Interview with Jason Strasser (on Gamestop)

Welcome everyone. This is episode 28 of the Brandon Adams podcast. I have with me Jason Strasser. Now Jason, this is the first number three. I've had a couple of other number twos, but you're my first number three and this came from groundswell popular demand. I'm honored. I love going on this podcast and it was certainly a crazy week and I feel like I feel like there's a lot of stuff going on on Twitter right now that a lot of debate that needs to happen and I'm excited to be here. Now you are a very mild manner guy, the most mild manner in the poker Twitter sphere. And I've noticed you're getting a little bit edgy because people are getting a lot of stuff wrong and you're eager to correct them is is my read correct. I don't edgy is the word, but like I for me it's like there's a lot of people that are that should know better that are spouting off stuff they don't know anything about. And you know big name Twitter personalities that are just just staying saying stuff that just like factually incorrect and I didn't come on this podcast to get any deep anyone else on Twitter, but it just bothered me that there's a whole bunch of stuff out there like people talking about market structure people talking about hedge funds people talking about short sellers people talking about all this stuff. I and just they're just wrong I don't know how to say conspiracy theories are everywhere and I just feel like yeah I just feel like the level of information that's told garbage is just really high right now it's my feeling so maybe edgy is fair but like I don't really care. Not many things set me off but like you're right like there was some stuff out there that really made me annoyed and it wasn't like attacking me but it was just wrong and I feel like I need to get cleared up. So the all in podcast which the poker world loves justify it's a great podcast we have to say. And and Chama is a fun personality he kind of has a tough role now because he's benefiting from engaged with conflict it's conflicted so it should probably be known that he's conflicted. But it's a good podcast however I know less than you and I noted a lot of things that they got terribly wrong in that podcast so I'm sure you noted many more things that they got terribly wrong maybe you could jump into it a little bit. Just just factual things that they got wrong like for instance you're a little bit on the on the idea of selling of water flow which is not great like there's been plenty written about it but it's not as bad as they. They think it is first of all to my company that he's taking public sells water flow that was the funny thing to me about that whole thing that so if I sells order flow so that struck me a strange that that would be like whatever Robin has doing so if I was doing with the same trades so that was weird. But backing up a second yeah like here's how you should think about it there's there's like as a customer who's trading you have two options if you retail you can go with a broker that's not selling your order flow and that's routing them to exchanges you know interactive brokers that's I think either all or majority what happens on interactive brokers right you put it in order interactive brokers routes into the market they try to get you the best price. They're not getting paid for order flow they're just routing your order for you the other choice you have a consumer is payment for the flow and it's naive to think that so far or Robinhood are just going to have this gigantic stock trading business and not have any ways of making money right so back away a second like if anyone's offering you free anything in any world you should think about like what's actually happening. And as you said there are pros and there are cons of payment for order flow but I believe to moth called it front running or something like that and that's not what's happening with payment for order flow you know payment for a flow is very simple this you know sit it else virtues says Juan is the world whatever they pay for the right to route the order to where they're waiting and you know the stock market and the option market are very fragmented so they're waiting on the perfect exchange where they can take the other side of it and have the best economics because everything is going to be a good deal. And that's the best economics because every exchange has different rebate rules things like that so the high you know the sitels the world are paying for that rights route the order flow to where they're waiting that's not front running that might that might be good that might be bad there's a lot written on both sides of it you know the sort of like the reason why it might be good is that you know they can they can price things very tight relative to the markets because they're not worried about smart flow when they're dealing with the retail trader so they price things like tighter than you would like I personally would love to be able to do that. I personally would love to be able to trade on Robinhood and get those executions over and over and over again if I could I would but they don't let people like me on Robinhood because they don't want people to have bigger orders and going through there because they're giving very good prices on small tiny orders. On the other hand if you don't like what's going on on Robinhood you can just open up an interactive broker's account you can pay commission and you can trade those are the two options as a consumer and I just felt like whatever was happening on that