I am an individual investor with a modest amount of money in the market, but have never used options trading myself because it's much easier (and safer, IMO) to buy high quality stocks that are undervalued and hold them long term than it is to try to time the rise and fall of prices accurately in the short term. I did notice that in my 401k, a mutual fund I was invested in took a decent sized fall last week, so I'm pretty sure it had something to do with this. But this is why smart investors diversify their holdings in many ways... different funds/stocks in different sectors, different markets, and hedging safely with hard assets that tend to rise in value as the markets/economy/dollar values fall (things like precious metals, select crypto assets, rare art, and, in more normal economic times, bonds). The fact that these hedge funds, supposedly led by smart investors, took such a huge chance by collectively shorting more shares of GameStop than existed speaks to tremendous greed, a total disregard for the safety of their investors, and intense disdain for the possibility that people outside the hedge fund crowd would be able to make them pay for it. Make no mistake, the fact that they had shorted more shares than existed was KNOWN by these guys when they did it, they just never dreamed that something like WallStreetBets could be organized enough to make them regret it. I find the whole story to be both sad and quite amusing at the same time. Also, make no mistake, this story is far from over... if investors on WallStreetBets hold their course (or even get more people on board thanks to all the media coverage), and the SEC or government doesn't step in to put a stop to trading that stock at some point, just the shorts on GameStop (not even mentioning the other stocks that are short more shares than are available that this group is targeting), could cost the hedge funds $60,000,000,000, or even much more, in losses... and make a lot of money for those holding on to their shares until the short squeeze drives the price of GameStop stock completely vertical (it could easily go far above $1000 per share). And if the Redditors are successful with driving the short squeeze of GameStop to the moon, the hedge funds better have gotten out of their oversized short positions on the other stocks (even if they have to take a loss), because the idea of being able to make a lot of money while at the same time teaching a lesson to greedy hedge funds is going to attract a bunch more people (shout out to the movie Trading Places lol) if it can be shown to really work... it's going to be an interesting week or two as all this plays out.
I definitely don't advocate joining in this little revenge story, both because it is, ultimately, about the "little guy" getting revenge on people that are perceived as having wronged us (whether true or not)-- and the Bible makes it clear that we are not to do that-- and also because there is a very real chance that this could end up very badly for the WallStreetBets crowd, and the hedge funds could win this little war... I'm not going to risk the money God has entrusted to me in something this speculative (see my comments above on smart investing).
Hope some of you find this post worth reading, and perhaps learn a little from it.
