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1) This $GME trade has been obvious and I’ve been all over it for weeks. Barring something unexpected, we have an insanity squeeze tomorrow. Fun stuff!! I have no right-tail exposure as I already banked massive gains. That was the appetizer... https://twitter.com/hkuppy/status/1352664776141381639
2) If I’m right about the insanity squeeze, all the funds who are short $GME and similar stuff, blow up and have to puke their longs. Remember, 120/80 has been a massive inflow machine. Now these levered funds are on the ropes. It’s a “quant quake.”It will be sudden and violent..
3) The higher $GME goes, the more it will pressure the quants. However, when all the equity is chewed through, someone has to defuse these neutron bombs. I suspect there’s a price on $GME where the prime brokers will step in...
4) As far as I have heard, the 2 big boys haven’t covered a single share of $GME yet. ~25-35m are short on just those 2 books. What happens when the prime has to cover in a fast market with every dealer short Gamma??
5) This will be reflexive. Primes liquidating clients, setting off short Gamma squeezes, pressuring other clients. Remember, the whole NYC 120/80 crowd has roughly the same book and a fukton of leverage...
6) Not saying this will definitely play out this way. Sometimes insanity squeezes fizzle out, but this sure feels like the Northern Corner. Back then, there were no Quant funds. Just an insanity squeeze where traders got caught with massive losses and sold what they could...
7) When traders went bust on their shorts, the brokers ate the losses and failed too. It ended in a flash crash as every long position got liquidated. Could it repeat??
8) On Monday I bought a pile of VIX. We had a small flash crash that fizzled. I booked a small gain on news of the bailout. Today on close, I lifted a MUCH LARGER position long VIX. The higher $GME goes, the more reflexive it gets and the likely I get paid..
9) Everyone I know is obscenely long crap stocks for a short squeeze. Be careful what you wish for. The higher they go, the more likely it blows up every fund’s long book. Could get wild out there. Don’t overstay your welcome. When the squeeze ends, the stock collapses...
