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GameStop Critical Margin Theory📚 Due Diligence (self.Superstonk)

submitted by Scienceisexy

I first saw this theory in a post by u/-einfachman- and this is my adaptation.

Introduction

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When you short a stock, you need assets to maintain that position. If the price of that stock goes up, the person you borrowed it from needs to know that you’re still good to buy that stock back and return it.

​

For example if I short a stock at $100 and it goes up to $150, I need to prove that I have $50 in assets I can sell to cover the short with.

​

I also need to pay a borrow fee for the service the lender is offering me.

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For example if I short a stock at $100 on a 1% borrow fee and it stays at $100 for the next year, I now need an additional $1 to maintain my position. This is the classic theory behind “we can stay retarded longer than they can stay solvent”.

​

I can also plot this decay mathematically.

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A = P(1 + rt)

A = 100 (1 + (0.01 * 1))

A = $101

*A=Net Liability, P=Initial Short Price, r=Rate of Growth/Decay, t=Time

​

And from this we know that the maintenance margin has increased $101 - 100 = $1. So I need an additional $1 in assets to keep my position open.

​

Critical Margin Theory

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u/-einfachman- has theorized that the resistance we have seen on GameStop over the last 1.5 years is a safe guard against margin calls.

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https://preview.redd.it/a1euckdd52491.png?width=2038&format=png&auto=webp&s=3ff43275b5f02febd2355c31e2717947093bf18e

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There’s just one thing.

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This line isn’t going down with the borrow rate. Not even close.

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https://preview.redd.it/tx4yl7cf52491.png?width=1618&format=png&auto=webp&s=e377a0476fe21416d15a26d2fb2b596e273de99c

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I’m going to work with 2 dates for this next section (circled above)

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https://preview.redd.it/ixi1zneh52491.png?width=942&format=png&auto=webp&s=4f44dde13f20d4fcb6038f4c280db7332afa9948

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The time between these 2 points is 204 trading days or 294 calendar days. 294 days over the 365.25 days in a calendar year is 0.80. Or 294 days is 80% of a calendar year.

​

So back to the borrow equation.

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A = P(1 + rt)

A = 344.66 (1 + (0.01 * 0.8))

A = $347.42

​

And from that we know that the maintenance margin has increased $347.42 - $344.66 = $2.76.

​

Um… Hey u/scienceisexy, if the maintenance margin only increased $2.76 per share over that period why did we bounce off resistance at $199.41?

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Great question u/scienceisexy.

​

I’m about to speculate, but I’m speculating based on real data so stick with me.

​

If the Critical Margin theory is true - that is to say that the bounces off the blue line highlighted above are HFs trying to save their ass - the critical margin is deteriorating WAY faster than the borrow rate.

​

How much faster? This is the cool part. I’m going to use the same dates as above.

​

A = P(1 + rt)

\*quick algebras*

r = ((A/P) -1)/t

r = ((199.41/344.66)-1)/0.8

r = -0.53

​

Holy shit. So the maintenance margin is going up 53% every year…

​

But hold onto your seats because there’s a catch. The stock price from June 2021 -> March 2022 went down. -42.5% from peak to peak to be exact. So someone made 42.5% on their short position but the maintenance margin is STILL up 53%. I want to hammer this home. The 53% increase in maintenance margin INCLUDES the 42.5% profit that was made. That means the actual rate of decay on the critical margin line is 95.5%.

​

I’m going to round up to 100% and you’ll see why in a second.

​

And just one more time because this is crucial. I short a stock at $100 on a 100% borrow rate. The stock goes to $50. I have made +$50 from my short position but lost -$100 due to the borrow fee. So I’m $50 closer to being margin called. This is why the blue line has a negative slope.

​

The average borrow rate of GME is 1% over that period, but the critical margin is increasing as if the borrow rate was 100% (95.5% to be exact). That doesn’t make sense. Is there some sort of financial tool out there that would give you 100x leverage on a stock? Hmm…

​

Well, option contracts get sold in groups of 100. What a coincidence.

​

Back to our $100 stock example - let’s say that instead of borrowing and selling a stock, I borrow an ITM Put contract, which gives me the ability to sell 100 shares at a given strike price. I exercise it, and sell those shares.

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100 shares in a contract, 1% borrow fee per share. Well look at that, 1% * 100 is 100%…

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It might not be Puts but some other financial tool like swaps. But the leverage is undeniable.

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Today, the critical margin is at $169.10 (nice). One +30% day and hedges are potentially fuk. There’s more research to be done here and maybe a way to size the real short position - I will post updates accordingly.

​

tldr: Critical Margin Theory says that the maintenance margin for GME shorts is increasing at a crazy high pace. From circle 1 to circle 2; the price at which someone will be margin called (the blue line) has gone down 53%. I.e. where I would have been margin called at $344 now I'm margin called at $199. Which is crazy because I made money on my short position. If I exclude that profit the real decay is close to 100%. The only way I can see this being possible is if shorts are leveraged through options.

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[–]Superstonk_QV📊 Gimme Votes 📊[M] [score hidden] stickied comment (1 child)

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[–]-einfachman-?𝐌ⓞ𝓐𝐬𝓈 𝐈s ι𝔫𝓔ᐯ𝕀𝓽ａ𝕓 ℓέ? 4728 points4729 points  (249 children)

Very good post u/Scienceisexy 🦍

I agree that critical margin levels are lower than I stated in my previous DD. I just gave conservative estimates to ensure that I'd have a high confidence interval to make that statement, and to compensate for any potential externalities that could affect their margin during a run up.

To further add to the post:

SHFs did profit (temporarily) when they shorted GME down from $400+ to $40 in January, 2021, just like they profited when they shorted it from $300 down since June, 2021, etc.

Here's the thing though:

They didn't really profit, because to actually profit you need to exit the position. SHFs can't exit their positions because if they do, they will start MOASS, so they have no choice but to keep burning through their cash to keep the price suppressed. Whatever 'profits' they made shorting GME at any particular time got wiped out long ago. Every day they burn through their cash to keep GME suppressed, and it's becoming very unsustainable for them, especially when the supply of shares available for them to manipulate the price down is being directly registered by Apes (taken away from brokers).

[–]johnklapper🥷Transfer Agent Sleeper Agent🥷🦭🦭 1217 points1218 points  (87 children)

This is an incredibly good post. Thank you both for all your work and DD around here. Sounds like some time and some diamond handed apes is the perfect recipe for a shit storm which will inevitably lead to shit in hedgies’ pants. Tick tock.

[–]sparkling_tendernutz 462 points463 points  (36 children)

This post supports the idea that Kenny is executing a scorched-earth policy in the hope of a bailout from the US taxpayers.

[–]dbx99🎮 Power to the Players 🛑 296 points297 points  (32 children)

In the future, we will see that Melvin got out with the least damage compared to the complete carnage that is coming for the HFs that will go through MOASS

[–]MushyWasHereRemoved by Reddit 160 points161 points  (10 children)

oooOoOoOoo 👀

so maybe he really is the greatest investor of his generation...

[–]Kilgoth721Custom Flair - Template 71 points72 points  (6 children)

Was going to say the same thing, lol.

[–]Big-Kitty-75💻 ComputerShared 🦍 27 points28 points  (5 children)

I mean he did still knowingly contribute to shorting GME well beyond 100%, so maybe the greatest worst investor?

[–]slabrangoonRegistered Shareholder 9 points10 points  (0 children)

King of the retards

[–]4cranch🦍 Buckle Up 🚀 5 points6 points  (1 child)

he was the best of investors, he was the worst of investors

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    [–]Tango8816💺 🚀 🌛 Abróchate el cinturón! 9 points10 points  (0 children)

    No shit.

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      [–]desertrock62💻 ComputerShared 🦍 192 points193 points  (14 children)

      He who panics first panics best.

      Melvin escaped with mere 50% losses.

      [–]dbx99🎮 Power to the Players 🛑 90 points91 points  (8 children)

      And my suspicion is that a 50% loss is far more desirable to 100%. A good poker player knows when to fold and when to walk away.

