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GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained

Release Date: 01/31/2021

Mag 7 Valuation Gap Closes | Netscape Redux? | 32 NHL Team ETFs? | VIX Seasonality Setup

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Derek Moore is joined by Mike Snyder and Shane Skinner this week to talk about how valuations of the top stocks now have shrunk to those of the overall market, while tech and other Mag7 stocks valuations have come down while earnings expectations are up. Plus, record short positioning in Nasdaq-100 futures, gold fund flows picking back up, VIX seasonality heading into the autumn, and a filing for 32 NHL team ETFs. All that and more this week. The forward P/E of the largest 10 S&P 500 companies has converged with the other 490. J.P. Morgan data shows the top 10 near 19.8x...

Bad News is Good News? | SpaceX Shares Unlock Angle | Fed Hikes Off the Table? | There Aren’t 10% Pre-Tax US Treasuries

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Derek Moore is joined by Mike Snyder and Shane Skinner this week to talk about a jobs report the market read as bad news is good news: payrolls up just 23,000 versus 80,000 expected, the prior two months revised down by 103,000, and participation slipping to 61.4%, the lowest since February 2021, even as unemployment fell to 4.1%. Daniel Lacalle argues the Fed is already weighing on the labor market, yet overnight index swaps still price about 1.7 hikes by mid-2027 — so are hikes really off the table? Plus, the US Dollar Index breakout, why there aren't 10% pre-tax US Treasuries, and how the...

Warsh’s Fed Lets the Market Decide | SpaceX Earnings | Apple Sells Off | Payout Ratios Falling for Mag 7 | Earnings Surprises and Semiconductor Volatility

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Derek Moore is joined by Mike Snyder and Shane Skinner this week to talk about the market tape defined by two things happening at once: a violent volatility shock concentrated in semiconductors, and an earnings season that is quietly the strongest in years. The Leopold liquidation drove SOX single-stock volatility to 75% much higher than the S&P 500 Index in general. With 305 of 498 S&P 500 companies reported for Q2 2026, sales are beating by 3.1% and earnings by 31.1%, and forward EPS is modeled to climb from trailing 294 per share to 374 per share, pulling the index P/E from 25.4...

Mag 7 Cap Ex Problem? | SpaceX vs Tesla | Earnings Implied Volatility AAPL vs MSFT | Lots of Dispersion in the S&P 500

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Derek Moore is joined by Mike Snyder and Shane Skinner this week to talk about whether the Mag 7 companies have a free cash flow problem compared to historical payout ratios. Then, they look at the relationship in price action between SpaceX and Tesla. Later, what does the options market say about next week’s Apple and Microsoft earnings reports? Oh yea, they touch on Strategy changing how it calculates the preferred STRC Sharp ratio, the US Dollar Index breaking out, oil prices, and much more. Do Mag 7 companies have a free cash flow problem? Comparing Mag 7 payout ratios to...

Apple Sues OpenAI | SpaceX Back to Earth | Memory Stocks Dip

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Derek Moore is joined by Mike Snyder and Shane Skinner to discuss SpaceX now being below its IPO price and whether it can grow into its current value. Plus, Apple sues OpenAI as the stock continues to run into earnings. Later, did anything fundamentally change with the memory stocks like Micron or people just don’t want to be the last out. Finally, the Strait of Hormuz didn’t matter to markets until the market decided it mattered again. Apple sues OpenAI Micron and the memory stocks dip again Trading behavior psychology losing hurt more than winning feels good? Strait of Hormuz...

Fed Inflation Task Force | Free Cash Flow Hyperscalers vs Semiconductors | Head and Shoulders Crude Oil | Earnings Season Kicks Off | Anthropic S-1 Wait

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Derek Moore is joined by Mike Snyder and Shane Skinner, looking at the Fed Task force and what that means for how the Fed evaluates inflation data. Plus, Anthropic is the S-1 everyone is waiting for. Later, they talk through a classic head and shoulders pattern than played out in WTI Oil charts, Fed probability of interest rate changes, Fed Minutes, and the generational exchange of free cash flow from hyperscalers to Semiconductor companies. All this and more this week. The Fed's new Inflation Task Force and what it means for how the Fed evaluates inflation data Anthropic: the S-1...

