Some reason that GameStop's shares are a good value. Slowly, the company gained the attention of WSB and traders who frequent the gamer-friendly social media service Discord. GameStop's shares started to rise late last year, after the founder of the pet-supply site Chewy bought a stake in the company and got a spot on its board. But they also trade tips and analysis that can go on for pages. Wall Street Bets, or WSB, is where armchair traders gather to share memes, commiserate over losses and share more memes. You can put some of the blame on Reddit's Wall Street Bets forum, one of the weirder places on the internet. Which means the brokers have to buy more shares, which means. That increases demand, which increases the stock’s price. If it goes high enough, the brokers who would be on the hook have to buy more shares, lest they get stuck having to buy a lot of expensive shares all at once. Normally, this small amount of demand doesn’t do much to the price.īut if enough traders bet big, the demand can push the stock up. To mitigate their risk, they buy some of the shares they’d need. The brokers who sell the options contracts have to provide the shares if the trader wants to exercise the option. (In practice, lots of traders just sell the options contract itself for a profit or loss instead of actually buying the shares, but this description suffices for our purposes.) If the price rises, the trader can buy the stock at a bargain and sell it for a profit. These bets involve contracts that give them the option to buy a stock at a certain price in the future. Some of these enthusiastic amateurs are buying shares of GameStop, but many are placing their own options bets, on the opposite side of the shorts. Some smelled opportunity after stocks tumbled last spring, some were trying to scratch a gambling itch after sports leagues shut down, and for some it’s just a game – trying to ring up dollars instead of points.Īll this has been made easier by the free trades available through platforms like Robinhood and E-Trade. Over the past year, armchair traders have surged into the market.
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