      [–]mrginger1987🎅🎄 Have a Very GMErry Holiday ❄🐧 49 points50 points  (0 children)

      "You never count your money when you're sitting at the table" 🎶🎵

      [–]Snoyarc🦍Voted✅ 33 points34 points  (0 children)

      Ken did say he was the finest investor of his generation.

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        [–]presterjay🦍 Buckle Up 🚀 75 points76 points  (1 child)

        And Gabe gets the last laugh over Ken.

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          [–]Putin_ate_my_PuddingI came in Uranus! 36 points37 points  (0 children)

          Well, over time we saw shitters like Citron and Melvin slowly get face-rolled by the something invisible, so I guess it must be something like this..

          [–]KamikazeChiefIt's always tomorrow - until it's today 49 points50 points  (1 child)

          Or the government just give them a load of free money (while painting retail meme stock holders as the true villain).

          We've already seen a taste of this from the SEC investomania clips

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              [–]millertime1216🦍💕🦍Love your neighbor as yourself🦍💕🦍 86 points87 points  (3 children)

              🦍💕🦍

              [–]ubertappa🎮 Power to the Players 🛑 19 points20 points  (2 children)

              🦍♥️🦍, but I dont know if my neighbour would appreciate me "loving" them as I "love myself" though.

              [–]RelationshipOk3565🎊 Power to the Players 💪 14 points15 points  (0 children)

              So just to be clear. The rt in the equation = the rate of our retardation?

              Think I got it

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                [–]Revolutionary-Fox230💻 ComputerShared 🦍 10 points11 points  (0 children)

                Mother fuckers

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                  [–]Scienceisexy[S] 397 points398 points  (44 children)

                  Great point about how they can't exit. I hope this gets to the top.

                  ps: I love your DDs <3

                  [–]LunarPayload First time? 19 points20 points  (0 children)

                  The shorters are Sisyphus

                  [–]TiberiusWoodwindKarma is meaningless, MOASS is infinite 124 points125 points  (37 children)

                  Hi, any reason why you ignore the guy who Ein took this from?

                  https://www.reddit.com/r/Superstonk/comments/tbdkgp/taste_the_rainbow/?utm_source=share&utm_medium=ios_app&utm_name=iossmf

                  His last post literally took a pic from my series and I’ve been posting on this weekly or more often for 3 months.

                  [–]atticusmass🎮 Power to the Players 🛑 86 points87 points  (27 children)

                  Looking at your past posts, I think it's the way you explain the data makes it sound like TA. I'm not saying your wrong and you should get due credit for the hard work. But the way this the science guy posted was easier to follow for tards like me

                  [–]TiberiusWoodwindKarma is meaningless, MOASS is infinite 60 points61 points  (26 children)

                  Here’s todays post.

                  https://www.reddit.com/r/Superstonk/comments/v6ckny/taste_the_rainbow_june_6_with_bonks/?utm_source=share&utm_medium=ios_app&utm_name=iossmf

                  I’ve gotten better since the earliest stuff but it’s all built on the same thing I’ve been saying for 3 months

                  [–]dormstaJust this guy, you know? 73 points74 points  (23 children)

                  I think dude above you is right. You’re using TA terminology and presenting data, which is great, but you’re not really interpreting for anyone beyond “Not organic. Algos. See?” I am personally someone who places a huge value on learning as much as possible, but even I threw up my hands at TA on this stock pretty quickly because for as ardently as certain people post about it, it just never pans out. I can’t be the only person here who therefore sees TA terms like channels and Ls and goes, “Ah nvm it’s more of this bs.”

                  [–]N1nja4realz🚀🚀 JACKED to the TITS 🚀🚀 2 points3 points  (0 children)

                  None of us are Financial Advisors, and even if we were it's obvious even they don't understand TA speak. For future reference, I suggest you start with big picture TADR style exposition and then break it down for the wrinkled brains.

                  I saw your post in the morning and never gave it any thought until I reread it thanks to this post tonight. You see what I'm saying?

                  Imagine Einstein without the catchy phrases, that's what you're doing.

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                    [–]Fap2theBeatI can has MOASS →😽← pwz 29 points30 points  (3 children)

                    Funny that your flair says karma is meaningless, and then complain about not getting credit 😉.

                    I remember reading this post of yours. I definitely remember the chart with Marge the maid. It was fairly easy to understand for TA noobs. Well laid out and made sense.

                    I understand wanting to be credited. Hopefully OP sees this. But hope you'll take solace in knowing your work contributed and continues to contribute to this sub. It is a pillar that others can stand on to build our mountain of DD higher.

                    [–]TiberiusWoodwindKarma is meaningless, MOASS is infinite 15 points16 points  (2 children)

                    My favorite part of these comments is knowing Ive spent 3 months trying to explain a difficult concept only to be told by people who couldn’t understand it that I seem toxic and mean. Thanks for the sentiment.

                    [–]dormstaJust this guy, you know? 21 points22 points  (0 children)

                    I’ll tell you, man. At least a couple of us have been in these comments trying to offer validation and specific suggestions for how you might package this going forward, and your responses have largely been, “But I’ve tried everything!” or “It’s not my fault people are dumb!” Ask yourself — why did /u/criand and /u/atobitt find so much success in their communication of complex ideas?

                    I remember that I had a professor who taught Psych 102, and he would openly lament how he really didn’t want to be teaching us, but the university was making him so as to be able to keep his position running a lab. He would sigh frustratedly when we didn’t understand what he was saying, and eventually most of us just resigned to a middling grade because we were done trying to parse what he said, regardless of how smart he would declare he was. You know what? All of the concepts came back around in latter classes, but they were much easier to understand coming from someone who understood a little better how to present them in a way that emphasized ease of perception.

                    Effective communication and finding messaging “sweet spots” is probably 90% of my IRL career, and I literally even wrote out an example of something you could use (I’ll even give you the benefit of the doubt and tack it to the bottom of this message in case you missed it). We’re trying to help you. Time is one of our most precious resources, as you know, and we’ve taken the time to essentially sit down with you and try to help you communicate your work more effectively. It leaves a sour taste, then, when you respond either cattily or not at all to those posts and continue to double down on the negativity.

                    TL;DR — If a couple people aren’t understanding you, that’s probably on them. If most people aren’t understanding you, that’s on you.

                    EDIT: Here’s what I wrote on a lower-level comment.

                    I understand why this is frustrating, because you’ve clearly put a lot of time into this.

                    I think you could easily have your “legend” for terminology and then do a quick summary like, “what this boils down to is that 1) the price movement is not organic and clearly controlled by algorithmic programs and 2) the way it’s moving and its trajectory seems to indicate that even the algos are increasingly constrained on upward movement they’ll allow. 3) That tells us that their window of tolerance is getting smaller and smaller, probably because of a combination of borrow rates obliterating their cash on hand and their margin collateral losing value pretty rapidly as the market keeps bleeding.”

                    [–]Fap2theBeatI can has MOASS →😽← pwz 20 points21 points  (0 children)

                    I mean, you do come off as whiny, whether you intended to or not. That said, I see you and am aware that you're a DD contributor. I'm sure you know some people are dumb dumbs and can't be helped.

                    [–]Ajsarch 10 points11 points  (2 children)

                    I was thinking about your posts while I was reading sci guy’s posts. The way you talk about decreasing ceiling before Marge calls is spot on. I think Sci Guy hits it out of the park mathematically- but you have the rainbow channel that makes it easy to understand as I’m a visual learner.

                    [–]American_Viking999MOASS on Uranus 3 points4 points  (0 children)

                    Commenting for more credit visibility, and because I like how we're squeezing their ability to stall the squeeze!

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                      [–]MillennialBrownNinja 10 points11 points  (3 children)

                      To me this screams that the GOV will not let these bitches drown and go under. It would make who ever is in charge look like the biggest idiot in the world. This is a giant turd sandwich no one wants to eat.

                      Apes see the shit and wont eat it but refuse to leave so the thing keeps getting stanker and STANKER. No joke this will cause a similar fall like the iron age fall except we see it coming and theres no way to stop it.

                      Either the shittttt keeps getting piled on or it eventually topples on anyone not looking/expecting it.

                      The gov is going to protect itself/the rich and thats it. Its up to apes to rebuild once the nuke goes off.