pod characterizing payment for order flow is some front running and the evil thing just was kind of ridiculous. So maybe we should just jump straight into what started the whole debate like the the game stop blow up upside blow up whatever. So we get into the idea of margin accounts and changes in margin and settlement procedures and all that. If you want to we can lead into some of the history of short squeezes and how basically this past week was just what we've observed for the past year and a half really even pre COVID with the most speculative stocks running the fastest. So we're just taking to a level of absurdity. You know I look at what's happened you know when people started trading in March they all bought just like bought airlines and cruise ships and whatever and they bought all like the stuff that they thought would rebound from COVID and retail did extremely well like retail was the smartest investor in March you know they buy in large we're doing all the right things while hedge funds were taking down risk and things like that so that's me is one thing then then the next step was the solar e the solar e the you know nea like the Chinese auto electric vehicle Tesla solar part of that was by and winning but there was just massive momentum and all the sort of Kathy wood type names you know all the gene editing and all the stuff that were where the valuations are very open and question because if you're you know stocks of the future. So like it's kind of hard to argue about valuation for these stocks that are some people believe are just the future of the world so like it's kind of hard to put normal valuations on those that was like the second phase. Whatever is been happening recently is just different right this is a yeah there's speculative stocks but the you know six months ago Robinhood people weren't looking for heavily shorted companies to run out that was not what was happening right this was just different this was you know a very well orchestrated. You know short squeeze like we've seen in the past right you know we've seen till rego nuts we've seen Volkswagen go nuts like there's pigly wiggly people are putting funny tweets about this old short squeeze from the 20s on Twitter you know this was a old school short squeeze which was not what the retail in my opinion has been doing this is like a shift in their behavior and I think the game something reminds me of like when you play poker and like an amateur player like makes a really good move that's what game stop is like game stop was a perfect situation it was a $1 billion market cap insanely high short interest also a name that like people recognize and like there's some like familiarity to this crowd that was buying the stock. It was like the perfect storm and the truth is that whatever the wall she bets crew did in game stock it worked out extremely well you know they whatever they even if even if games up collapses tomorrow like I there's net net going to be a ton of winners because there were ton of hedge funds and other investors that have covered their stock in the hundred 300 whatever range and that money is going to largely you know a decent chunk of it not all that obviously there's a ton of institutional holders. You know I think it'd be fun for us to go through the math real quick because how I was going to ask you how many shares of game stock do you think are held by this crew because I was sort of running through the math like there's probably like five million accounts on Robinhood that have it or someone told me there was 60% of Robinhood accounts had one at least one share of GM and I think there's 12 to 13 million Robinhood accounts. So there's only 60 whatever million shares of GM me outstanding so like I know a lot of people have been putting like the holders on GM we know a lot of those holders have already sold out and a lot of the whole and we know the short interest has come down right so like short interest when this whole thing started was low 70 millions and is my prime brokers some prime brokers were sending out reports that is basically high forties on Thursday and there was more covering on Friday so call it like maybe yeah I think I think we were going to be really happy. Yeah I think I think we really should think about what the actual holders of GM are right now but I think Robinhood owns like half. So long story short they've made a ton of money they've done a great trade the absolutely squeezed out real investors and I don't know what else to say about it like it was a very well executed. included short squeeze. - There, so just for listeners point of view, there are insane mechanics that go into short selling. If you're interested, there's an old paper that still holds up called The Market for Barrow and Stock by Gene Devolio. It's about 100 pages, but it goes through all the mechanics. There are some weird aspects of short selling. One of the weird aspects is that if you start from a position of zero percent short interest, and then you have, say, one percent, say, I only 1 percent of the shares, and I all, the sudden, put my shares out for borrow. And Jason, Jason borrowers them to short them. He's selling them to a new buyer who now owns the shares just as surely in his own mind as I own the shares. So there's now 101 percent of the float long and 1 percent short. And so you get this weird aspect where, when you get a very high short interest of, say, 80 percent, you actually have 180 percent of the shares outstanding long and 80 percent short. It's counterintuitive, but that's the way it