Quick little DD because I don’t have a ton of time.https://i.redd.it/dan0o6wdwtyc1.gif Hello there again, I’m that dumb Marine that posts on here now in third person because it made someone mad so I told him I would now title all my DDs in the 3rd person. Nothing I say on here is Financial Advice I’m just trying to share with you information and don’t listen to someone who eats crayons. I’m of the opinion that if you understand why things happen, they aren’t as scary anymore. https://i.redd.it/xb0bqe6iwtyc1.gif Most people said last week was super unusual. We were SUPER bullish and this was MOASS…..so why did we going down so much this morning?I believe in being pragmatic. Not everything is a crime and somethings can be explained when you understand how the market works. I’m in GameStop because I think it’s a super interesting stock to watch because after 20 years of investing / it just acts SUPER weird sometimes. This interests me because it’s not the norm. The companies fundamentals have been slowly improving. It trades much higher than a traditional evaluation would support but I’ve never seen a stock where 25% of the company has been put into DRS with a transfer agent. I was the guy who said I’m in GameStop because I believe in the old adage, “Fuck around and find out”. Wall Street has said this company has no value, and retail investors said, yes it does. Both sides are dug in and I’m betting on Retail to outlast the shorts.I’m hoping Ryan Cohen and team have a real plan. I think it was critical that they reduced costs and going profitable for the first time since 2018 is a good first step. I do believe still that retail MUST support the website / stores. This means people shop in GME as a first option because it supports your investment. Ok, I’m going to do something EVERYONE hates!!! I’m going to talk about the Options Chains to explain to you what happened this morning……but realize I’m only doing it to explain WHY the share price went down.Take a deep breath and let’s dive in……… Credit to FrankdaTank1 for providing me with these data points from UWs. Frankdatank1 Provided me with these One of the Whales took profit on the $10 dollar Calls that were deep in the money.Deep ITM (In The Money) means that the share price was much higher than the current price. So this Whale had bought a bunch of $10 dollar calls or near the money roughly 2 weeks ago. They also loaded up $12 dollar calls as well. Today, this Whale sold all the $10 dollar calls when it was above $16/$17.This was followed by the MM dehedging all those shares that were ITM at $10 dollars. This was followed up by someone selling over 3k contracts @ $15 dollar Call strikes mins later and taking profits. Then that leads to a lot of retail/whoever taking profits or cutting losses when the price was falling. Basically at the high of the day, they took profits and the price tanked as the MM (Market Makers) started to dehedge all these ITM calls. Some people appear to have also stacked some puts as well. This means as the price is falling, the MM needs to sell shares onto the market to hedge for the Puts going ITM. https://i.redd.it/prtn6obi2uyc1.gif Almost done…….I’m not saying the run is over but I’m explaining the drop. In fact I think we stay in the $12 to $16 range for couple of days and see if we get a major spike again.Obviously I’d love to see it just run to the moon but I’m trying to be grounded just presenting facts.**Edit: There was a spike of buying of call buying when I was in a meeting at work. Someone dropped a $1.7m order 17C 5/17 when the stock hit $13 dollars. **Edit 2: Someone is stacking a lot of Calls like 16k of them at $34 dollars for next week. This is possibly playing a massive IV spike or it could be someone shorting so they buy some cheap Calls as locates for shorting. https://i.redd.it/ygek1cq83uyc1.gif The Problem with Options with Retail.*I know some of you want to burn me at the stake…..but I’m really just explaining how much options effect the share price. I’m not pushing for people to play options and I’ll explain the problem with Options with Retail traders.* Most of Retail are poors like many of us. We don’t have hundreds of thousands of dollars laying around. So options that would be smart for us to play, we can’t afford. Many of us watched for years people on WSBs yoloing stupid amounts of risk / money on short term trades. People wiped their entire life savings doing that. The problem with options is most retail can’t afford safe / reasonable options contracts if the IV is high. This causes them to yolo into short dated expiries where the Theta monster will eat you alive. (Some of you know exactly what I’m talking about you degens) There is safer ways to play options but I’m not advocating for teaching them. Personally, I have LEAPs for 2025 and 2026 which are near the money / ITM (In the money). Those the only calls, I really feel comfortable playing on GME and I use Cash Secure Puts (Bullish) meaning I’ll buy the shares if the price goes lower than my strike. They pay me cash each week and sometimes you get assigned like mine did at $10.50 weeks ago because I committed to buying them at that set price. Looking pretty smart now that I got paid to average down. My point is that we do need to pay attention to the options chains to see what Smart / Whales are doing. I don’t think most retail traders unless you understand options should be trading them. Most people lose unless you know what you are doing. But to sum it up, I think this run was random because it wasn’t based off any catalyst. I watch over the weeks the options got slowly stacked then a couple of large orders came in. This mainly was because the IV was pretty low on GameStop and the MM (Market Maker) was being forced to buy shares from the market. https://i.redd.it/3ojzwkvi6uyc1.gif You want a silver lining? Here we go……I post this often but it’s important to understand cycles. GameStop has been getting hammered down for a while.Why? I’d argue as someone pretty pragmatic that because the company was burning through over -300 million in cash in 2021 and 2022 respectively that would contribute to the decline. The company was not profitable and revenue had been shrinking (Due to store closures, restocking inventory, expenses for the NFT market place, overpaying C level executives who weren’t delivering the turn around on the the expected timelines) would be the the main reasons. However, since we aren’t over paying a CEO, wound down the NFT marketplace, shut down some facilities, and just overall have reduced a lot of overhead. The company with it’s TTM went profitable for the first time since 2018. So the company still has 1 billion in cash with much lower overhead and it’s been 3 years of shorts pushing the price closer to what the fundamentals say it’s worth, the question is……..what do you do for a company who’s slowly turning it around who just stopped the bleeding cash but still has a large war chest of over a billion dollars in cash sitting there? Bankruptcy is looking like it’s off the table at this point. So at what point, do you close and how do you do it? Wyckoff:Here is APPL back in 2009. You have strong selling pressure into an Automatic Rally then downward pressure before hitting a new low then double bottoming (I’ll note that GME has already double bottomed at like $10 if you go back on the daily chart). Then you trade in a range for months until they have slowly shaken the tree trying to buy in at the lowest they can. I think shorts and everyone wants to see how Q1 goes and Q2 go before they decide what their plan is going to be.This means that shopping at GameStop this year is critical because it fits the timeline. This means it can chop in this range for a couple more months before a breakout occurs. This would be likely that shorts would slowly start stacking calls and selling puts so they can maximize profits. My thesis that GME chops around and is going through a slow Wyckoff accumulation cycle which means it can go up or down. But this would be in a channel similar to the ones I posted above. We don’t know if $10 was the spring test or if it could be coming up.I’ll keep watching things and updating you all. I’m still digging around XRT but I got distracted last week by the price action. I’ll get back on it this week. submitted by /u/anonfthehfs to r/Superstonk |