                      [–]N1nja4realz🚀🚀 JACKED to the TITS 🚀🚀 8 points9 points  (2 children)

                      The Government does one thing well and one thing only, always be last to the party. In late-stage capitalism all the wrinkle brains work for private businesses., and the government is stuck with all the people that didn't make the cut. As a result they're always the last ones to get it and this is why you get Yellen apologizing for not seeing inflation. All these frontman senior officials have teams that are supposed to do the leg work for them, but when you're working with those that didn't make the cut cuz all the good ones got high paying jobs somewhere else, you concede you'll always be one step behind.

                      My point is, they won't protect anyone until it's too late. They won't be there to save Kenny and Jeffrey the Giraffe Yass or any of their friends. They'll be there to save whoever backed Kenny and Jeffrey The Giraffe Yass'es bets. The prime brokers, the big kahunas, BofA these nuts and Goldman and likely a bunch of other banks. The US government would've bailed out everyone back in 2008 if they weren't so slow to figure it out and respond. They were oblivious to everything happening around them until Jamie Dimon and Co. knocked on their door and told them what's what.

                      This is why they were so quick on the trigger with the Covid crisis, JPoW wanted to be proactive but he and his staff were once again wrong on the play. And now it's time to pay up, the music has stopped, they're desperately looking for chairs, and a lot of the smaller fish haven't even started looking because they're being served on a silver platter to bankroll this. And the Fed thinks they can make this a "soft-landing", but you see JPoW saying shit like "Inflation going depends on factors outside our control." I bet they had a plan to hit this next economy reset and Putin wanted to no part in it and cashed his chips and they're now forced to play catch up. In reality, they were always behind on the play and asleep at the wheel, and didn't see the macroeconomic implications of the last 5-6 years.

                      Well shit, that's enough tinfoil for the night.

                      Obligatory Not Financial Advice. I eat bananas before bed.

                      [–]StonkerrificThe Fire Starter 🔥🚀 6 points7 points  (1 child)

                      You’re assuming the govt is just negligent when they’re actually maliciously complicit.

                      [–]darthnuggetUUP-299 4 points5 points  (0 children)

                      I think negligently complicit would be more accurate. They know they are ignorant and comply because others (donors) tell them its the best option, even though overall its malicious in nature to the people.

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                        [–]Elegant-Remote6667Ape historian | the elegant remote you ARE looking for 🚀🟣 135 points136 points  (5 children)

                        Can you please add the link to your dd post here so my backup system can collect it so I can piece the two together- I am making a 17 part dd of the dd to be able to understand what’s going on

                        [–]-einfachman-?𝐌ⓞ𝓐𝐬𝓈 𝐈s ι𝔫𝓔ᐯ𝕀𝓽ａ𝕓 ℓέ? 34 points35 points  (0 children)

                        Sure thing! I just added the link to my original comment.

                        [–]4kcnaz 14 points15 points  (2 children)

                        How can the backups be accessed. Sorry if it been answered somewhere else. Thanks you so very much for all you do!

                        [–]Elegant-Remote6667Ape historian | the elegant remote you ARE looking for 🚀🟣 3 points4 points  (0 children)

                        Dashboard is the easiest way without downloading anything- includes links and wayback machine links. I am adding ipfs links shortly.

                        If you really want to there are torrents on my site as well

                        [–]Elegant-Remote6667Ape historian | the elegant remote you ARE looking for 🚀🟣 3 points4 points  (0 children)

                        The entire archive is 2tb for posts and now over 90tb in total - I am sure you don’t wanna download that 😂😂😂

                        load more comments (1 reply)

                          [–]LionRivrRyan Cohen’s girlfriend’s husband 143 points144 points  (10 children)

                          It’s not just “cash”.

                          If their critical margin depends on the value of assets in their accounts, then Critical Margin should correlate with the entire stock market indexes and their price movements… Or if not the entire stock market, then at least with the prices of stocks/assets held by SHF’s.

                          That’s my best smooth-brain guess as to why the entire market pumps when GME pumps. That’s why all GME rallies are short lived. That’s why GME is pushed down when the entire market is down. We’ve seen this tight correlation for several months now.

                          So they can: 1. Dump GME price if the market drops naturally. 2. Pump their assets’ prices if GME price rises or gets more buy pressure than they can handle. 3. Sell options for profits.

                          But retail can: 1. DRS

                          [–]Chippyspyder 61 points62 points  (8 children)

                          What if the stock market should have crashed long ago ( I think it should have, but whatever), but the only reason that it hasn't, is they're artificially keeping it up to avoid the margin calls that would happen against their gamestop short. Maybe that's putting too much stake in what influence gamestop has in the stock market, but if they know this whole thing implodes when the stock market goes down, maybe they're propping it up just for this. Or maybe that's overtly simplistic.

                          [–]LionRivrRyan Cohen’s girlfriend’s husband 71 points72 points  (6 children)

                          That’s exactly my theory.

                          It’s really a matter of U.S. national security.

                          Pretty much, the U.S. needs to let everyone else’s stock markets and currencies crash first. The US already fucked up 2008/09 for everyone. They can’t be the fuckups this time.

                          The US wants to maintain whatever global economic power they have left. And to retain the USD as global reserve currency.

                          Other than that, I DRS.

                          Edit: and if they do lose control of the markets due to naked shorts on GME, the US/SEC’s one hedge against taking the blame is to blame the retail investors for the “meme-stock investomania”

                          Edit2: pretty lame of a hedge if you ask me. The US could also pin it on Melvin/Citadel too. They’ll take Ken Griffin down as the scapegoat to save the rest of the financial industry.

                          [–]TJ_King23? Simulated Ape 🦍 49 points50 points  (0 children)

                          It’s about supporting USD imo.

                          China Evergrande is crucial.

                          It’s a game of chicken.

                          Who blinks first?

                          [–]flyinhighaskmeY 12 points13 points  (2 children)

                          This is all possible. On that video though....

                          the US/SEC’s one hedge against taking the blame is to blame the retail investors for the “meme-stock investomania”

                          I'm actually kinda wondering if that whole video was GG throwing apes a bone, giving someone the ability to sue the SEC. What was the line in the latest GME report? Something about "we've finished supplying documents as part of the investigation" right?

                          Sounds like the SEC is in possession of what might be some interesting non-public documents. I've been wondering if a little lawsuit just might help those docs see the light of day.

                          [–]SemperP1869 6 points7 points  (0 children)

                          Damn, that's deep homie

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                            [–]Positron49 5 points6 points  (1 child)

                            This is actually many people’s theories. The Fed has never cared about inflation, as long as we aren’t marching down the streets. They know they can report 7% CPI when it’s really 20%, and keep everyone calm. That is the least of their worries.

                            What really matters is the global strength of the dollar. The US is Homelander from the Boys, extremely powerful in a physical sense, insane, and forcing others under our control. We will force our allies to print money faster than us. We don’t care that our currency is going to $0, as long as we make everyone else get there first.

                            [–]TJ_King23? Simulated Ape 🦍 13 points14 points  (0 children)

                            $2 Trillion RRP

                            [–]ultrasharpie🦍Voted✅ 4 points5 points  (0 children)

                            I agree with you lionrivr. All those points. It's the same pattern i've been following, and I use it daily to predict market movements. It's actually pretty great and probably the most likely and simplest. GME is the idiosyncratic stock.

                            [–]ckaslon13 27 points28 points  (1 child)

                            Thanks for your DD lately.

                            [–]MandoHORIanLiquidate the DTCC! 12 points13 points  (0 children)

                            Yes the recent and insightful DD was very invaluable...

                            [–]BlueCoastDoge 35 points36 points  (3 children)

                            Good comments and interesting hypothesys.

                            Added info to ponder on... Let's say SHFs have indeed burned through the cash they made some time ago on the first run-up. And let's also propose that they have been burning through a ton of cash to keep kicking the can down the road in order to stay alive.

                            My questions...

                            Where are they getting their cash to maintain their position? ...not only wrt GME but a bunch of other stocks that they surely shorted and did not close their position.

                            Is the MM part of their business, especially as it applies to Shitadel, giving them enough cash to maintain their position?

                            Is there another entity or partner actively assisting these fuckers with regular external cash infusions to ensure they do NOT lose control of the situation?

