Is there a way to invest in a long-term short of GameStop?
I just have an Ameritrade account and haven't really done a whole lot except for buying some ETFs oh, and I usually just sign on through my internet browser
Would like to learn a little about the different options for shorting the stock
Isn't it pretty much guarantee that it'll go down but it just depends on what time frame? Can you buy short position for different time frames?
Look everyone! It's a fool and his money!
I looked into it a little more. It seems like you can only buy a short position for one day? Is this right?
Why can't you buy short positions for different time frames?
Wouldn't that actually keep the market and investors more honest if you had short positions for a week, a month 6 months excetera?
There's no way that this internet hype pumping up GameStop can be sustained. It's ridiculously overvalued
So you guys are saying that I'm a Fool If I know for sure that eventually GameStop is going to go way down in price but there's just no way to predict on what day that's going to happen
So I just have to buy short on everyday and take my chances that in the long run it'll eventually be corrected?
That's definitely not how it works. Look into a "put."
That said, I'd be cautious about shorting this stock even if you think it's overvalued.
Well it's not exactly that you can only do it for one day, but if the stock goes up significantly you have to have the capital to cover the rise in price
Anyway that's the whole cycle is that people are shorting it at the same time that people are pumping the price
So the shorter is actually have to buy back at a higher price to maintain their position
Well, it's not that I think it's overpriced it's a fact that it's over price. Just went up 20 times in one month with no significant reason for that. Added to the fact that it's a dinosaur of a technology that's clearly becoming outdated, there's no need for brick and mortar game stores just like there's no need for Blockbuster stores
Ok, so how do I put option against GameStop, do you buy put options the same way you do the stock?
Don’t do it
First, why don't you just enter the short position and then liquidate it whenever the hell you want to. If you only want it for one day, liquidate it after one day. Keep it however long you want.
As for option, their are ways to limit your losses should it go wrong, but that also limits possible gains. I am not an options guy but understand it in principal. With options, you generally may be able to make a lot, but it is easy to lose everything. With a stock, you generally pick the direction you think it will go, but you have as much or as little time as you choose on an ongoing basis to let it achieve the desired outcome. With options, you have to get the direction right, and you have to get the timing right (they have a set duration after which they expire and become worthless).
Options are really only for the most experienced investors, imo. But others do venture there, for better or worse.
let's talk investing wrote:
There's no way that this internet hype pumping up GameStop can be sustained. It's ridiculously overvalued
Well, just like Tesla.
Keep buying GameStop stock, put a second mortgage on your house, sell your 401K, Roth, your running shoes, everything.
Go full in and report back.
You can buy puts, but right now they are really expensive. Gamestop closed at $325 yesterday. In the options market, the closing price for 1 put contract (for 100 shares of stock) with a strike price of $100 and an expiration date of February 19th was $29.88 per share. In other words, the contract would cost $2,988. If you hold until expiration, you would need the stock price to drop below $70 in order to make money on the trade.
let's talk investing wrote:Well, it's not that I think it's overpriced it's a fact that it's over price. Just went up 20 times in one month with no significant reason for that.
Are you serious? No significant reason?
There is a very significant and well known reason for the increase: It went up because someone shorted it too much.
When a stock is shorted too much, the people who shorted the stock become easy prey. Other people can start buying up the stock, knowing that the shorters will be forced into buying it from them at the price they are asking. This drives up the price, so the shorters make a huge loss.
So please ask yourself this: If a stock’s price is high BECAUSE it was shorted too much, do you really want to jump in and do even more shorting!
short shorter shortest wrote:
let's talk investing wrote:Well, it's not that I think it's overpriced it's a fact that it's over price. Just went up 20 times in one month with no significant reason for that.
Are you serious? No significant reason?
There is a very significant and well known reason for the increase: It went up because someone shorted it too much.
When a stock is shorted too much, the people who shorted the stock become easy prey. Other people can start buying up the stock, knowing that the shorters will be forced into buying it from them at the price they are asking. This drives up the price, so the shorters make a huge loss.
So please ask yourself this: If a stock’s price is high BECAUSE it was shorted too much, do you really want to jump in and do even more shorting!
It is a game of chicken. At some point the stock will end up under shorted and the price will collapse. If you bought in at 40 and are holding, are you going to ride back down to 10 or are you selling at 150? At some point the selling pressure will be insane. If you were Ryan Cohen who just made 1.2 billion, would you be looking to liquid as much as possible? Or David Foss who just made 490 million? Or George Sherman making 340m? Now as insiders they all have limits on their ability to sell but want to bet they have already filled to sell a ton when the next trading window opens? Do the math on how many Redditors with 600 dollar stimulus checks have to be buyers? And if you are just a regular guy who bought in at 20 and our now looking at say a 15x profit aren't you thinking it is time to quit the game?
Obviously the question is does this selling pressure happen Monday or does the stock shoot up to 1000 before heading back to 10? At some point shorting is going to make some one a huge pile of money. If that time is now is a bit of a guessing game. Markets often stay irrational far longer than expected.
