Row 55157

Row ID: 55157 | Dataset Entry | Axioma AXP Content Repository

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This page contains data entry 55157 from the Axioma AXP content repository. The structured data below represents the complete record for this entry.

[Note: I'm not interested in shorting. This isn't a how-to question. I'm just baffled by how it works, if it works.]

HYPOTHETICAL SCENARIO: Company A is worth, say, two trillion dollars. It is heavily shorted. Suddenly some catastrophic news hits the company. The stock plummets, oh, say, 55% in one day, that'd be over one trillion dollar drop in market cap. And then over the next few days it falls more, for say a total of 75% drop. Historic.

QUESTION: Under such a hypothetical, let's imagine a bunch of firms have bet millions or more, each, on shorting this dud company. If the stock fell 75% over a week, and you had a $10 million bet shorting this stock, what would those puts or whatever theoretically be worth? What if your bet was $100 million? How high could the "winnings" go?

But the more fundamental question: if you were to collect those "winnings" -- where is the money coming from? In theory, if the stock fell well over $1.5 trillion in value, and people and firms had bet gazillions to short it, the "proceeds" from those shorts would combined now be worth way more than $1.5 trillion, right? So where is that money actually coming from? And at what point does it, well, run out?

FieldValue
text [Note: I'm not interested in shorting. This isn't a how-to question. I'm just baffled by how it works, if it works.] HYPOTHETICAL SCENARIO: Company A is worth, say, two trillion dollars. It is heavily shorted. Suddenly some catastrophic news hits the company. The stock plummets, oh, say, 55% in one day, that'd be over one trillion dollar drop in market cap. And then over the next few days it falls more, for say a total of 75% drop. Historic. QUESTION: Under such a hypothetical, let's imagine …
label r/investing
dataType post
communityName r/investing
datetime 2024-05-23
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Raw Record

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  "text": "[Note: I'm not interested in shorting. This isn't a how-to question. I'm just baffled by how it works, if it works.]\n\nHYPOTHETICAL SCENARIO: Company A is worth, say, two trillion dollars. It is heavily shorted. Suddenly some catastrophic news hits the company. The stock plummets, oh, say, 55% in one day, that'd be over one trillion dollar drop in market cap. And then over the next few days it falls more, for say a total of 75% drop. Historic. \n\nQUESTION: Under such a hypothetical, let's imagine a bunch of firms have bet millions or more, each, on shorting this dud company. If the stock fell 75% over a week, and you had a $10 million bet shorting this stock, what would those puts or whatever theoretically be worth? What if your bet was $100 million? How high could the \"winnings\" go?\n\nBut the more fundamental question: if you were to collect those \"winnings\" -- where is the money coming from? In theory, if the stock fell well over $1.5 trillion in value, and people and firms had bet gazillions to short it, the \"proceeds\" from those shorts would combined now be worth way more than $1.5 trillion, right? So where is that money actually coming from? And at what point does it, well, run out?",
  "label": "r/investing",
  "dataType": "post",
  "communityName": "r/investing",
  "datetime": "2024-05-23",
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