                            Just wondering...

                            [–]unloud🧚🏻‍♀️ ComputerShaerie 🧚🏻‍♀️ 10 points11 points  (2 children)

                            Where are they getting their cash to maintain their position? …not only wrt GME but a bunch of other stocks that they surely shorted and did not close their position.

                            Here is an example of how they have gathered money to stay afloat.

                            It’s not enough to really give them a way forward, though… not for long.

                            [–]Inside_KreapGainStonk! 34 points35 points  (1 child)

                            Exactly. I couldn’t have said it better myself einfachman.

                            [–]MuteCook🦍Voted✅ 7 points8 points  (0 children)

                            Finkel is einfachman. Einfachman is Finkel

                            [–]j__walla🎮 Power to the Players 🛑 14 points15 points  (0 children)

                            You're back!!! I missed you 👉👈

                            [–]TEDDYKnighty🏴‍?️🦧 Kenny is a rat 🐀🦧🏴‍?️ 13 points14 points  (0 children)

                            There was a day not to long ago that I wouldn’t have understood anything in either of these posts. But now I’m nodding along like “yeah wow good way of looking at it.” I’ve gained wrinkles along the way lol

                            [–]MetalButtcheek🚀🥲QuantDropout🥸 12 points13 points  (0 children)

                            So using this logic, profit isn’t really profit.. it just helps them remain seemingly neutral; in other words it’s just a continuous cycle of debt

                            [–]bearrfuk🎮 “Not Your Name, Not Your Shares!” 🛑 - DRS 11 points12 points  (0 children)

                            Plus the fact borrow rates are going up is because Apes directly registered the shares and GameStop published that number publicly. If they don’t increase borrow rates their scam will get exposed and brokers, even though might be in bed with SHFs and Banks, don’t want that level of scrutiny on themselves. They are forced to reciprocate in the form of increasing borrow rates because of high DRS numbers.

                            [–]jazzyMD 60 points61 points  (31 children)

                            Can you help answer a question I’ve had trouble with? We talk about how HFs didn’t profit off these price drops because they are not closing their positions but how do we know that?

                            Couldn’t they theoretically have caused artificial run ups to close their lower price point short positions and then open new short positions at higher price points? Particularly if they are controlling these run ups to begin with.

                            Doing this over and over and over again while pocketing money off of weekly option plays. We know when the price drops the volume is usually on the lower side.

                            They could have still massive short positions but now the average price of that position is $300 instead of $4. So obviously eventually they have to close but they could run this out over years and slowly unwind.

                            I’m just wondering how we factor that into this equation? I just find it hard to believe that they short the stock and take on huge borrow rates without any exit plan besides apes giving up? And we issue a stock split and now they are all fucked and we win. Their entire company is filled with PhD from the best schools in the world. There has to be some theory behind their maneuvers. That’s what we need to be thinking about

                            [–]-einfachman-?𝐌ⓞ𝓐𝐬𝓈 𝐈s ι𝔫𝓔ᐯ𝕀𝓽ａ𝕓 ℓέ? 89 points90 points  (8 children)

                            You bring up a good question!

                            SHFs have a history of never closing their short positions (only covering at most). This is evident with zombie stocks that were cellar boxed many years ago, and that was without any dedicated group of retail shareholders buying and holding.

                            Say they could artificially inflate the price to short it back down. Well, to fully profit, they'd need to close those shorts, which would be very risky for them to do.

                            Example: They raise the price 20%, borrow 1 million GME shares to short it down maybe 10%? Then, they'll need to close out these positions by purchasing 1 million shares...and now all the people that bought the shares don't want to give it back so easily 😂 you see where I'm going with this.

                            Simply put, it's too high a risk, so whatever type of profits they'd make from something like that would have to be very small per week. And any type of unwinding like that would take decades for them to complete, so it's impossible at this point.

                            Any profits they'd make from that would have been negated by the building weight of unrealized losses added on GME short positions to keep the price under critical margin levels.

                            Now, I have seen Citadel purchase call options a few weeks before a rally, so yes, they are likely making some profits from options to can kick, but it only serves to buy them a little extra time, and their profits from options ultimately get negated over time from the constant cash burning to keep the price suppressed.

                            Lastly, yes, Citadel is filled with tons of PhDs from prestigious universities. They developed very complex algorithms to keep all this going.

                            But their algorithms are dependent on rational investors. In this instance, by rational, I mean responding to the price. It's designed to manipulate emotions, and ultimately make retail thinking of their profits and sell.

                            Apes negated the algorithm. The algorithm no longer works, because Apes have weaponized the concept of being "retarded".

                            The Ape community doesn't care if the price drops and they lose money. We think in terms of shares, not dollars. So, no matter what the algorithm does, Apes will continue to buy, and so now SHFs have an inoperable algorithm that just serves as a can kicking tool until they lose control and MOASS starts.

                            That's the beauty of the Ape community.

                            [–]rc2288🎮 Power to the Players 🛑 24 points25 points  (0 children)

                            Hello ein, I just wanted to add onto the apes negated the algorithms. When this started in wasabi subreddit, most of the the people on there are used to buying weekly’s fds and random/crazy otm calls or puts. So when they started buying gme shares instead of options, no matter how bad shf dropped the price, it didn’t matter because we were so used to seeing people be down -80% on their options when they submit their loss porn on there. I think it took a really specific group of investors to pull this off because some of those guys that were posting their DD were super informative too. Awesome to part of this community now. Love your DDs too. 🙂

                            [–]FalconCry7Of you, to whom was justice denied? 7 points8 points  (0 children)

                            Thoughtfully explained.

                            [–]Tango8816💺 🚀 🌛 Abróchate el cinturón! 4 points5 points  (1 child)

                            Wouldn’t they have adjusted their algorithms by now though so as to accommodate for ape think?

                            [–]mas0518🎮 Power to the Players 🛑 8 points9 points  (0 children)

                            My two cents, even if they did, who are they realistically buying back from at this point? Day traders? Other short sellers/borrowed shares? Retail (I couldn't fathom to predict how many retail buyers may have sold over the last year)? They ultimately need to get all the loaned shares back. We know we've DRS'd a substantial amount. And many more shares (maybe same amount, maybe more) sit in IRAs, and oversea accounts of equally diamond handed apes. My question is where do they get the shares to buy back, if not rehypothication? Only if the original thesis, that the float was not synthesized many times over could I conclude shorts fully exited their positions. They just keep simply extending it, like OP and Ein and others have pointed out.

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                              [–]TigreImpossibile🚀 37 points38 points  (0 children)

                              I just find it hard to believe that they short the stock and take on huge borrow rates without any exit plan besides apes giving up?

                              Like you said, they have the best of the best working for them and that includes behavioural psychs. No one, and I mean no one on either side of the fence thought we'd all still be here in June 2022, so I think you're really underselling the "apes just giving up" angle. It's not like its 2 weeks later or 6 months later, it's almost 18 months later; and what has been involved is a campaign of FUD, shills, MSM lies... it's been a psy ops campaign to convince us its "over". And lots of elaborate can-kicking on the short side.

                              It's hardly simplistic.

                              Also, even if they unravel their short positions from $4, to, let's say $300, the interest is much higher and growing every day. All these options strategies cost money. Worthless puts still cost money.

                              Melvin finally tanked. Citadel is posting heavy losses.

                              It can't go on forever. I can HODL forever though. No sweat for me.

                              [–]jaypizee💻 ComputerShared 🦍 6 points7 points  (0 children)

                              Also worth considering is that they don’t actually decide entry and exit points for stocks, I believe the algorithm does that for them. It will buy and sell on its own, they just tweak the algorithm for max profit. I think it’s important to remember we are up against computers that run on human-designed programs.

                              [–]magnusmerletaakoSay yes to the DRS 23 points24 points  (11 children)

                              I also want good answers to these questions. If they can manipulate the price however they want, can't they just create positions whenever they want and profit from them knowing which direction the price will go? We need to reconcile two opposing beliefs in this sub: one, that Citadel is all powerful and can take the price wherever they want (at least in the short term), and two that they are constantly fucked by apes holding.

