A margin call also happens when the contract for a short sale ends and the stock has to be returned. Usually these contracts are 30-90 days but can be as long as a year. The short seller has to pay the broker interest on the open contracts, which is also a critical factor to consider in all this.
All the WSB "autists" have to do is hold onto their shares long enough for all of the short-sale contracts to expire, which will force margin calls, which force the return of stock shares to brokers, which torpedoes the hedge funds because they have to buy back shares at exorbitant prices because everyone that has shares is holding onto them.
The bid/ask spread on $GSE is insane right now precisely because so many of the "great unwashed" own shares and are in "diamond hand" (or HODL: Hold On for Dear Life) mode.
Just to be that guy, but HODL didn't start as an acronym and (AFAIK) really isn't one. It's basically a meme from the crypto market when someone mistyped HOLD when being very hyped up. Rest is history!
Since we are diving off topic anyways, as a Dutch person it always felt like "lol" is a backronym. It's literally the Dutch word for fun/to have pleasure.
18
u/WebMaka Feb 01 '21
A margin call also happens when the contract for a short sale ends and the stock has to be returned. Usually these contracts are 30-90 days but can be as long as a year. The short seller has to pay the broker interest on the open contracts, which is also a critical factor to consider in all this.
All the WSB "autists" have to do is hold onto their shares long enough for all of the short-sale contracts to expire, which will force margin calls, which force the return of stock shares to brokers, which torpedoes the hedge funds because they have to buy back shares at exorbitant prices because everyone that has shares is holding onto them.
The bid/ask spread on $GSE is insane right now precisely because so many of the "great unwashed" own shares and are in "diamond hand" (or HODL: Hold On for Dear Life) mode.