works. And what should never happen is for more than 100 percent of the shares outstanding to be short, because what should happen by the mechanics of the market is that if we're starting from a position of, say, zero short interest, I sell to Jason, or I allow Jason to borrow my shares, he sells them to someone else. When that person has my shares, the broker should know that those shares are on borrow from Jason, and he's not allowed to put those out for borrow. So there's no rehab application. There's no, in the terms of the financial crisis, it would be like naked short selling, selling without a clear borrow. There is, there should never be a case where the same shares are went out twice. And so there should never be a situation where more than 100 percent of the float is short. This is a situation I don't understand exactly with GameStop, but they're more than 100 percent short, right? Yeah, here's what I think happens. So you go get a short interest of the float. So you go get a short, Brandon's a hedge fund, you go get a short, you want a short GameStop, you go to a bank, you get a locate from a stock loan desk. So Goldman or whoever says here Brandon, you have a locate. Goldman is not like uniquely identifying that share as the one that you borrowed and sold in the market. They're not like linking and keeping track of that exact share. What Goldman is telling you is I can process this transaction. I can find the share. And if we need to settle this, I feel confident that I can find the shares. It doesn't. So I think what happens in GameStop is a lot of the holders in GameStop where people that were lending out shares. And it was a stock loan desk looked at the pool. And they didn't see anything that would scare them. I think it's telling that I haven't lost my locate in GMME at all this week. And I think that's not just me. That's the street wide. And it's crazy. And if you look at Tillray or Volkswagen or one of the insane short squeezes, there was no borrow available in those spots. But for whatever reason, when people are looking at the pool, and you have to remember Robin Hood, Lens out shares. Robin Hood takes the shares and lends them out. That's one of their profit centers at Robin Hood. So when when you get heavy retail concentration of stocks, it doesn't necessarily where where stuff gets really tight is when you have the Volkswagen pour situation and pours on to ton of Volkswagen and says, I'm not lending that out. Then the bar goes crazy. Or Tillray, where you have insiders who can't sell or or you know, that kind of thing, who people aren't lending out. But retail people owning stocks is actually generally good for the lending ecosystem. So I think part of what's happened in Gamstopp is even as the shares have gone. First of all, there's been a lot of short covering. I was reading online that there hasn't been a lot, you know, at least 40% of my opinion of the shares have been covered so far. But I think when stock loans looking at it, they never felt uncomfortable with the amount of shares that were available to be located. So they kept giving locates out locates out locates out obviously your point is correct. They shouldn't be giving out locates because if everyone called it at the same time, it would just break. But the way the stock one just actually worked, let's say the locates started to dry up. Then they would go to the people that are short and say, hey, you got to buy this back. And that's kind of what would have happened. If the stock loan people started getting nervous because of the supply and demand situation in the lending world, then then you would have seen that. This is not what's happened in GameStop. Like to my knowledge, this has not been like four spying in where the stock loan desk is saying, hey, you have to buy this now. And like, like I said, because of all the covering the last week, like the borrow is not a huge issue right now. I think retail clients are having trouble borrowing it, but I don't think it's a social clients having trouble borrowing. Oh, a random thing that I remember from the paper, the market for borrow and stock. And I'm pretty certain that this has changed because it's a, it's really about the terms and conditions. When you, when you sign the terms of conditions for Robinhood, they're pushing you into a margin account. And as part of the margin account. And so they're all able to wind out your shares and they're able to collect the fee from that. Second of all, technically, they own the shares. We'll get into this later. But technically, if they were to. To go into some negative equity situation somehow. I don't know how that would be, but that if they were, then you would, as a brokerageholder would be a creditor of rob, Robinhood. As you go, as you go deeper and deeper here, you're going to realize that stock loan. Like there's a lot of people that are whining about different things on Wall Street, being good or bad. Like stock loan is one of it is. It is an incredibly, let's just say shady area. There's a ton of money made in stock loan and it feels wrong. Do you know what I mean? Some guy bar, some guy buying game stop and then Robinhood lending it out and making huge profit off the lending and not sharing a dollar with the client. Doesn't that feel wrong? And do you know how many? It's essentially leads to three different types of holders of stock you have. You have one person whose view is so optimistic that they're willing to hold it. Despite getting nothing for lending it out. Another person who is a long who's willing to hold