LogFAQs > #964287603

Lopen posted...

The bigger picture here is that synthetics were the reason it squeezed that hard combined with a lot of people who weren't phased by the market maker driving the price down (paper hands are what allow the synthetic positions to eventually become covered over time) to flush them out.

The ingredients are for the MOASS squeeze are:

1. Synthetic shares
2. People holding through low prices.
3. Catalyst for the price to move up. (if your force removal of synthetics as in the case of OSTK/BBIG, 1 and 3 are the same thing)
That's the common thread between all MOASS, be it Overstock or Volkswagen or AMC or GME. Reported SI number being high is why GME had 2 and 3, but that's not the reason it squeezed in and of itself. AMC's SI was actually never that high. But the synthetics were absolutely there.

Synthetics had nothing to do with Volkswagen. Porsche and one of the German states owned between them 95% of the shares. There was a short interest around 12%. Ergo, it was effectively impossible for all the shorts to cover without buying from Porsche or the German state. When Porsche announced this the price immediately shot up at open the next day.

This is the same fundamental dynamic with GME and with almost all historical short squeezes. What made GME new is that it was the first major short squeeze carried out without a major concentration of shares in a few hands.

I recall there was a lawsuit regarding Overstock with regard to the creation of fictitious shares that were used to sell short with no borrowing of real shares. It was something like that. That's more what you are comparing to with BBIG I guess but I would guess that for every Overstock, there's 100 stocks where this stuff ultimately came to nothing.