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| Topic | Explain the Gamestop situation like I'm ten and barely understand stocks |
| s0nicfan 01/28/21 3:30:25 PM #55: | FLOUR posted... So are these hedge investors required to buy back the stock at these astronomical levels? That's the only part I don't get. What if they just don't return the stocks to the original owners? Jail time? Yes to the first question. The idea with shorting is I borrow your stocks, sell them at some amount, then buy them BACK at a lower amount and return them to you. The risk is that I am legally required to return your stocks to you at the agreed time, whether or not the value has gone up or down. What this means is these hedge fund accounts borrowed stock and sold it at like $20, and they'll be legally required to buy it back at whatever the current price is (like... $300?) by the deadline (which IIRC is tomorrow). That's going to cost them billions in losses, but that's the risk they take when the short a stock. --- "History Is Much Like An Endless Waltz. The Three Beats Of War, Peace And Revolution Continue On Forever." - Gundam Wing: Endless Waltz ... Copied to Clipboard! |
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