it, but only because they're getting a large bar of fee for. Right. And another set of people who are willing to pay a large bar of fee to short. So it's a strange equilibrium. It is. One thing that notice just pro tip, if you're ever long as stock on Robinhood, let's just say, and it's hard to borrow. The right move is to sell that stock and then get synthetically long with options. And what I'm not saying is buy calls, but if you buy calls, sell put the same strike. That's a long position that's going to look exactly the same as this basically your your entry into a forward contract at the expiration when you do that. And the economics of the bar will be priced in the option market. So like. Game stops hard because not many people have capital for 100 shares. I bet the average amount of shares people hold is two. So it doesn't really apply to game stop. But just in general, if you're an investor and you think your broker's screwing you on stock loan, you can always turn to the option market and create synthetically the same position. With the economics of the hard to ball price into the option. So basically buying it a discount to where the stock is today. So I think that for a lot of people who are sick of stock loan messing around with them, that's the way you fight it. As of the early 2000s, it was such a strange world that that the if your stock was special, if it had a high interest rate for borrow. And you happen to be long it in your brokerage account. You could actually get the money from winning out the stock if you called your broker and asked for it. But if you didn't say today, like interactive brokers, a lot of brokers have ways of getting that money. I'm not that I don't have I don't have my familiar with Robin Hood or others, but I do know for a fact there's just tens of millions of dollars a day. That is wasted like this. Actually much more than that, I guess. Where people who are long as stock is hard to borrow are not getting paid for just like the most way to comment sad. So I like to go into two things. One is settlement like the sort of two day standard settlement and how this possibly led to Robin Hood's issues that cause the stop and trading. The second part is what you think of the fact that obviously Robin Hood restricted trading on game stop on Thursday. That was very unpopular. But then on Friday afternoon, they restricted trading on a lot of different securities. This weekend, I haven't been on Twitter much this weekend, so I haven't seen comments on this, but I find it very interesting for Monday. Not just Robin Hood, but all of the major discount brokerages took a basket of about 45 of the most traffic stocks and a lot of this basket had a margin requirement of 30 to 70%. So I'm assuming that there's going to be a $500,000. I'm assuming that they're going to be quite rapidly putting it into effect on Monday, which could lead to disorder in the markets. A lot of times, if one broker changes, say a biotech stock from 50% margin to 100% margin, they'll give you a few days to work it out. But I'm imagining that this is coming from somewhere where they're trying to straighten the ship in shorter order. And I think this is gonna be insanely unpopular. I mean, people are gonna log into their broker to count on Monday. They're gonna have a big margin call and they're gonna call up and say, what happened? I was fine on Friday and the broker's gonna say, well, we just changed all of these margin requirements to 100%. You need to bring your account in speed by the end of the day. - Yeah, first of all, it's sad what happened. Like, whatever happened behind the scenes the last few days, it should never happen. Like, we can both agree that like, we should be in a fair market where if someone wants to buy a stock for whatever price they should be able to do it and it's sad what happened. Robinhood, I think, put out a blog post this weekend about this what happened and largely saying the same things that you're saying, which is that the DTCC, the clearing court basically raise margin requirements for them. I have no doubt that really happened because I don't think it's the first time this kind of thing has happened. Like, he pointed out before, like, there's a long history of stocks being extremely volatile and the clearing corporation raising margin requirements. I don't think there's ever been like this many retail brokers in one stock and one platform. I think Robinhood, it's kind of on them, honestly, because I do think they're with better playing could have avoided this. You know, for me, like, why weren't new accounts shut down like in the past week or something? Like, clearly there was way too much activity at their platform and the DTCC was not comfortable with the counterparty risk. But there are things that Robinhood could have done to reduce activity on their platform in advance. It just feels to me like, why are you able to open up a new account right now on Robinhood? If, you know, the issue is too much activity, right? Every time there's a trade, there's T plus two settlement. DTCC wants to, is worried, like, GameStop opens at $10 tomorrow. Okay, fine. How much money did Robinhood lose? Like, were they able to like avoid a big situation where they tried a margin call and lost a bunch of money, right? So they lost a bunch of money and they can't settle the trades. There's a, it could be very destabilizing or bad for the DTCC. So I get why the DTCC is raising margin requirements. On the same time, like, I feel like there are things Robinhood could have done. Obviously could