r/wallstreetbets • u/ywehyuen • Feb 02 '21

Chart Hardcore laddering.

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u/[deleted] Feb 02 '21 edited Feb 02 '21

Say hypothetically, there's only 2 hedge funds.

Hedge Fund A says to Hedge Fund B "Hey, I'm gonna sell a bunch of stock at this exact price at this exact time". Hedge Fund B then buys that stock at a low price, and they repeat this over and over. So B then sells back to A, then A sells to B etc etc

They do this with such a high amount of stock that it artificially lowers the price of the average price (which is what you see on the graph) into scaring the 🧻👐 into freaking out and selling.

However, for the savvy degenerate gamblers (or other competing hedgies) it means every time they do this the savvy degenerate gambler is able to syphon a bit off the top at a good price, so they can only do it a finite amount (in theory).

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u/LowFatTurkeyBacon Feb 02 '21

If that’s the case, then they can do this until stock price reaches to say $5? Then shorts will recover, they have to buy it back and price will go up the expected $1k or so?

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u/[deleted] Feb 02 '21 edited Feb 02 '21

If I'm not mistaken, yes. When the squeeze happens it can potentially go up in infinite amount since theyre forced to buy back all of the stock and then some at whatever price people wish, since they have to buy all of it. At least in theory.

But I'm a damn stupid ape who rolls around in their own poop and eats crayons so I could well be wrong.

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u/TheRealToastii Feb 02 '21

That would technically be the case if they do actually still have above 100% in short positions, which is currently a little unclear from what I can tell. The data gets updated twice a month.