Post by UEM on Jan 26, 2021 17:38:27 GMT -5
Attempting to dive into the Game Stop thing which I do not understand.
Let's examine the story as I understand it.
Some guy on Wall Street attempted to 'short' Game Stop which means that he bought a lot of stocks, then badmouthed the company to drive the stocks down. I guess that this means he was betting AGAINST their success. I don't know how one does that as I thought you could only purchase or not purchase stocks in a company.
People on reddit get mad about this. They band together and start buying all Game Stop stocks which drives the price up.
This means that A) original Wall Street guy is losing money and B) Reddit people are gaining money.
However, here's the rub and the part that I don't understand.....
If I bought 50 shares at $100, that cost me $5,000. The stock goes up to $200 the next day, I made $5,000, correct? (50 shares x $200 = $10,000).
Now, while I have $5,000 more in stocks, in order to have the actual money, I have to sell those stocks at that price, correct?
Therefore, it seems to me that a bunch of people who are buying high are fucked because they will never be able to sell Game Stop at that price.
I suppose that they could now short against themselves?
Let's examine the story as I understand it.
Some guy on Wall Street attempted to 'short' Game Stop which means that he bought a lot of stocks, then badmouthed the company to drive the stocks down. I guess that this means he was betting AGAINST their success. I don't know how one does that as I thought you could only purchase or not purchase stocks in a company.
People on reddit get mad about this. They band together and start buying all Game Stop stocks which drives the price up.
This means that A) original Wall Street guy is losing money and B) Reddit people are gaining money.
However, here's the rub and the part that I don't understand.....
If I bought 50 shares at $100, that cost me $5,000. The stock goes up to $200 the next day, I made $5,000, correct? (50 shares x $200 = $10,000).
Now, while I have $5,000 more in stocks, in order to have the actual money, I have to sell those stocks at that price, correct?
Therefore, it seems to me that a bunch of people who are buying high are fucked because they will never be able to sell Game Stop at that price.
I suppose that they could now short against themselves?
