> It boggles the mind people think hedge funds can't profit off a mad rush like this...
How exactly would they do it? Shorting it again would involve calling the top for a stock whose price recently has been unpredictable, but very high.
Writing options seems nuts for something this volatile. I guess they could "buy volatility" with a straddle but again what would the numbers have to be on this where they turn a profit? It's not like the rest of the market is underestimating the volatility, it's evident to everyone.
Volatility makes the HFT's money. Hundreds of millions of shares are flying around the past few days. Thats not from a bunch of people buying and holding. They make money on fractions of a percent swings. They can make a lot of money on 50% swings.
The other thing is, the price WILL go down eventually. Even if not today. A fund with billions of dollars can afford to sit on a short of GME at $400 for a long time. Longer than the upward pressure will last. The narrative was that the short squeeze will happen today, and prices will skyrocket. You only had to be in it for a little while. Now the narrative is changing, and it will maybe be next week, or even farther out. Sure the meme is to hold forever, but anyone holding any amount that will maybe make a difference are going to see that life changing number and sell eventually.
One of my neighborhood friends is a HFT guy and he says he makes bank off fractions of a dollar. Not all trading is equal obviously. But he said sometimes it's like 3,4,5 decimals places deep that he is watching the stock prices and trading
I would be completely out of my depth implying I understand all the creative ways different hedge funds make money, but there's a lot more tricks in the bag than "short it" and "write options"
Just look at Citadel... how much money do you think they've made off early access to majority of retail orders for GME as RH exploded?
And how much more money will they make on an ongoing basis after this from all the new users?
The volume has been insane, someone is making money besides retail investors, and they won't be the ones left holding the bag after the musical chairs stop...
How exactly would they do it? Shorting it again would involve calling the top for a stock whose price recently has been unpredictable, but very high.
Writing options seems nuts for something this volatile. I guess they could "buy volatility" with a straddle but again what would the numbers have to be on this where they turn a profit? It's not like the rest of the market is underestimating the volatility, it's evident to everyone.