have like closed new accounts earlier. They also could have had like, you know, it's tough. I think Robinhood's an $11 billion company and I heard that they needed like multiple, multiple billions to clear all these trades that have been happening the last week. So if they need multiple, multiple billions to clear all these trades, it's not like VC money is the money they need because VC is like, that's not the money they need. What they need is like a financial lender who understands the risk at Robinhood to write them, to loan them money on a short term to get through this. And I feel like they could have had that all set up. There's a ways they could have had access to liquidity. I know they borrowed money from a consortium of banks. I don't think it was quite enough. And I think you saw interactive brokers as we can come out saying that activity should be normal on Monday. But yeah, I mean, I don't know what to say about Robinhood. Like I feel like they let down their customers. - Well, the one thing that seems a little bit unique and worries him for Monday is that in a typical situation where you have margin requirements raised, I can just say anecdotally that it often causes the price to go down. For the obvious reason, like there's forced liquidation, if there's a forced distribution for a major broker, but what sort of should happen in financial theory terms is that the stock is trading at approximately the right price. And so if you have, let's just say major brokerages raise the discount to or raise the margin requirement to 100%. All those customers sell as they get their margin in order. But then everyone-- - I'm not familiar with what-- I'm not familiar with what Robinhood margin situation was in GME this week and where it is now. I thought it had been very high for not just like Friday. I thought they raised it earlier the week, but I'm not positive on that. - But what's new is that all the discount brokers took a list of the 40 most traffic stocks and made those 100%. - Yeah. - That's what's new. And so the concern would be that typically in such a situation, sort of the retail accounts would sell to get their margin in order and then other places recognized in the value would buy and the price would maybe go down a little bit. But in these cases, as you said, a lot of the longs are held in these accounts. And so as they liquidate who's taking the product and buying, it's hard to say. - I think one thing we should differentiate is that there's a lot of these stock shooting up now, but there's kind of a big difference between a lot of them. GME is in the bucket with Volkswagen and Tore in many ways, like more of a classic short squeeze, but not everything is going on quite like that. And I thought it was helpful. The way we think about it is we sort of group these pumps or squeezes into categories. You know, there's another stock squeezing right now, KOSS. It's like it was a microcaps company and now the stock's gonna up like 200 times or something like that. There's no short interest in this. So we have like, if you think about a stock that's being pumped, it doesn't have short interest. To me, that's a doge coin. That's what's happening here. It's like a crypto style pump, you know? Where basically like, you know, a whole mob floods into some alt coin or floods into some tiny stock with no short interest. And I feel like people who are familiar with crypto and familiar with trading have seen like how that works. You know, the first person that makes money, you know, you wanna try to sell before the last, you know, it's just a game of like, basically net zero. You know, the crowd is gonna be overall flat at the end of the day if the stock returns to previous levels. There's no thing like game stop where, game stop there's people that are covering at way higher prices and that's like money going to the other side. Whereas like a doge coin pump, there's just, it's a net zero game at the end of the day when it goes back to $1 or one center where a doge coin goes. The third one is even worse than doge coin for pumpers. And that's where there's real sellers when the things go up. So look at AMC, right? AMC went up, what happened? Company sold shares. Silverlake took their convert, converted into shares, sold shares. A bunch of people that owned equity because AMC has been diluting a lot of equity in the past year. A lot of those sellers came out and sold. So this is like the opposite of game stop, right? AMC pumps and what happens? Like people show up and sell. Nokia, the same way. Nokia, we saw it was one of these names that, you know, Dave Portano was pushing and other people were pushing. What happened? The stock goes up. What happens? All these European fund managers that are probably waiting to sell Nokia for the last thousand years, they finally get their pump, they move up. And all you saw is money being sold. So I feel like GME is a situation where there's money going into the pockets of the Wall Street Bet Group. They made money. AMC Nokia is the opposite. They are literally, it's a wealth transfer from Wall Street Bet's to Silverlake. From Wall Street Bet's to European fund managers. That's what you've seen here. And then you have the ones in the middle where the only people who are involved are the pumpers, KOSS, for example, that's just like a crypto altcoin. And what I wanted to communicate here is that I feel like what's happened is game stop work perfectly. And people are trying to, you see Silver, people are tweeting about Silverlake. American airlines went up for a crazy