A 'call' option gives the buyer the right - but not the obligation - to buy a security, such as a share or a bond, at a specified price on a specified date.A 'put' option, similarly, gives the buyer the right - but not the obligation - to sell a security at a specified price and on a specified date.
That way, should the option be exercised, the broker will be able to deliver the shares at the price and on the date specified.What has generated the explosion in the share price in this instance, however, is an additional factor - which is that Gamestop had been the target of a number of 'short sellers'.These are investors who bet on a fall in the price of a particular security such as a stock or a bond.
Accordingly, when Gamestop's share price rose as those who had sold call options bought shares in the company to protect their position, some short-sellers realised they would need to do likewise.The shorts were forced into buying the shares as well - squeezing the price higher.What prompted these investors to look at Gamestop in the first place?
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
People are watching The Big Short to try and understand the Gamestop sagaComedy film starring Christian Bale, Ryan Gosling, Steve Carrell and Brad Pitt tackled the financial dealings of the 2007-2008 US market crash The short squeeze relates more to herd behavior rather than betting for a dodgy financial instrument to fail. Good movie though.
Source: The Independent - 🏆 80. / 59 Read more »
GameStop short squeeze - will it happen again? Investors urged to 'approach with caution'GAMESTOP was a company few expected to go through an investment rollercoaster but recent investor sentiment completely, albeit temporarily, turned the industry on its head. In a rebellious pushback against large hedge funds, retail investors decided to collectively take a stand and now that the dust has settled, many are wondering if there could be further rebellions down the line.
Source: Daily Express - 🏆 26. / 68 Read more »
Octopuses may have short dreams 'like small videoclips, or even gifs'Experts from Brazil who recorded video clips of the eight-legging animals dozing said that octopuses may have short dreams 'like small videoclips, or even gifs.'
Source: Daily Mail Online - 🏆 135. / 51 Read more »
Legoland is offering theme park short breaks from £30pp and kids go FREELEGOLAND has launched an early booking offer with theme park breaks from £30 per person – and kids get to go for free. The short break offer is available on selected dates between M…
Source: TheSun - 🏆 64. / 61 Read more »
Italian PM Giuseppe Conte to offer resignation after defection leaves his coalition short of majorityMr Conte will officially inform his cabinet he intends to resign at a meeting on Tuesday morning.
Source: SkyNews - 🏆 35. / 67 Read more »