By now you must have heard of GameStop and how a Reddit forum of stock and option traders on r/wallstreetbets have been massively buying up shares of GameStop in a bid to prevent Wall Street hedge funds from running the video game retailer into the ground and profiting from their short trades. Year to date, the share price of GameStop has risen from US$17.25 to US$325.00 (as of 31 January 2021).
I won’t dive into the full details of what a short trade is – there are already many articles/videos explaining it – but I will give a quick summary of the GameStop situation and what the endgame is for all the ‘retards’ (anagram of traders) on r/wallstreetbets and everyone else on their side.
In a nutshell, a bunch of Wall Street hedge funds — chief among them, Melvin Capital and Citron — have bet billions that GameStop will ultimately go bankrupt as video game retailing goes digita...