amount, pre-market and came back. People are trying to apply the same technique to that work in game stop to other places, where it's not a good, not a good poker strategy, or not a good hand to play, if you get what I'm saying. And I really hope that the people at Wall Street Bet's understand that they hit the jackpot with GME. And who knows how that's going to end. But just because it worked in GME, doesn't mean it's going to work everywhere else. And some of the other spots I've seen them try, to me, it looks like going all in blind every hand, basically. Well, OK, maybe you could talk a bit about the option writing ecosystem, because one thing that has happened with the Wall Street Bet's crew is that they do like punning options. I mean, this is a crew that gambles their faces off. Like they're really going-- I can verify that. --and they like options. And my take on it, you give me a new correct name. Basically, I think one of the things that we learned in March is that the option writing complex is basically an efficient complex that has a lot of capital. But there are some capital constraints. So in March, they were still willing to write options, but the big, the expected loss, which is always-- it's always incalculable, right? You never know what it is. But basically, it seemed like the big was very high if you did want to-- by options at that time. And when I'm speaking of big, obviously, if the implied volatility goes up, option prices are going up. But there's sort of another element to it. Maybe you could get into it where, if the option market maker is feeling capital constrained or they're playing defense a little bit, they're just sort of offering worse prices in general. The whole market is offering worse prices in a way where even after accounting for all of the grits, all of the possible variables, the person who's buying the option is still getting a slightly worse deal than they otherwise would have. They're paying a little bit more vague. Or another way to think about it, relative to the replicating portfolio, they're paying a little bit extra. And it seems like we went through this period in March where the option market making complex was liquidity constrained. And for various reasons over the course of the year, it never fully recovered. And so we find ourselves at a spot now where people are fired up about options, retail, people are fired up about options. But it might be one of the worst times ever for retail to buy options. I don't know if you're going to get it. Let's back up. So 2020 was the best year probably ever for these guys that market make options. Citadel securities, which is, again, there's a Citadel hedge fund. Citadel securities-- we can talk about it later if you want-- but there's Citadel securities, according to Bloomberg, made $6.7 billion last year. There's a huge number for them. I'm sure the other market makers, Suspohana is not public. But what you're hearing is if you knew what you were doing in that space last year was a great year, because there's just tons of activity, tons of volume. I think what's happening, especially in the last week, I think the Wall Street Bets crew needs to understand that what they're doing is not that sophisticated. It's not hard to see what's going on. And when these market makers, they're adjusting right now. So when they see the crowd pouring into these different options, the pricing is much, much, much higher than normal. I don't think it's like what you said, a liquidity thing. I think these guys are sitting on tons of cash and are totally fine. They're ready to go right now. They've had a banner 12 months. I don't think that ecosystem has been-- I mean, I get-- oh, I get-- maybe there's some crazy lost in game stop or something like that. But the ecosystem is very, very healthy right now. And I think what you're all that's happening is one that says, see this flow of volume come in. It's always like the weekly option, like a way out of the money call. They see that flow starting to happen. They just put the prices up and up and up. And the buyer just keeps buying regardless of the price. So whenever you have someone buying-- you have a lot of buying right now that's just not price sensitive at all. And in options that can be very, very, very costly. And I think if you look at the amount of money lost on options outside of game stop in the past three trading days, it would be some staggering number. Because people are buying these options, but they're not looking what implied wall it is. And the market makers know that. And so in the last week, I've never seen option prices like as high as I've seen in the last week. I mean, I trade crazy biotechs and crazy-- I've never seen anything like it before. And so-- but the Wall Street Bets Crew keeps buying them. And like I said before, it's going to end this private and badly. When the Wall Street Bets Crew-- let's just say that next week, Silver's kind of a tough example because global-- Yeah, you think they're going to cause a global-- I mean, like, here's-- you have to think about them as maybe like a $10 billion hedge fund in aggregate. Somewhere between a $10 and like a $30 billion hedge fund in aggregate, but one that uses leverage. So maybe they have like $5,200 billion of buying power or something like that. You and I both know in Silver, the kind of market we're talking about here. There are a lot of people that would look to sell their Silver up 15% for me. Let's just put it mildly, right? And just like in Nokia and just like in AMC. So yeah, I mean, I don't know