Memory Stocks Pause | Fed May Do What No One Thinks | US Dollar Strength | Crude Oil Prices Done? | Bitcoin Recession

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Derek Moore is joined by Mike Snyder and Shane Skinner to get into markets including whether the memory stock run (including Micron) is over or just taking a pause. Then, they look at the strength of the US Dollar and whether that is a major headwind while oil prices seem like they are done worrying about the Strait of Hormuz. Later, the case for and against the Fed LOWERING rates this year vs the consensus view that they need to tighten. Oh yeah, and they get Derek talking again about Bitcoin and Strategy, the resilient employment numbers, ISM prices paid are dropping, and market seasonality....

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Derek Moore is joined by Mike Snyder and Shane Skinner this week where they’ll discuss Micron’s earnings announcement and subsequent stock price changes and free cash flow. Is that where all the hyperscalers cash is heading? Plus, the latest geo-political goings on including tracking the number of tankers in the Strait of Hormuz. Are the Fed dot plot predictions (expectations) really as useless as they same? Don’t forget the guys got Derek talking about Bitcoin and Strategy again. Finally, looking at some bull and bear cases for the equity markets. What are the Hyperscalers? Strait of...

Kevin Warsh Fed | Economy Better than Thought? | SpaceX Option Volatility | Strategy STRC Preferred Dips

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Derek Moore is joined by Mike Snyder and Shane Skinner this week to get into the post Kevin Warsh Fed Presser reaction. Plus, leading economic indicators (LEI) are turning bullish? Then, they talk about the options action in SpaceX including how high is the implied volatility. Odds and ends this week include discussion on MicroStrategy’s preferred STRC has dropped below its par value. SpaceX implied volatility in its options Kevin Warsh FED press conference Kevin Warsh says no dot for you! LEI leading economic indicator MicroStrategy (Strategy) preferred issue #STRC Difference between...

SpaceX Day 1 Trading | Oil Going Lower? | SpaceX Expected Options Volatility | Inflation Hype | 2 Day Correction?

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Derek Moore is joined by Mike Snyder to discuss some wild SpaceX price predictions and review day 1 of trading. Then, they discuss what the implied volatility and options pricing will be like once SpaceX options are available. Then they make the case that oil has seen its peak and the bull and bear case going forward. Later, they look at the 2-day correction before the markets decided none of the things that mattered matter anymore. SpaceX day one price and predictions going forward SpaceX options coming next week Implied volatility expectations for SpaceX options Is the correction...

More Episodes

The Wall Street Bets community executed a short squeeze through Reddit on stocks like GameStop and AMC Theatres this week. But what is a short squeeze? How did they and others buying stocks and options cause the stock to go up at least in the short term? Is short selling bad? Why potentially some brokers had to halt trading in certain names? A look back to the late nineties when internet chat rooms were pushing stocks. Examples of the little investor turning thousands into millions, and vice versa. How short sellers can root out fraud in companies with examples. Jay Pestrichelli and Derek Moore get into this and more in this very timely and fascinating episode.

What is a short squeeze?

What is the GameStop short squeeze?

How did Reddit group Wall Street Bets execute a short squeeze?

How some people have made a lot of money

How other people may lose a lot of money?

What is short interest ratio?

What is short interest as percent of float?

What is a delta or gamma squeeze in options on stocks?

Large in the money option open interest in GameStop at expiration

How short selling adds liquidity.

What are short days to cover metric?

Short sellers uncovering fraud in Amazon Prime documentary the China Hustle.

Short sellers with Enron, Nikola, Wirecard

Trading halts and liquidity requirements on brokerages

Congressional hearings coming on Robin Hood and Wall Street Bets GameStop activity

Examples of pump and dump in 2000 by Michael Lewis in New York Times

Short selling was found useful even in 1918.

How short selling in itself does not bankrupt companies.

How short selling that drives price lower can impact ability for secondary equity offering.

Mentioned in this Episode:

Explaining Delta and Gamma Options Squeeze Robinhood vs Softbank Whale https://brokenpiechart.libsyn.com/robinhood-option-traders-vs-the-softbank-whale

Derek Moore’s Book Broken Pie Chart https://amzn.to/2YoxRaF

Documentary “The China Hustle” on Amazon Prime Video https://amzn.to/39uBJgm

Michael Lewis article on 16-year-old penny stock trader 2001 https://www.nytimes.com/2001/02/25/magazine/jonathan-lebed-s-extracurricular-activities.html

ZEGA Financial www.zegafinancial.com

Jay Pestrichelli’s Buy and Hedge Book on Amazon https://amzn.to/2YoJDSg

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