FCAS wrote:
You can buy puts, but right now they are really expensive. Gamestop closed at $325 yesterday. In the options market, the closing price for 1 put contract (for 100 shares of stock) with a strike price of $100 and an expiration date of February 19th was $29.88 per share. In other words, the contract would cost $2,988. If you hold until expiration, you would need the stock price to drop below $70 in order to make money on the trade.
They are expensive because the market expectation is that on Feb 20th the stock is going to be dramatically lower. A put on apple for 100 (current price was like 130) was like .25 because nobody expects apple to drop 20%+ in a couple weeks. I am sure the smart money has started doing the math on when the short pressure will ease and how they can making a killing on the way down. And everyone who owns the stock has to be thinking about if they should bail now and take their gains or hope for one more doubling.
adsfdasfasfsafadfa wrote:
FCAS wrote:
You can buy puts, but right now they are really expensive. Gamestop closed at $325 yesterday. In the options market, the closing price for 1 put contract (for 100 shares of stock) with a strike price of $100 and an expiration date of February 19th was $29.88 per share. In other words, the contract would cost $2,988. If you hold until expiration, you would need the stock price to drop below $70 in order to make money on the trade.
They are expensive because the market expectation is that on Feb 20th the stock is going to be dramatically lower. A put on apple for 100 (current price was like 130) was like .25 because nobody expects apple to drop 20%+ in a couple weeks. I am sure the smart money has started doing the math on when the short pressure will ease and how they can making a killing on the way down. And everyone who owns the stock has to be thinking about if they should bail now and take their gains or hope for one more doubling.
Real money could be made in selling options to both sides since volatility is so high. You can probably find a lot of price mismatches and end up selling an option for way more premium than the 100 stocks in the contract are worth
Guys why does this testosterone-fueled banter have to rule the world?
Can't we just talk intelligently and try to learn and understand and become better people for it
My basic point is that I guarantee the stock is going down over the next year. And I'm just asking for what are some ways to make money assuming this is true
At some point the reality that a company has to actually be making money and have a path to Future profits and sustainability is going to kick in. And this bubble due to shorting and hyping against shorting is going to crash
From what I'm learning making money is speculating against fluctuations. Anyway I don't think this is the same as apple or Tessler because while those companies might be overhyped and overvalued they have longevity and growth potential. I don't see how a brick-and-mortar video game outlet has the legs the same way that Tesla does
Gamestop is all downhill from here. Only suckers will buy from here on out. It has reached its peak. You missed the boat. All downhill now. Some sheep will get sucked in and lose now. That is the point of the (stock market) game. Some win. Some lose.
let's talk investing wrote:
So you guys are saying that I'm a Fool If I know for sure that eventually GameStop is going to go way down in price but there's just no way to predict on what day that's going to happen
Yes
Read your sentence after the “but”.
The world is looking at this and wants in.
You’ve shown you don’t know what you’re doing.
To make money shorting a stock, others have to lose money.
You’re going to bet you know how to handle this better than people who do this for a living.
Good luck
Dr. Racket wrote:
Real money could be made in selling options to both sides since volatility is so high. You can probably find a lot of price mismatches and end up selling an option for way more premium than the 100 stocks in the contract are worth
I would be surprised if there are many opportunities for retail investors.. The high speed traders are constantly looking for arbitrage opportunities like that. I expect that misprices are showing up constantly and getting corrected with in seconds.
It will be fun to see how this thing unwinds. I expect to see the stock to drop from 300 to 10 in a week. Just not sure when. If I had just turned 50k into like 10 million, I would be selling like mad:)
what would concern me for the short term would when they halt trading. It's happened several times already to GME.
Traders think they can be fast enough to get out if it turns against them, but when they halt trading, the stock freezes for an hour(no trading is allowed at all), the market makers tabulate a new price to re-open trading at based on the current buy and sell orders that have amassed, and the new price is set. Commonly that price is drastically higher or lower than where it was before the halt. And then the stock could be halted again very soon, compounding the effects.
Sometimes that price it was last at before the circuit breaker triggered (halting of the trading of the stock) is the last time that stock will ever see that price again in that the stock continues to sell off and being a floundering business, eventually gets bought up, de-listed, and/or declared worthless.
Course, Robinhood investors may come to realize this before its all over.
let's talk investing wrote:
Is there a way to invest in a long-term short of GameStop?
I just have an Ameritrade account and haven't really done a whole lot except for buying some ETFs oh, and I usually just sign on through my internet browser
Would like to learn a little about the different options for shorting the stock
Isn't it pretty much guarantee that it'll go down but it just depends on what time frame? Can you buy short position for different time frames?
O.P. are you serious! Do you plan to learn how to short equities on let'srun then you plan on jumping in? There have been discount brokerages since 1975. Discount clients save a few hundred dollars a year in commission but more than give the money back doing stupid trades. Since 1975, discount brokerage customers do worse than full service customers. You guys get what you pay for. If you were a full service client with a financial advisor with more than 5 years in the business, your full service advisor would tell you to sit GameStop out.
Buy puts on IJR - Small Cap Ishares Core ETF. 1 put will cost between $100 - $125 for Feb 19 2021, 90 Strike. GME is only 1.14% of portfolio, however, you also have other WSB's faves; Bed Bath and Beyond, iRobot, AMC, Tanger Factory Outlet. Do your own Due Diligence.