100% to around 20%.
WJW|4 years ago
1. Lots of people are short.
2. Price goes up significantly, shorters get margin calls.
3. Price goes up a lot due to buying pressure from shorters closing their positions. (ie, the squeeze itself)
4. Price is now extremely high and fairly disconnected from fundamentals.
5. People notice the price is very high compared to earnings and open new short positions.
After step 5, there can be a ton of shorters in the stock yet there is not a very big chance of a new squeeze since the price at which the new short positions were opened is so high. Imagine how much the price of GME would need to rise to squeeze out the shorters who opened their position in the 300-400 USD price range.
Dork1234|4 years ago