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  • Who wins the lottery?

     Anonymous updated 1 year, 3 months ago 6 Members · 7 Posts
    AMC
  • Clayton

    Member
    June 18, 2021 at 1:28 am

    I’m just a stupid, smooth brained ape since January, but I have a question about something I’ve never fully understood….. How many people will be left holding the bag after the squeeze? Surely not everyone will be able to sell all of their shares at 100k, right? What part of the math am I missing here? I know there is no telling how many synthetic shares are floating around, but how many shares are the hedge funds required to buy as of now? So many questions about this running through my head and I just can’t get it through my ape brain. Please help me understand. Nobody wants to be holding the bag directly after the short squeeze. However, when we hit it big, I anticipate buying shares back when they have settled.

  • CrayonMuncher

    Member
    June 18, 2021 at 2:05 am

    To answer your question about how many shares the hedge funds are required to buy, the answer is that if it is a short position that they have open, and they are trying to close it, they need you to sell it to them in order to close it out on their end. They are on the hook for all of their short positions, real or fake, and that’s where you dictate the price by holding out and letting it rise.

    They can’t walk away from it. It’s a financial obligation they are legally bound to uphold. That’s why you probably hear a lot of people say “all shorts must cover.” That’s what it means. All of their short positions must be bought back in order to close it. That’s how they dug themselves into such a deep hole with these synthetic shares and failures to deliver. They put into circulation more shares than should be in existence and are responsible for paying all of them.

    The lawyer Wes Christian gave a great example. He said imagine you photocopy the title to your car and run around town selling it to everyone. One day they all want to collect on the car you sold them. What are you going to do? The shorters have essentially photocopied shares and put them into the market.

    Keep in mind I emphasized short positions. They are not obligated to buy what you are selling otherwise – only the shorts they are obligated to buy back.

    So, in theory, once they finish buying all of them back, they are done (and they hope to still have money in their account after that but really they will be bankrupt). In reality though, they have millions and probably even billions to buy back, but that’s the missing piece of the puzzle. Nobody knows how many are out there because so many fake ones are mixed in with the real ones. One thing we can do though is watch the short interest and the failure to deliver numbers to give us clues as to what kind of progress we are making. That’s why you see people watch Ortex so closely.

    To answer your question about being a bag holder. That’s the catch. You want to raise the price on them high enough to get a lot of money when you sell, but you also don’t want them to either

    1. be finished covering all their short positions or

    2. be bankrupt

    How are you going to know when either of those happens? You don’t. Unfortunately, nobody does. That’s why we have to watch the numbers to get a rough idea. Timing is going to be key in all if this.

    • Clayton

      Member
      June 18, 2021 at 9:56 am

      @CrayonMuncher Thanks. I was thinking exactly what you said in my mind because that made sense to me, but I certainly needed to confirm those thoughts. I appreciate the time you put into your response. You are certainly a crayon munching legend!!!

      AMC to the MOON 🦍🚀🌙

  • Jakefromstatefarm

    Member
    June 18, 2021 at 9:23 am

    Read somewhere there is a $70 trillion insurance policy. There are around 4 million retail apes. Lets say the average is 100 shares each for 400 million shares. If it moons to 500k a share that is 200 trillion… this is not solid math as many variables can’t be known but holy shit it’s a lot of money that is going to need to come from somewhere for all of us to get our tendies…

  • Curunir

    Member
    June 18, 2021 at 10:18 am

    The insurance discussions would come in after the company has done everything it can out of its own assets first.

    They will have to liquidate all of their other holdings, burn through all of their capital and reserves, sell off real assets, etc. Basically go bankrupt. Then the federal insurance will kick in to cover remaining obligations for that specific firm.

    Obviously every business holding shorts and naked shorts will be different in how this plays out for them. Some may be able to cover their small pool of shorts with a little pain, others may make national news headlines as they go under.

    I personally think the start of this sell off of other assets is why there’s so much red across the market.
    https://finviz.com/map.ashx?t=sec

    Selling of broad levels of other stocks while they were still up, then other businesses will start doing the same, and as this plays out we may see a big dip across the markets. I really doubt we’re going to “crash the market” but I think you’re going to see a very real dip across the market. Think of it as everything else going on sale and when the squeeze is over you have a good entry point into some long term investments.

    So that limited, but massive, insurance pool does not define any upper limits by itself. You need to also know all the valuations of the entities that are holding shorts and the real and naked short counts they hold as well as a lot of other variables we will never know.

  • JohnApe

    Member
    June 18, 2021 at 8:36 pm

    I think the direct answer to your question of how many people will be left holding the bag is “the number of people holding the float”. The have to buy back all the shorted shares, and we do not know how much that is, but at the end of the day there should be roughly 500 million shares owned after everything is corrected. (assuming we get to a zero shorted state, which might be unlikely, assuming new shorts are placed on the way down).

    Caveat, I don’t know anything and this is my first post, so feel free to assume I am wrong.

  • Anonymous

    Deleted User
    June 19, 2021 at 8:45 pm

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