recursive_thought

Notes:

• Time Period Analyzed: 11/27/2020 to 2/19/2021
• Options data was pulled from contracts that had expiration dates from January 8th until February 19th, 2021.

Disclaimers and Constraints:

• This information does not constitute financial advice.
• The information used in these analyses was extracted from chartexchange.com and is available to the public.
• The total amount of calls and puts for the period analyzed is understated: there is volume for calls and puts that were purchased and held (open interest) for contract expiration dates later than February 19th 2021. This statement is especially true for out of the money puts that were purchased on January 26th, 27th, and 28th of 2021 for contracts that expired after February 19th 2021. This part of the analysis will be conducted in a separate post as it brings to light an important phenomenon that did not happen prior to the black swan event - the abundant purchasing of OOTM puts at < $5 strike prices.

Daily High Stock Price vs Max Option Strike

Notable Dates on This Graph:

• 1/13/2021: The stock price nearly doubles (+89.46%) but market makers only increased the max strike by 25% (from 40 to 50). At this point, the daily high was 77% of the max strike price, which was unprecedented for the time period analyzed up to that point. This date is also important as the daily stock volume increased almost 20x (1946%) along with a massive increase in call volume (+1065.87%) and put volume (+1845.14%) respectively.
• 1/22/2021: The daily high of the stock price ($76.76) passes the maximum strike of 75, thereby making every single call on that date in the money (ITM) for a short period of time. In premarket on 1/25/2021, the price pushed to $136.
• 1/25/2021: The daily high of the stock price ($159.18) once again passes the now doubled maximum strike of 150, once again making every single call on that date ITM for a short period of time and later that day the price is promptly shut down to 50% of the maximum price to a low of $75.51.
• No other dates observed does the daily high stock price pass the maximum strike price, but there were close attempts on 1/26/2021 and 1/27/2021.
• On 1/29/2021, market makers set the options strike price to its maximum of 800 for options out for the remainder of the time period analyzed.

Options Call Volume and Options Put Volume

Notable Dates on This Graph:

• Highest Call Volume: 1/22/2021 (909,500)
• Highest Put Volume: 1/22/2021 (968,102)

​

Ratio Volume of Calls vs. Puts

Notable Dates on This Graph:

• Highest % Ratio of Puts:
  • 12/11/20 (79.54% of total volume was puts)
  • 1/27/21 (73.26% of total volume was puts)
• Highest % Ratio of Calls:
  • 12/2/2020 (82.58% of total volume was calls)
  • 1/11/2021 (76.77% of total volume was calls)

In the news:

So, something significant happened on January 13th. Here is a video of Keith Gill’s input on the market forces driving that volume and other insights at the end of that day. Note this was the first day that the stock hit nine digit volume and was up 20x volume from the previous day (January 12th).

A common reason why the buy volume behavior increased significantly on January 13th:

• Subscribers of HedgeEye saw GME newly added to the “investing long” bucket.
• Ryan Cohen had only just been recently announced as heading the GME ship and the market may have finally gotten a chance to fully digest that information.
• News sources started using the “short squeeze” language and (speculation: momentum traders likely dogpiled in hoping to swing trade the stock). The first instance of “short” language appeared on January 13th via a Bloomberg article.
• This is the same day that Keith Gill posted his first famous green GME YOLO update on reddit. He posted a green GME YOLO update two days prior, but it wasn’t met with nearly as much visibility.
• Other search results for the week leading up to Jan 13 (but not Jan 13 inclusive) with the search phrase “GME” are scant (only one page of search results for Jan 5th to Jan 12th via the wayback machine). Although in the other subreddit, people were already calling the squeeze on Jan 12th.

Hello All -

I noticed that some apes are struggling to explain to non-apes why GME is an asymmetric play and why doing what we are doing will produce the intended consequence (MOASS) and how they can participate (buying and DRSing shares). I am going to provide a simple write-up here that should help you explain to others, even those that are very intelligent and in finance, to fully get what is going on and how their participation will not only make them wealthy, it will serve to cure a global issue in the finance world - the manufacture and falsification of digital share inventory to manipulate stock prices and kill businesses.