what to say other than-- they just hit gin. And then they're trying it in other ways. And I'm skeptical. So let's just take the AMC example. Though as you say, it's a hard example because you have all this supply waiting in the wings. OK? Right. They decide to make an orchestrated by essentially on AMC. And they get together and basically crowd source a lot of option buying in AMC. And as you said, now the option market makers, they're reading Wall Street Bet. They're prepared for these things. So it's hard to catch them by surprise. But basically, they do catch them a bit by surprise. And option market makers are just taking it back by exactly how much volume is coming in. Every time someone from Wall Street Bet is taking a big order, the market maker is buying the replicating portfolio. It's basically bidding up the stock. And then if they really get caught off guard by the volumes, they've written all of these contracts to the early people on Wall Street Bet. And then they're shocked at how much more money comes later. And now there's a bit of a gamma squeeze because they have to, as the delta's increasing, they're having to buy more stock. And it's just bit, bit, bit, bit, bit. But what should happen, aside from the fact that you have the supply waiting on the wings from the sophisticated investors that hold a lot and love to see the price increase and sell, what should also happen is that this sort of gamma squeeze is not a one-way street. And it should be that as we get to expiration, assuming these are like overly levered speculators, they can't really take delivery come expiration whenever and most of the time is short dated. So let's just say it's last Friday or this coming Friday. And now it should kind of go the other way because they have to cash in their winning tickets, right? And that should be-- Yeah, yeah. And of course, if the stock starts going down, the people that sold the options have to sell stock also, because they bought stock to hedge against the calls. And then the stock goes down. Those calls are not in the money. They have to get rid of their hedge. So the gamma squeeze thing is real. It's like a real effect. We saw it with Tesla. We talked about it. I think last time I was here, it's a real, real effect. But as you pointed out, it goes both ways. And I think the key point here is that the options are being priced for the kinds of moves we're seeing now. It's different when the options are being priced like in a more normal type of environment. But these options are being priced very extreme right now. Stock moves up 50%. It's not surprising any one of these options sellers right now. They're being priced to move that kind of stuff. These stocks are being moved, price to be moving 50% a day or whatever. So the market is now pricing options to a point where they're very comfortable with the moves that are happening, largely speaking. And the wall she bets through keeps buying them. Tesla-- look at the options people are buying in Tesla, the one week stuff and whatever back in the day. These options are 30 times more expensive. We're talking about orders of magnitude different. And they still are buying them. And so yeah, like I said, I just think that big picture-- I hope the people that made a bunch of money in GameStop don't expect it to work in Silver, for example. And it might-- I mean, I have no idea what's going to happen in Silver. But like, I mean, there's a big difference between GameStop in Silver to put it wildly. Yeah. And so when you get this reversal of the gamma squeeze, like I'm basically, as people are cashing out their winning tickets on expiration day, we've seen examples where despite the expectation that as the speculators were going to be sort of cashing out their winning tickets in the stock might decline, you in fact have this group just gambling so furiously that they basically just take all the winnings and pilot into the next expiration. Right. So they don't go down. Right. That is like, how do you even explain that? Like, that's just-- Well, that's just what's happening. I mean, that's happening. Yeah, you're right. Like, the-- them selling their winners puts the stock down, them buying more auto tickets, pushes the stock up. So a lot of times you expect to see-- a lot of people I was reading, they thought Friday, GME would be down because of the effect. And of course, you saw not that happen. Yeah, I mean, there are just two forces pulling in different ways. If this crew continues just to buy out of the money options, it will be very supportive for stocks. And that's just how it works. Now, if they stop buying or they give up, you know, different. However, based on what you're saying, like in terms of the financial ecosystem, for them to shrink in size does not require these things going down because they're overpaying for option that just requires a little bit of chopping moves for a month or so. Yeah, I mean, not even a month or so. I mean, I think the psychology of GameStop is very interesting. it's like it's not really like like you know you're an expert. like it's not really like people are buying stocks not for reasons that it's gonna go up like they're buying stocks because You know, I think a lot of people are buying Jimmy because they want to be part of the Cause or you know, it's a cultural thing almost right this is not like rooted in like the stuff that you taught your kids at Harvard like this is This is something different Um, I think when you're trying to think about GME you should think about is more of a human psychology thing