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According to the Financial Times, a "gamma squeeze" also took place in addition to the short squeeze: as traders bet on the rise of stocks by purchasing call options, options sellers hedge their positions by purchasing the underlying stocks (here, GameStop and the related securities), thereby driving their prices even higher. [45]
When meme-stock traders' de facto leader posted a screenshot implying he owns over $100 million of GameStop, Andrew Left immediately shorted the stock.
The cost of borrowing these stocks can become significant – in February 2001, the cost to borrow (short) Krispy Kreme stock reached an annualized 55%, indicating that a short seller would need to pay the lender more than half the price of the stock over the course of the year, essentially as interest for borrowing a stock in limited supply. [28]
You need a lot of cash — and guts — to short Trump Media stock right now.
The losses by short sellers are a stark contrast to a year ago, when shorts made a $15.9 billion profit on Tesla shares as the company’s stock lost 65% of the value.
MicroStrategy shares plummeted more than 16% after short seller Citron Research said it had taken a new bet against the stock, which has gained over 500% this year.Even with Thursday's decline ...