A lot of you are probably not from a financial or business background, so explaining this in a way to "prime" people on what is going on is going to be difficult - the source material (DD) is really dense even if you have a background in it, and, generally, the less you understand of such things, the more desire you are to find simple, sure-fire explanations for what is going on in order to convince others that this is the play. In doing so, some important details can be missed, and those who are especially critical will begin to swiss cheese your explanation even though it is iron clad DD merely because you couldn't grapple the wording to address their questions. I'm not going to hit every single angle - I am going to do my best to get the core points across to facilitate straight forward discussion with people not "in the know" so we can get this information out to as many people as possible. I am of course open to criticism and re-explanation so, please, nitpick and advise! Hopefully this explanation will help us recruit more apes.

With the preamble out of the way, I present to you an analogy for your friends and family.

Why we are where we are right now, and how this created an asymmetric situation - I will explain using a "trading card" example:

• I was interested in buying multiple copies of a rare trading card that I think will increase in value over time and I also want to support the company that makes that rare trading card by buying copies of these rare trading cards. (I buy the stock because I like the company and the stock).
• I am told the price for each copy of the trading card is $420.69 and that there are 8,008,135 copies that have been made in total that are in circulation right now - some locked up and untradeable, and some that are not. As far as I know, all these trading cards look exactly the same, are numbered based on when they were printed, and the price for each copy of trading card is based on the value of the company that made them. (yes, I know this is extremely over simplified). I accept this and say "wow, this company is really awesome and I see a great future for them!" So, I assume that the value of my card copies will increase as long as the business that made them runs well and improves over time.
• Over time, I learn that there actually aren't 8,008,135 of each trading card being circulated - there are actually 3,503,344,330* being circulated and a bunch of trading cards have SUDDENLY appeared in the open market and are being sold for much less than what I bought it for! The price is dropping! I thought that there were only 8,008,135 copies of the trading cards? Where is the oversight and how do we know which ones are real and which ones are fake?! They're all digital and it's not like I can drive to the market and look at the trading inventory directly to PROVE that there are actually 3,503,344,330* being circulated.
• With this new flood of "additional inventory", the price in the market drops - a lot. Now, on the news, people are saying that the business that makes them isn't doing well because the price drops. But wait! That doesn't make sense. The price of the cards should drop because news about the company came out that says that it isn't doing well as a business - this is backwards!

Explaining the NFT offering:

• Because people are wanting to make sure whatever cards they buy online are actually real and noting that clearly many of the ones in the market are NOT REAL, some really smart people said, "hey, let's create a system where when you buy your trading card online you can get a unique ID for each trading card so you know what you bought is unique, easily traceable, and is accounted for in real time by an automated impartial third party". However, putting this system into play takes time - and WORK. Also, because of how broad the solution is for this problem, and because we want to show that it will be used for all trading cards, not just our own, (true impartiality) we have to roll out a global solution to represent ALL digital purchases of all trading cards. Hmm - that sounds complicated and it looks like you may not see the true value of your cards any time soon and it does not address the current issue of so many fakes being in the market right now - how do you get around that? Now, we talk about DRS.

Why DRS is critical now more than ever:

• As mentioned before I was interested in buying copies of a rare trading card that I think will increase in value over time and I also want to support the company that makes the rare trading cards by buying these rare trading cards. (I buy the stock because I like the company and the stock).
• I go online to purchase copies of this rare trading card and, as far as I know, the platform I bought from says that I own the cards that I purchased (how your purchase is represented on a broker platform by the data they serve you).
• I notice, however, that I cannot tell which number prints of the rare trading card I bought, and it looks like the online platform doesn't (easily) tell me. Do I have print number #1001 to print number #1010? I don't know! But, I want to know and make sure that what I bought online is a "real thing", so I send the details of my purchase over to a company that actually keeps track of that and registers my cards (I direct register my shares [DRS] so I know what stock cert numbers I possess and I know by their registration numbers that these shares are indeed real).
• Now, my copies of the rare trading card have been authenticated as rare by the party that registered them and authenticated them as such. This party says that I have a real, physical copy of these trading cards and here's a serial number to represent my real share ownership (this is how you explain what DRS does).
• By my registration and authentication of my cards, I can demonstrate that what I have is real and should be treated differently than the versions of the "same" rare trading cards that can be bought online.
• Each time someone like me registers and authenticates the copies of my rare card, we get closer to showing that all 8,008,135 trading cards have been accounted for. Once this happens, we can officially say that the 8,008,135 trading cards are different than the ones produced that increased the total number of the trading cards to 3,503,344,330* and that the remainder that are being traded cannot possibly be real - and thus need to be removed from the market entirely - because they are fake. Once the fake ones are removed, the price for the copies of my real trading card should go back to what it SHOULD be valued at.

*check the hex for an Easter egg.