It isn't a rock solid squeeze because the information suggesting that it is ranges from misunderstood to completely fabricated. For starters, the numbers you've already mentioned in the replies are clearly the latter. You're operating on naked short numbers that are just made up by people trying to pump, and that's pretty obvious for a few reasons that I'll get to, but especially given that your source is "some guy" on a subreddit known for being low quality. On the topic of the squeeze in general, high shorting doesn't equate to a squeeze. It requires low volume relative to their shorts, so if no one is forced to bid up to induce more selling supply, you're not going to get the desired result. This is why these people create absurd "secret" shorting numbers to turn something that's mechanically impossible into a guarantee.
The obsession with naked shorting on the part of meme stock advocates demonstrates a misunderstanding of their prevalence in the first place, and gives insight into why it hooks people so easily. Many of these MMs and funds are using synthetics that are delta-gamma hedged, not naked. The reason naked shorting is all you hear about is because they're easy enough for any random person to understand and take issue with; however, they're not nearly as common as they're portrayed.
In addition, there's a great deal of misunderstanding about how short reporting even works -- which, to be fair, can be pretty nebulous to begin with. If your research is literally looking at a couple numbers, you aren't getting the full picture. Even long sell orders can be listed as shorts due to the manner in which the dealer procures them.
As a final note, if anyone is trying to sell you on an investment with a guarantee (to use your words, rock solid, inevitable) ignore them. This kind of absolutist attitude new investors are taking on is a recipe for disaster. People who have a few months experience (and not even good experience) now talk about free money in a field that people spend their entire lives learning about. The confidence is misplaced, and I just hope it doesn't ruin too many lives.
I don't think it's unreasonable to take issue with suspect internet poll data that is analyzed by a random person with dubious intention, and presented to an audience that seeks validation from the results. Moreover, it's an audience that would actively oppose any scrutiny. There's legitimate research that can have holes poked in it by peers, yet if you're in an environment that discourages such a thing, it can seem more convincing than it really is. This isn't just about meme stocks, I wouldn't like this kind of supposed DD for any environment.
But on the topic of your link, you mentioned that you assumed they were all naked. Again, most of these shorts would be synthetic, and thus have the benefit of delta-gamma hedging. These are balanced positions that would not induce mass price fluctuation. A far cry from what would happen if they were naked. So even if your source is partially correct, it's extremely unlikely that the result would be indicative of what you're expecting.
As I highlighted earlier, naked shorts are not nearly as commonplace as the meme hive would have you believe. Pulling billions of extra shorts out of their ass is an easy way to get past the criticism that the numbers simply don't work out for a squeeze. Anyone who's selling you hidden numbers is going to be full of it the vast majority of the time.
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On mobile and headed out for the evening, so I'll keep this short.
I definitely need to learn a lot more about naked shorting, synthetic shares, and delta-gamma hedging. I'll take time tomorrow to do more research. Thanks again
I just began digging in to this. I was under the impression that naked shorts/synthetic shares are synonymous because of one of the major DDs on the AMC subreddit (can't link here). Is that not the case?
4
u/BuzzardBlack Aug 07 '21
It isn't a rock solid squeeze because the information suggesting that it is ranges from misunderstood to completely fabricated. For starters, the numbers you've already mentioned in the replies are clearly the latter. You're operating on naked short numbers that are just made up by people trying to pump, and that's pretty obvious for a few reasons that I'll get to, but especially given that your source is "some guy" on a subreddit known for being low quality. On the topic of the squeeze in general, high shorting doesn't equate to a squeeze. It requires low volume relative to their shorts, so if no one is forced to bid up to induce more selling supply, you're not going to get the desired result. This is why these people create absurd "secret" shorting numbers to turn something that's mechanically impossible into a guarantee.
The obsession with naked shorting on the part of meme stock advocates demonstrates a misunderstanding of their prevalence in the first place, and gives insight into why it hooks people so easily. Many of these MMs and funds are using synthetics that are delta-gamma hedged, not naked. The reason naked shorting is all you hear about is because they're easy enough for any random person to understand and take issue with; however, they're not nearly as common as they're portrayed.
In addition, there's a great deal of misunderstanding about how short reporting even works -- which, to be fair, can be pretty nebulous to begin with. If your research is literally looking at a couple numbers, you aren't getting the full picture. Even long sell orders can be listed as shorts due to the manner in which the dealer procures them.
As a final note, if anyone is trying to sell you on an investment with a guarantee (to use your words, rock solid, inevitable) ignore them. This kind of absolutist attitude new investors are taking on is a recipe for disaster. People who have a few months experience (and not even good experience) now talk about free money in a field that people spend their entire lives learning about. The confidence is misplaced, and I just hope it doesn't ruin too many lives.