                              [–]MagicarpalMoasstronaut 26 points27 points  (4 children)

                              I think the missing part of that argument is that they can take the price wherever they want, but crucially that doesn't actually help them because closing a position doesn't just require the price to be low, it also requires people to sell at that price, and nobody's selling. When they drop the price, retail doesn't sell, retail buys and DRSes, which makes their position worse. There is literally no answer to the holy trinity of Buy/Hold/DRS.

                              [–]RelativeCommand8837GME MASTERbator 9 points10 points  (2 children)

                              but would they spend so much time, money and effort trying to get us to cash out if they were profiting off the current situation?? The FUD is what has kept me believing we're winning, it's not very scientific but it is a common sense assumption.

                              [–]MagicarpalMoasstronaut 16 points17 points  (0 children)

                              I think the key here is that their 'profit' only exists in theory, it can't be realised. Imagine this simplified round numbers scenario: You're a hedge fund, and you naked sold 100m GME shares when the price was $200. This gives you $20 billion in cash and $20 billion in liabilities. At today's price of $130, you've made a profit on paper of $70 per share, so you've got $20 billion in cash and $13 billion in liabilities, which looks like a $7bn 'profit'... but you're actually totally screwed, because it's impossible to close that position without triggering the MOASS.

                              [–]magnusmerletaakoSay yes to the DRS 5 points6 points  (0 children)

                              I agree. The Forget Gamestop articles, the constant media hate, the bots, the shills. Something is up. But how can they both manipulate the price and not profit from it?

                              [–]rabbitboy868🏴‍?️ ɪ‘𝕒𝕧𝕖 𝐚 𝔀𝓮𝓮 𝔭𝔢𝔤𝔩𝔢𝔤 乁(ᵔ ͜ ?)ʡ 🏴‍?️ 9 points10 points  (1 child)

                              They can manipulate the price. However, they can't manipulate the price however they want. If they could manipulate it however they want, we'd be back at $4 or cellar boxed already. We haven't. Clearly they don't have as much power as they'd like you to believe they do. We can stay retarded longer than they can stay solvent. It's just a waiting game at this point.

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                                [–]Woolliam 19 points20 points  (6 children)

                                This has been my biggest "what if" fear over the last year. It's generally accepted that the price isn't real, and that dark pools allow for manipulation of the lit market, so if they have the kind of power that we assume they have, what if they're actually playing it perfect day by day? Every time a day starts up or down 5% on minute 1, then swings the other way, if that's all them, wouldn't they have made an absurd amount? Would closing a large chunk of their positions on the dark pools even impact lit exchange?

                                Not even regarding gme as a company itself, just the prospect of moass and how powerful the villains are in all this, I can't help but wonder. They've cheated every step of the way so far, why wouldn't they chest their way out of this?

                                [–]MatthewCashew1 16 points17 points  (0 children)

                                Melvin is out of business. So no, obviously they arent profiting and playing it “perfectly”

                                [–]joethejedi67💻 ComputerShared 🦍 11 points12 points  (1 child)

                                Bc there is no way out

                                [–]ebolathrowawayy 10 points11 points  (0 children)

                                I have worried about this before and I'm still a little worried, but didn't melvin and citadel both report pretty serious losses? If they can play both sides with darkpool hijinx then I don't think they'd be reporting so much loss.

                                [–]BigBastardHere 3 points4 points  (0 children)

                                Theory:

                                Everything up is a cover/close of short positions opened at higher prices since the initial run-up in January 2021. The cycles are an unwind.

                                Still such a large position at the original short prices that it is just to live another day.

                                [–]MagicarpalMoasstronaut 4 points5 points  (0 children)

                                If they consistently won on options, nobody would sell them options.

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                                  [–]Truth_RoadApes are biggest whale 🦍 🐋 17 points18 points  (0 children)

                                  Thank you for your wrinkle brain contributions to Ape-kind.

                                  [–]Far_Perspective_3146🎮 Power to the Players 🛑 5 points6 points  (0 children)

                                  I just like the stock

                                  [–][deleted] 2 points3 points  (0 children)

                                  Is it not possible they closed those specific shorts? I'm not being very specific I know, but I'm theorizing that the cycle theory is them closing some of their shorts via dark pool abuse while sending their newly opened shorts to the lit market.

                                  [–]ghettobrawl 3 points4 points  (0 children)

                                  They were depending on apes to paperhand and sell, making it possible for them to cover their original short positions if it got back to sub $20. What they weren't depending on was the incredible amount of sheer autism that accounts for the diamondhands through every peak price movements. The longer they continue to burn this candle, the less wax they'll have. Eventually, the marketplace will be revealed and new streams of revenue will be realized, bringing in healthy net profits that could be reinvested. The fundamentals would no longer be disconnected, as they put it.

                                  Shorts thought they could wait long enough for shareholders to get bored and sell, but ironically they just turned everyone into long term investors.

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                                    [–]FireRngesusCustom Flair - Template 566 points567 points  (53 children)

                                    Some interesting maths here fellow ape. The shorts are no doubt leveraged through some naughty option plays

                                    [–]Nice-Violinist-6395 393 points394 points  (46 children)

                                    I think they’re leveraged through the other “meme stocks” in the basket, some of which are very much not stocks-that-have-been-memed.

                                    I’m gonna break the “only GME” rule here, I don’t give a shit. I’ve had a hawkeye on the other stocks RH restricted during the sneeze for over a year now. It’s incredibly interesting. Some, like Starbucks, were obviously a pandemic-only short play and are no longer applicable to GME.

                                    But a lot of others?

                                    Popcorn is its own bag. But here I’m talking about EXPR, KOSS, and CENN.

                                    EXPR and KOSS have been covered at length. But CENN is interesting. First of all, it has absolutely nothing to do with GME. Not even remotely in the same sector. But for the last year, something interesting has been happening.

                                    CENN currently trades at ~$2, which is deceiving, because a 20% increase in one day is all of forty cents. But trust me when I say it is tied to GME like a fucking anchor.

                                    What I’ve noticed is that every time GME suddenly spikes, in the 5-day period beforehand, CENN goes up a proportionate amount. It’s hard to notice — again because CENN is a $2 stock — but it’s fucking real. On March 18, CENN started to suddenly go up on no news. A few days later? GME follows suit. It’s the EXACT SAME PATTERN as EXPR, except EXPR tails GME instead of preceding it. And I have some good news: today, CENN went up over 20%. If I was a gambling man, I would make a huge bet that in the next five days, GME will have a related spike.

                                    But what does this all mean?

                                    Remember the DD with ETF baskets, the reason we have the term “basket stock?” I believe that GME’s volumetric price action is being spread out over several other basket stocks — in other words, if GME is supposed to rise, for a time they can hide that action in CENN through swaps. Then GME takes off, and after a day or two, they’re able to spurn off the rest of the upward movement into EXPR, with BBBY fitting into the process at certain points as well.

                                    Long story short, what the hedgies are doing is essentially cleaning their room by shoving everything into the closet, then under the bed, and so on and so forth. That way, they can hide the huge fucking mess they’ve made while that specific part of their “short house” (pardon the metaphor lol) is under inspection. But this has been happening way too consistently for way too long not to be correlated.

                                    [–]whatt_shee_saidFrom my anus to Uranus 90 points91 points  (0 children)

                                    I wonder how this plays into the CFTC’s decision to stop reporting swaps data near the sneeze. Seems like a pretty good reason to not want anyone to see what’s happening behind the swap scene

                                    Edit: On September 17, 2020, the Commodity Futures Trading Commission (“CFTC”) unanimously approved three final rules1 to overhaul its regulations for real-time public reporting, swap data reporting, and data validation, verification, and correction. Wasn’t initial buy-in by RC Ventures on 8/31/2020?

                                    [–]Current-Position9988 39 points40 points  (7 children)

                                    Yea I've been in CENN for a while now, mainly because it's an astronomical 97% off it's high last year or something like that, despite having really bullish company news for months on end.

                                    [–][deleted] 26 points27 points  (1 child)

                                    If it goes up another 70 bucks I’ll break even.

                                    [–]demoncasehedgies r fuk 16 points17 points  (0 children)

                                    holy shit, I bought because I know CENN is in another basket and being part of the fuckery but I bought like, 3 shares at $1.7 lmao

                                    just to see the price and get alerts

                                    edit: also is very important to point that they DON'T HAVE ANY ROOM FOR ERRORS ANYMORE, any fuckup they are gone!

