If the price is rising rapidly, then all the shorters will pile in to buy the stock in order to minimize their losses, and that buying frenzy pushes the price higher. These options have an expiry date, however, and if the price goes up instead of down, they are forced to buy the stock at a higher price, taking a loss. More specifically, the coordinated action made heavy use of options, as this lets you get more bang for your buck. They then wait for the price to fall, buy the stock for less than their selling price and return it to the owner, pocketing the difference. This means they borrow stock to immediately sell it. When a stock is in decline, investors will often “short” the stock.

There was method in this apparent madness. The Redditors had chosen stocks whose prospects were extremely poor, GameStop being a case in point: a retailer of physical games media in an already declining market, further hit by a pandemic. Other companies have also benefited from this push, including AMC Entertainment Holdings (AMC), BlackBerry (BB), Nokia (NOK), Express (EXPR), and more.Īny significant increase in demand for a stock tends to push the price up, but there was an extra factor in this case. GameStop (GME) stock has risen by over 1,350% during the last month, driven in large part by the WallStreetBets subreddit. Over the last week, the Reddit forum WallStreetBets has helped push stocks like GME (GameStop) to new highs The company claims the change was made due to ongoing volatility.Īs we noted yesterday, GME was one of several stocks whose value shot up when a bunch of Reddit users entered into a coordinated buying spree. Popular stock trading app Robinhood has responded to the GameStop (GME) craziness by allowing users to sell GME, but not buy it.

Sell on robinhood app