When is this crew gonna get bored? That's that's what the answer is right when is when is esteemed gonna run out like is it The thing is like if you buy GME today and you just go away for a year You know, it's very unlikely that um Yeah, just the history of these kinds of things. It's very unlikely that it's anywhere near the current stock price Um, I think the thing about GME also is we haven't heard from the company yet, right? So like that's the big other thing that's just looming out there is like in theory right economics wise If some companies sees it stock go up like this They should be We don't know I mean, they might like yeah, we don't know anything But all I'm saying is like just Like there's a lot of things that can happen Um, but I think trying to rationalize the people buying GME it's it's not like a normal situation It's much more this you should have a psychiatrist on here if you want to really dive into this because it's more about like the Mob mentality versus um because we saw the data from Citadel they put it out last week about Retail trading in GME and on Monday they were net buyers and Tuesday They were sellers and then of course when the Freeze happened they were small net sellers But last week the retail was baked in according to Citadel was A net neutral they weren't net buying or net selling Um, which I think is remarkable because these people have a lot of heart, you know like you think when the stock goes up this this much like I'm impressed by I'm impressed. I mean It's it's it's Not many times in history. Do you see people buy a stock for 30 and you go to 300 and and the group is just holding you know the diamond hands thing seems Like that's what's happening. It's actually very impressive and I and I think the future of the stock especially in your term is going to come down to the sort of collective psychology of that group and whatever the company does is the other variable In terms of the people being squeezed Obviously everyone like in your position sort of Taking positions are here they would love to know the status of the people being squeezed and it's I always think it's funny because people It seems like they trust what they hear about it, but if you're being squeezed you're always gonna lie about it and say that you're already out So like yeah I think the squeeze is over so of course you're always gonna lie about it and spread misinformation and say that you're already out But so so I I felt like people were quick to say are they're already out. They're already out like on my Yeah, of course they're already out sure. I'm sure so but But like do you but backing up what it's been do you have a grasp on the reality of like where well here's what happens right so okay Game stops at $4 and People are short Right, this is last year. They're short and now it's $350 right no matter how small you size that position If it's a 1% position right you're you're out of business so No matter how small you size that position there's just pain buying as you would know But what happens in this situation is there's a big difference between some of that short of the socket $10 and some of that short of the socket $200 or $300 right because What happens in these situations is that the short base gets Diverse right it was relatively concentrated before the squeeze and from what I'm hearing and now it's gonna be very short And the guy shorting it at 200 is thinking well, okay, this is crazy. It might go to 500. It might go to a thousand But I eventually I just think you know 30 billion dollar valuation for like a pretty much struggling brick and mortar company. It's not has negative cash flow um or negative EBITDA I should say Uh, I think both um You know doesn't make any sense. So I do think what you've seen what you see in these not just GME just any short squeeze is that the short base Changes right there's a big difference between 50 million share short from from someone that short of the $4 and When it all turns over and the bunch of people are short around this price You know positions are obviously sized appropriately Rister understood So I do think that the sort of squeezingness of GME it can obviously still squeeze but I do think that you know some dynamics are in play which Normally in the spot comment down which is why when you see other shorts like till reg go up You see the same thing you see the short base get more diverse and that sort of takes the panic buyer away from the equation more For the the non decision maker the the right then exactly the force buyer who said right Right and I do think it's important month and um a lot of investors like hedge fund give a month and update to investors And the number one question that you're gonna get if you're a hedge fund and you're down this month Is what's your GME exposure was left, you know So I do think that part of what happened on friday Was people Shoring up that exposure they're gonna say hey listen we lost 10% but our GME is like manageable That's what they would need to say like it's very hard to send out that email like hey we lost 20% And yeah, we have this gigantic GME position is 30% of our of our fund, you know That's just very hard to write so I do think that was in play on friday Well, man, this was uh This was a beautiful summary I really all right. I think I think what I'd like to do is um Give it to you for review tonight and we'll get it out in the morning so it doesn't become Oh try my best. I try my best. Yeah, it gives me as soon as you can All right, my man. All right. Thanks Brandon talk to you later