                                    we just need to wait

                                    [–]Huff33💪 I'm here for the memes 💙 4 points5 points  (4 children)

                                    Looking at the 5 year chart CENN had a high of $17,000 in June of 2018...

                                    [–]Ace_McCloud1000DRS AND YOU SHALL BE WITNESSED 54 points55 points  (5 children)

                                    Sounds like if you played it right you could park a tiny amount of cash in CENN (if thats all you have), it pops a smidge, cash out and then send it to GME. Wash and repeat to always increase your position in GME 🤷‍♂️ If it's not obvious this is not financial advise.

                                    [–]NotLikeGoldDragons🦍 Buckle Up 🚀 85 points86 points  (1 child)

                                    Never forget that in the past, once we've found patterns, the pattern suddenly changes when it matters. They watch our subs like a hawk.

                                    [–]Ace_McCloud1000DRS AND YOU SHALL BE WITNESSED 17 points18 points  (0 children)

                                    This is true, I've forgotten about the pattern change the second it's found.

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                                      [–][deleted] 21 points22 points  (0 children)

                                      CENN just went up 22% today...

                                      [–]millertime1216🦍💕🦍Love your neighbor as yourself🦍💕🦍 10 points11 points  (5 children)

                                      Dang, I wish I’d had that one in my watchlist all along. Great catch!!

                                      [–]DancesWith2Socks🐈🐒💎🙌 Hang In There! 🎱 This Is The Wape 🧑‍🚀🚀🌕🍌 6 points7 points  (4 children)

                                      It was NAKD before, part of the mayo basket.

                                      [–]stringedbass4 15 points16 points  (0 children)

                                      I've been noticing this trend with CENN for a while too, glad to finally see someone with more wrinkles then me talk about it.

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                                        [–]gotgus 109 points110 points  (2 children)

                                        Yes this maths proves I have no idea how to do maths but it's provacative and it gets the people going. Son of a bitch I'm in

                                        [–]SuboptimalStability🎮 Power to the Players 🛑 45 points46 points  (1 child)

                                        GME is drier than the desert, yet they keep spreading their disgusting mayo everywhere.

                                        [–]xcantdjgamecock 58 points59 points  (1 child)

                                        Indubitably

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                                          [–]chato35🚀 TITS AHOY **🍺🦍 ΔΡΣ💜**🚀 (SCC) 134 points135 points  (1 child)

                                          Can you fix the error in 2nd paragraph ( intro)?

                                          I think you meant if the price goes up to $150, not down to $50. But I am smooth as Apes comes.

                                          [–]Scienceisexy[S] 74 points75 points  (0 children)

                                          Good catch. Thank you!

                                          [–]Kind_Initiative_7567🦍Voted✅ 213 points214 points  (19 children)

                                          Needs an adult in here but its always been intuitive to me that SHF using options to stay in the game for another day, while both floor and ceiling are steadily closing in from either side. Meanwhile, all I have to do is stay zen at 0 cost. How much more simpler can it get ?

                                          [–]TheBigFart123 70 points71 points  (0 children)

                                          It’s the most simplest

                                          [–]waterboy1523♾️ We're in the endgame now 🏴‍?️ 56 points57 points  (4 children)

                                          1000% agree. But if OP is correct, we can have a chart to track until moass

                                          [–]Kind_Initiative_7567🦍Voted✅ 30 points31 points  (3 children)

                                          But you know what, OP is prolly onto something spicy here. The simplicity of this calculation and how hard it hits home is a good reason why this is prolly a solid thesis. And I imagine the increased CTB has only made the wedgie get tighter. Its prolly ATOMIC at this point.

                                          [–]waterboy1523♾️ We're in the endgame now 🏴‍?️ 11 points12 points  (0 children)

                                          Totally agree. Before we only could sense it with our itchy butt holes. Now we have some history/trend lines and maffs and the picture is clearer. And we can better see maybe where that margin calling line is.

                                          [–]iupvotefood🟣 DRS AROUND AND FIND OUT 💜 3 points4 points  (1 child)

                                          Maybe this is the real play (or 69 of 420) RC is executing from the dividend. It's been discussed if shorts could somwhow deal with the splividend. Maybe they can maybe they can't. But seems like this interest rate is really squeezing someone hard

                                          [–]kaze_sanSwippity Swooty - i want these fucks to pay with their booty! 13 points14 points  (2 children)

                                          Holding at zero cost is a myth - sorry to bust that one.

                                          Still need money for power to charge your phone to check Reddit ☝️☝️☝️😝

                                          [–]efficientnatureIdiosyncratic Reward 🚀 16 points17 points  (1 child)

                                          I charge at work - infinite money glitch

                                          [–]yoyoyoitsyaboiii🚀💵 Where's the money, Lebowski?! 💵🚀 4 points5 points  (0 children)

                                          The boss says not another dime - so I poop on company time.

                                          [–]ckaslon13 14 points15 points  (3 children)

                                          A week or two ago I saw where I believe hedgies had purchased almost 50k puts in one day. This is only way they are staying solvent. Let it run in the morning early buy alot of OTM puts that you drive down ITM with way OTM puts. But I did see they were actually doing there job as a hedge fund and buying cheap OTM calls just in case it ran they could cover. Someone needs to chop that high speed cable they use for their algo. Like a construction company. Oops. How quick could our stock correct in 24-36 hrs while they fix it. Just saying. I’m sure they have backups systems to prevent sich a disaster.

                                          [–]redrum221🎮 Power to the Players 🛑 4 points5 points  (2 children)

                                          How early are you talking? Curious if they are waiting for the daily buy from ComputerShare and using the puts to drive the price down.

                                          [–]ckaslon13 4 points5 points  (1 child)

                                          Very early in the trading day. Usually we see a rise pre market and after open but then algo kicks in and starts dropping around 845-9 with OTM puts. Once in a while we will see a rise but as the day progress the puts gain strength and we drop below usually. I truly believe that were the price is right now is safe for them. If they can get it to drop some even better. But they hit a giant wall of resistance at $80 that I believe could send shit up fast with fomo but SHF still have their ace in the whole always which is dark pools OTM puts and borrowing to short. As this continues it almost feels like we are trapping a dying animal. We are finally boxing them in for the kill which is so ironic after all of their cellar boxing which destroyed so many good companies

                                          [–]bluemango404💻 ComputerShared 🦍 21 points22 points  (4 children)

                                          Ever notice how every 'Directedge' exchange 'transaction' ALWAYS ends up in .50 increments, when under 150 a share? Over 150 and its 2.50 increments.. because of the 'implication'..

                                          Too much of a coincidence to ignore the crime.

                                          BRING IT ON MAYOBOIII

                                          [–]Wise-Share 11 points12 points  (3 children)

                                          Are you referring to Kenneth Cordele Griffin?

                                          [–]gme_tweetssomebody say Ken Griffin?👂 22 points23 points  (2 children)

                                          What’s crackin’, Wise-Share, This criminal? https://www.kengriffinlies.com/

                                          disclaimer: KennyBot2.0 sent this message. if you are displeased with this bot please send a pm so it can be improved. beep boop.

                                          [–]Wise-Share 14 points15 points  (0 children)

                                          I love that bot!

                                          [–]Reizz333GME in the streets, runic glory in the sheets 9 points10 points  (0 children)

                                          Good bot

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                                            [–]velo_hots 71 points72 points  (1 child)

                                            Loved the DD, but wanted to offer one small correction. Options provide leverage, but not 100x. Usually it's roughly associated with the value of the Greek value delta (there's a formula but usually it's close)

                                            [–]ipackandcover 9 points10 points  (0 children)

                                            This.

                                            [–]WhiteSmokeMushroom💎🙌🏻 Casual lurker until MOASS 🍦💩🪑 59 points60 points  (2 children)

                                            The borrow cost in that example wouldn't be $100, it would be 27 cents.

                                            The borrow rate is annual, not daily or a one-time fee. Meaning a borrow rate of 100% on $100 would not be $100, it would be $100/365 days, approximately $0.27 a day.

