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Topic	Stock Topic $eventeen
red sox 777 01/28/21 6:31:59 PM #10:	CoolCly posted... Well, I think the short interest is still there - but I'm starting to wonder if settling it will actually have the impact we thought it will if that level of volume is already normally happening? There's no reason to think they have to settle all the short interest at the same time, right? If they had to settle they theoretically could have done it already, so when they actually do it, why would it push the price that much If I'm thinking along the right track then the $200-400 range is where we will peak, but maybe I'm missing something They have to close the position if they get margin called. That happens if the total value of their portfolio falls below some level. Their broker will force them to close the positions as a further move in price against them will bankrupt them leaving the broker with liability to pay the difference. According to Chamath, hedge funds have already been doing this, but by selling their long positions rather than closing shorts (because they are afraid buying the short stocks will send the prices soaring even faster). His data is that amount of position closing done by long/short funds is already nearly at the level of March 2020, when the whole market crashed and then zoomed up. But the belief is that the actual closing so far has been mostly in the long positions. That was probably the reason the market in general fell yesterday a lot yesterday as GME and AMC soared. https://twitter.com/chamath/status/1354883155279237123 The reason it surges skyward is that when it gets bad, shorts will have to compete to get out first. If you are out early, you don't lose as much. The more you wait, the worse it gets. So once a short fund decides there's no way out, that the squeeze will happen, then it's in their interest to be the first to start covering. So there's a mad rush for the exits, like a crowded theater on fire. --- September 1, 2003; November 4, 2007; September 2, 2013 Congratulations to DP Oblivion in the Guru Contest! <cite>red sox 777 posted [p:950029762] in Stock Topi... [t:79265210]...</cite> <quote>CoolCly posted... </cite> <quote>Well, I think the short interest is still there - but I'm starting to wonder if settling it will actually have the impact we thought it will if that level of volume is already normally happening? There's no reason to think they have to settle all the short interest at the same time, right? If they had to settle they theoretically could have done it already, so when they actually do it, why would it push the price that much If I'm thinking along the right track then the $200-400 range is where we will peak, but maybe I'm missing something</quote> They have to close the position if they get margin called. That happens if the total value of their portfolio falls below some level. Their broker will force them to close the positions as a further move in price against them will bankrupt them leaving the broker with liability to pay the difference. According to Chamath, hedge funds have already been doing this, but by selling their long positions rather than closing shorts (because they are afraid buying the short stocks will send the prices soaring even faster). His data is that amount of position closing done by long/short funds is already nearly at the level of March 2020, when the whole market crashed and then zoomed up. But the belief is that the actual closing so far has been mostly in the long positions. That was probably the reason the market in general fell yesterday a lot yesterday as GME and AMC soared. https://twitter.com/chamath/status/1354883155279237123 The reason it surges skyward is that when it gets bad, shorts will have to compete to get out first. If you are out early, you don't lose as much. The more you wait, the worse it gets. So once a short fund decides there's no way out, that the squeeze will happen, then it's in their interest to be the first to start covering. So there's a mad rush for the exits, like a crowded theater on fire. --- September 1, 2003; November 4, 2007; September 2, 2013 Congratulations to DP Oblivion in the Guru Contest!</quote> ... Copied to Clipboard!
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