@Overunder Re: If they do HOLD
Sorry, you don't really know much about how things work.
The truth is that most people do not, unless they are in the business.
Nothing is really going on in the dark.
The markets are really heavily regulated and its even easier to pick up on the cheats.
I mean its really easier w all of the data and now AI/ML to look at patterns of fraud.
Here's a good example. Robinhood for example ... free trades for the retail investor. (That would be you or I trading our own money.) The reason they can do this is that they are working w Citadel Securities... who also works with other brokerage houses to clear the trades and gets the data of the trade in real time before the trade hits the exchange.
Now Citadel Securities is handling the trade. They could do what is known as front running... that is to make a trade before for your trade to capture some of the potential profit. That is illegal and because of their position, CS is heavily monitored. Note while that sound ominous and hard to do... its not. The SEC knows every bid/ask and trade that goes thru CS so they could pick up on a pattern of illegal trades quickly.
What the Hedge Funds did is legal and well known. Its a highly leveraged practice because someone has to own the shares that the funds are shorting. Note that the companies than lend the shares will make trades to help offset the risk that they have.
When a Hedge fund is to leveraged and gets caught in a short squeeze, its not a good thing. (At least from their perspective.)
W.R.T Gamestop, the funds involved made a dangerous bet. If there is a sudden and large move in some of the options, along w stock being bought. The market can move against them and then it crumbles as they have to close out their short position. If no one is selling, the share prices go up.
The irony here is that there's more news on Gamestop and the reddit crew than when things like this happen all the time. I mean when people (retail investors) lost their shirts in Oil it really didn't make a lot of news.
To be clear, the SEC is going to investigate those on Reddit. However if you were not on Reddit and saw and did the same thing... it would be a totally legal trade and nothing to worry about.
If Elon Musk was liquid... (World's richest man has all of his money tied up in his companies...) He could easly wreak havoc.
With respect to Gamestop... the stock was around what ?$17.00 and driven down to $5.00.
If you look at the company's fundamentals, once the dust settles, $5.00 a share would be a good price to get in... They need to do a bit of restructuring but could be viable. Not everyone wants to download their games over the net, right? So a brick-n-click strategy could work.