                                            And that's assuming shf pay the rates we see on public data, which I'd assume are the pleb rates (because that's all we ever see).

                                            [–]tommygunz007 14 points15 points  (1 child)

                                            When you own the MM and the SHF, there are no borrow rates.

                                            [–]nolitteringplease346 3 points4 points  (0 children)

                                            This is probably the variable missing from OP's work :(

                                            [–]a_hopeless_rmntic🎮 Power to the Players 🛑 295 points296 points  (18 children)

                                            so drs

                                            [–]Scienceisexy[S] 171 points172 points  (13 children)

                                            duh

                                            [–]HappyRuin 38 points39 points  (9 children)

                                            Muh

                                            [–]Unfair_Usual722🌶️ Buckle up GMErica 🏴‍?️ 25 points26 points  (8 children)

                                            Ruh

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                                                [–]aint_lion 192 points193 points  (7 children)

                                                Just double checked your math and can confirm I can’t solve Algebra

                                                [–]Guildish Power to the Players 20 points21 points  (2 children)

                                                Dang I thought it was Calculus!

                                                [–]poonmanglerFUD me harder, daddy 😘 12 points13 points  (1 child)

                                                That explains the dramatic...

                                                PAUSE

                                                [–]SoreLoserOfDumbtownDingo’s 1st Law of Transitive Admiration 🍻🏴‍?️ 8 points9 points  (0 children)

                                                Is that like, a bear doing jazz hands or something ? Idk.

                                                [–]chato35🚀 TITS AHOY **🍺🦍 ΔΡΣ💜**🚀 (SCC) 39 points40 points  (1 child)

                                                I can count to potato.

                                                [–]ultimateChampions68Wrinkle proof smooth brain 🦍 26 points27 points  (0 children)

                                                Ok brainiac no need to pull out the big words

                                                [–]Guildish Power to the Players 9 points10 points  (1 child)

                                                Dang I thought it was Calculus! No wonder I can't solve the math!

                                                [–]youngsteveo🦍Voted✅ 28 points29 points  (1 child)

                                                There's an important variable missing in some of the examples: time.

                                                In your simplified $100 short at 100% interest, where the stock goes down to $50, you mention that the position still lost money due to the high borrow rate. Your napkin math would be close to correct if the short was held for one full year, since the borrow rate is a yearly rate.

                                                If they shorted down from $100 to $50 in a single month, that short position would still be profitable, since they only needed to pay one month's worth of fees.

                                                Also--and I might be wrong here, but this is how I understand it--the fee that needs to be paid to the lender is based on the current stock price each month. So, even at a 100% borrow rate, if the stock fell to $50 over the course of a year, and the shorter did not close, and the borrow rate did not fluctuate, then the shorter still didn't pay $100 in fees, because the fee was calculated every month based on the average stock price that month, which was falling.

                                                Great post, just wanted to shed some light on a very complicated and opaque system.

                                                Please correct me if I'm wrong on any points.

                                                P.s. even with my nitpicking, shorts are still very much fuk.

                                                [–]Brave_Bid5260 3 points4 points  (0 children)

                                                Does make sense. I also don't understand why they wouldn't just swing-short it with another account. I mean, IBKR lets you open multiple accounts with contradictory positions, large shorters must be the same. Because they can't close the original short doesn't mean they can't close new shorts tactically.

                                                [–]Rude_Spread_1555🦍 Buckle Up 🚀 24 points25 points  (0 children)

                                                Wow! (math) Science really is exy! 😁

                                                [–]jaybaumyo🦍 Buckle Up 🚀 18 points19 points  (1 child)

                                                Okay dude but answer me this: why would a prime broker margin call an investor if they knew the margin call would bankrupt both the investor (SHF) and the prime broker?

                                                [–]Landed_port🦭Twinkcoin Shill🦭 53 points54 points  (20 children)

                                                u/ScienceISexy counterpoint: I (A bank) can just give Citadel a cash infusion from my collateral book of cooking so they can keep dropping the price and nobody gets margin called for another day. With the rumors of Citadel losing investors, why have we not seen some form of cash infusion for poor Citadel?

                                                By everything I've seen, Citadel can't keep this up for another 120 days (long shot); a strong probability that they lose control again in 8 days.

                                                Another counterpoint: Citadel has remained civil so far but when facing bankruptcy they'll straight up manipulate/fail to report/fail to route orders in order to crash the NBBO to ATL; traditionally when facing bankruptcy large firms yet alone market makers have blatantly ignored the law in the name of their best interest

                                                [–]jqian2💻 ComputerShared 🦍 17 points18 points  (4 children)

                                                Another counterpoint: Citadel has remained civil so far but when facing bankruptcy they'll straight up manipulate/fail to report/fail to route orders in order to crash the NBBO to ATL; traditionally when facing bankruptcy large firms yet alone market makers have blatantly ignored the law in the name of their best interest

                                                Facing bankruptcy vs potential jail time are very different things. I'm not sure how willing they'd gamble with possible jail time to avoid bankruptcy.

                                                [–]Landed_port🦭Twinkcoin Shill🦭 8 points9 points  (3 children)

                                                If they're already facing potential jail time I wouldn't put it past them, that's a big IF though

                                                [–]fuckingcarterhas an absolute massive [REDACTED] 3 points4 points  (1 child)

                                                they would likely want to minimize the amount of jail time lmao

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                                                  [–]iupvotefood🟣 DRS AROUND AND FIND OUT 💜 9 points10 points  (1 child)

                                                  Investment ehh... like the 1.15b they just got from Sequoia and Paradigm in January? The first time they've ever done that...

                                                  https://www.citadelsecurities.com/news/citadel-securities-announces-1-15-billion-investment-from-sequoia-and-paradigm/

                                                  Eww I feel gross linking to Citadel

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                                                    [–]Correct-Duck8038🎮 Power to the Players 🛑 15 points16 points  (0 children)

                                                    Your numbers confirm that i suck at math.

                                                    You son of a bitch , im in!

                                                    [–]QuarterBackgroundcaneth:nft 23 points24 points  (0 children)

                                                    They are leveraged in swap derivatives. 💣🤯 Only a matter of time.

                                                    [–]NickvonBach 12 points13 points  (0 children)

                                                    That was nice. Thank you. Please more.

                                                    [–]Cheezel_X#1 Idiosyncratic [REDACTED] 10 points11 points  (0 children)

                                                    🆙🆙🆙

                                                    [–]joeker13🚀DRS, with love from 🇩🇪🚀 7 points8 points  (0 children)

                                                    Love to see some real science wrapped in crayon paper! This is getting wild.

                                                    [–]I_promise_you_gold🦍Voted✅ 10 points11 points  (0 children)

                                                    Fucking hell…I understood some of those words. What have I become?!

                                                    [–]UncleZiggy💻 ComputerShared 🦍 9 points10 points  (0 children)

                                                    Great DD. Can't wait for GameStop to break their margins... probably with the NFT marketplace and/or the stock splividend

                                                    [–]M4573R_CH33FAsk me more about ligma 8 points9 points  (0 children)

                                                    The best part is that i have only long positions DRSed on GME, so I have nothing but time and it costs me nothing.

                                                    Imagine being short on this lol

                                                    [–]TherealMicahliveEew eew llams a evah I 7 points8 points  (0 children)

                                                    You dont mean by… massive derivative positions but no real shares? Like hedgefuks ..

                                                    “Citadel filings have entered the chat”

                                                    [–]South-Play-2866💻 ComputerShared 🦍 5 points6 points  (0 children)

                                                    This is the first time I've been presented with equations that turned me on.

                                                    Tit's jacked. OP's username checks out.

                                                    [–]Aggressive_Lie9539💙 Pepperidge Farm remembers 🦍 13 points14 points  (0 children)

                                                    The boggled minds

                                                    [–]FunkyChicken69🚀🟣🦍🏴‍?️Shiver Me Tendies 🏴‍?️🦍🟣🚀 DRS THE FLOAT ♾🏊‍♂️ 12 points13 points  (0 children)

                                                    Love me some algebraic quantifications of how fucked shorts are. Thanks OP

                                                    [–]dragespir🍗 Tendies Today | MOASS Tomorrow 🚀 5 points6 points  (0 children)

                                                    I'm excited.

