Reddit’s WallStreetBets is just another Ponzi Scheme designed to rev up and take advantage of unsuspecting investors. This scheme has been around forever in different forms with the same goal: capitalizing on the fear and greed of investors.

Like the Dolly Parton song, Here we go again. As we all witnessed last week, the squeeze in GameStop (GME) and AMC Theatres (AMC). GME went from 80.00 per share to 483 before settling the week at 325. The Implied Volatility is over 800% implying a move this week of 400 Plus or Minus. AMC was similar going from 4.00 per share to 20.00 before settling at 13.26. AMC volatility implies a move this week of over 700% of 13.00.

The absurdity of these two moves is incredible. First, looking at GME which is a brick-and-mortar retailer selling products that no one uses anymore. GME is a huge favorite to go out of business. AMC which has few movies and less patrons coming and is in financial trouble. However, short squeezes cause the shorts to scramble, they will pay anything to get out.

The most important thing to understand is who is behind all of this and what is their motive. We know that it’s Reddit’s WallStreetBets. We have no idea what they are creating, but things to consider are simple, are they front running? Are they intentionally creating this action to profit? Are they honestly reporting on conditions with no financial interest? We do not have those answers yet, however, you can bet it will come out.

The new rumor is in Silver, which will be a much tougher task. First let us cover the shorts. SLV carries an 11% short interest compared to GME 147%. Short-squeezing a stock with short interest of 140% is one thing, but short-squeezing a physical commodity where market-ready stockpiles are 3 times average daily futures volume is another. Comex Silver Futures short interest has fallen 26% from a year ago.

Can a major squeeze be created here, of course the answer is yes, but the odds of the moves as compared to GME and AMC are almost impossible. We as investors always must be diligent in how and what we trade at the same time ignoring the news. We know one thing for sure Trade the News and you lose.  

Todd Horwitz Chief Strategist
Stop being a prophet and make profits

On Monday nights I do a strategy call, tonight Andy Hecht and myself are going to discuss the short squeeze in GME as well as the much talked about upcoming short squeeze in Silver. You are invited to this webinar just register below.

Monday Night Strategy Call 5:00 EST

We have also included a registration link for session 4 on Saturday February 6th at Noon EST

2021-02-06 Options Training Session 4 Register here