This is an automated archive made by the Lemmit Bot.
The original was posted on /r/Superstonk by /u/autistdd on 2025-12-06 01:39:50+00:00.
TL;DR: Shorts borrowed GME with āhealthy collateralā and used equity swaps (2015ā2020) to hedge rising prices without closing. The Jan 2021 squeeze came from gamma pressure, swap expirations, and forced collateral liquidations to buy GME in the open market. Now with swaps settling, hot options, strong fundamentals, and RCās warrants, JanāApr 2026 could rhyme. Not financial advice. Iām autistic :)
I wrote predicting GME rallies using 5-Year legacy mammoth volume windows which you can go checkout before reading this post. While reminding myself why I still hold GameStop, I fell into a rabbit holeāthis post explains it as simply as possible.
Jan 2016 to Dec 2020
ā¢ Between 2015 and 2020, shorts began accumulating significant short interest in GME, backed by other solid securities or cash as collateral. I suspect, popular equities like Meta, Nvidia, Apple, Google and Amazon, may be part of portfolios used as collateral.
ā¢ As GMEās outlook improved, shorts faced rising risk from increasing prices and borrow fees. To manage this, they entered equity swapsācontracts exchanging GMEās total return for fixed or floating payments.
ā¢ In these swaps, the short seller pays the bank the % gain or loss based on GMEās performance (more precisely, movement in notional value), while receiving a fixed rate (e.g., SOFR or LIBOR plus spread) in return.
ā¢ This structure helps short sellers offset borrowing costs & hedge without closing physical short positions, delaying forced buy-ins especially when GME became hard to borrow.
ā¢ I suspect banks accepted these swaps relying on the "healthy collateral" backing the shorts & trader creditworthiness, expecting the collateral equities to hold or increase in value.
ā¢ By 2020, GME fundamentals strengthened markedly, swap expiries approached, and options activity surged, increasing market volatility.
On Jan 2021
ā¢ I believe, the early 2021 short squeeze was mainly driven by lender collateral forced liquidations, options gamma, and high short interest. Retail participation was significant but not the primary driver, especially as broader markets declined while GME rose.
ā¢ This view is based on backtracking known facts (GME surge + Market decline) mixed with some speculation and personal interpretation of how events may have unfolded.
Jan 2021 - Dec 2025
ā¢ From 2021-2025 we've seen GME surge multiple times. I have already written a post about predicting GME surges using 5-Year legacy mammoth volume windows which accurately predicts 17 out of 19 price surges in GME.
ā¢ Rising value of āhealthy collateralā has allowed short sellers to borrow more GME shares and keep the price contained. The AI bubble is fueling the growth in "healthy collateral"
ā¢ Michael Burry publicly stated his bet against the AI bubble with 10K NVDA $110 Puts Expiring Dec 2027. He gives an explanation here: https://x.com/michaeljburry/status/1991292814647259297
Dec 2025 onwards
ā¢ As of Dec 2025, similar patterns are emerging with robust fundamentals, active options, spicy warrant activity, and several swap expiries approaching.
ā¢ Upcoming swap expiries will trigger cash settlements tied to GMEās performance, likely squeezing shorts further. With options and warrants heating up, forced liquidation of āsafe collateralā may be near. Jan 2026 to April 2026 is my estimate when shit hits the ceiling.
None of this is financial advice.