                                                    [–]Zombie_Trick🦍Voted✅ 5 points6 points  (0 children)

                                                    Can we get u/martinshkreli to weigh in?

                                                    [–]LowlyApe?️♥️ Not Folding the Nuts! ♣️♦️ 5 points6 points  (2 children)

                                                    Paging u/tiberiuswoodwind

                                                    [–]gerbs650🎮 Power to the Players 🛑 26 points27 points  (4 children)

                                                    I’m just here to get paid

                                                    [–]chrisc1987My position is xxx doggy 39 points40 points  (3 children)

                                                    No, you’re here to expose the Wall Street scam, put financial terrorists in jail and go somewhere Elon Musk could only dream of - Ur anus.

                                                    [–]lukelg85💪 Fuck Citadel 🦍🚀 3 points4 points  (1 child)

                                                    Ur anus sounds like a nice place where a lot of apes would like to be. Weird 🤷‍♂️

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                                                      [–][deleted] 15 points16 points  (0 children)

                                                      Energy has a presence in every system that exists. In the context of this specific play, you can see the reactions of entities to information they are aware of such that one can piece together the cause of their reaction. The big pieces that are deducible are examples such as hedge funds blowing up left and right during what was ATH's of the market. The FED privately loaning $4.5 trillion and then printing publicly another $4 trillion to give out. RRP going from a small few billion to $2 TRILLION DOLLARS! These are the ones we can immediately observe. There are smaller patterns that emerge that require level 2 understanding and prediction to properly interpret.

                                                      MSM is a basket full of tells for anyone watching. Never before in the history of the marketplace has the media been worried about how retail played in the market. In fact, it is publicly known data that 90% of retail would have busted their account within 90 days (eerily reminiscent of online poker data) of depositing. Did you ever hear about how they were worried retail was going to lose money? I can go on Stocktwits right now and I guarantee within 20 posts there is one telling me that I'm going to lose my money. 99% of MSM articles are bearish with a negative outlook on GME. Absolutely none of those articles ever address the bullish potential - if the aspect of GME must be discussed (think NFT marketplace) it is done from a negative viewpoint. No objective discussion is had about the merits of the GME play. Objective lies are stated on a daily basis, including that GME has high debt. I am probably preaching to the choir here, but the only logical reason that the media would all of a sudden care about retail losing money in conjunction with negative outlook articles only reveals the energy behind this attack is scared.

                                                      I love that math is finally starting to make an appearance because this was one of the aspects of the GME movement that has been somewhat ignored. As discussed above, we have been able to interpret the same outcome through energetic deduction, but starting to present mathematical interpretations is vital to the final nail in the coffin.

                                                      [–]schnitzelbricks 5 points6 points  (0 children)

                                                      Is it possible that larger SHF can make contracts with lenders to remove any borrow fees required.?

                                                      [–]fataii🦍Voted✅ 4 points5 points  (0 children)

                                                      They will always control the room until there are no exits, we will at this point control the exits. Every month that goes by we remove an exit door. Eventually they won't have an exit and whatever is in that room after all of it will be ours. This is not hypothetical, it's a mathematical certainty.

                                                      [–]welcometosilentchill🦍 Buckle Up 🚀 5 points6 points  (0 children)

                                                      instead of borrowing and selling a stock, I borrow a deep ITM put

                                                      You can’t borrow option contracts, so I assume you mean buying them, right?

                                                      Buying deep ITM puts are a common shorting mechanism because of how delta is measured and all the benefits that come from buying options. Basically, you can use these contracts to facilitate short positions using fixed costs and they are extremely margin friendly because delta values offset the losses as the price moves against you. If you are caught in a squeeze, the only real risk is the option expiring worthless and having to eat the cost of the premium (fixed cost). But, as the price moves against you, the value of your option contract becomes less affected by depreciation as the delta value increases from -1. So margin requirements on these short positions are essentially always “Premium paid - options value”.

                                                      If the position generally works in your favor, you can choose to sell it for profit or have it assigned. The broker then has to locate the shares and, if they can’t, you are still in a favorable position to roll into new contracts or exit at a profit.

                                                      All of this is to say, I think it’s really hard to approximate margin requirements using borrow rate when discussing options contracts because they don’t face the same collateral risks as true short positions and generally you need to be able to account for the value of the contract itself as part of the margin collateral.

                                                      [–]Truth_RoadApes are biggest whale 🦍 🐋 4 points5 points  (0 children)

                                                      This is a spicy DD. I like it very much. Many thanks.

                                                      [–]Wise-Share 3 points4 points  (0 children)

                                                      I have no idea what I just read.

                                                      [–]Zaebae251🦍Voted✅ 2 points3 points  (0 children)

                                                      Nice

                                                      [–]Elegant-Remote6667Ape historian | the elegant remote you ARE looking for 🚀🟣 3 points4 points  (0 children)

                                                      Op submit this post to archive ph. And read my 5 part dd about how ftds and put interest is correlated - shorting through put borrows makes sense actually -they don’t have to find the shares just “say they can locate trust me bro”

                                                      [–]TurnBasedCook🦍Voted✅ 3 points4 points  (0 children)

                                                      Cool theory! PS you should change wording in the last bit because 1% multiplied by 100 isn't 100, it's 1.

                                                      [–]Spaceman_Earthling🚀 Sniffs Rocket Fuel ⛽ 11 points12 points  (0 children)

                                                      Wrinkle go ook

                                                      [–]LionRivrRyan Cohen’s girlfriend’s husband 4 points5 points  (0 children)

                                                      Critical Margin should correlate with the entire stock market. Their critical margin depends on the value of assets in their accounts at all times.

                                                      That’s why the entire market pumps when GME pumps. That’s why all GME rallies are short lived. That’s why GME is pushed down when the entire market is down.

                                                      [–]stellarEVH💻 ComputerShared 🦍 2 points3 points  (0 children)

                                                      This is excellent work.

                                                      [–]GotaHODLonMe 2 points3 points  (0 children)

                                                      Nice write up!!! Quality.

                                                      [–]Smelly-Dog-FartHedgies R 👉🏻👌🏻 2 points3 points  (0 children)

                                                      This ape maffs.

                                                      Nicely done, thank you for your service.

                                                      [–]TallWineGuyNaked Shorts? 🙅‍♂️ Naked LONGS 💁‍♂️🦍🚀 2 points3 points  (0 children)

                                                      OP your maths is particularly sexy

                                                      [–]jerseyanarchist💻 ComputerShared 🦍 2 points3 points  (0 children)

                                                      up with new DD, to the wrinkle brains

                                                      [–]Electrical-Amoeba245🦍 Buckle Up 🚀 2 points3 points  (0 children)

                                                      Awesome write up, op!!!!!!!!👏

                                                      [–]cjbrigolMOASS tomorrow or ban! 🚀 2 points3 points  (2 children)

                                                      We had an almost 30% day like 2 weeks ago lol. I'm ready for another.

                                                      [–]jmdugan 2 points3 points  (0 children)

                                                      this graph feels closer to the activity: https://i.imgur.com/cXlacrd.png

                                                      I don't know if there's a reasonable way to connect it, but if you look at the dates around 29 Mar to 1 Apr 2022, when the price goes above this blue line, then almost exactly 45 days later (May 18 2022) Melvin is announcing that it was closing shop.

                                                      plus, the overline on the first day spike corresponds to turning off the buy button

                                                      coordinates: https://i.imgur.com/iMJmMiM.png

                                                      [–]ThirdCrewape want believe 🛸 2 points3 points  (0 children)

                                                      Imma go with doubt on this one. Saying we're 1 30% day from a critical margin calls.

                                                      [–]fonix232🐍 SNEKTASTIC 🐍 2 points3 points  (0 children)

                                                      Holy fuck, the first DD in some time that I actually understand.

                                                      This is a good sign. Whenever fuckery was easily explainable even to those with very limited financial market understanding/knowledge, shit went up. But when DDs became massive and barely decipherable without a degree, shit went down.

                                                      To simplify it even more:

                                                      Dum-dum 🦍 understand DD = 📈 Dum-dum 🦍 no understand DD = 📉

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