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A $10 billion company, thanks to a gamma squeeze, delta hedging and Reddit.Credit.Nam Y. Huh/Associated Press
Retail madness
Why is Wall Street obsessed with GameStop, the video game chain that until recently was known for middling performance? The company’s stock has soared to scarcely believable levels its market cap as of yesterday was $10 billion, and its shares briefly doubled in premarket trading today thanks to an army of small traders spurred on by a Reddit message board.
What’s happening: Traders on the Reddit message board, WallStreetBets, a community known for irreverent market discussions, made GameStock their cause du jour and rushed to buy out-of-the-money GameStop options. (A sample comment on the board: “PUT YOUR LIFTOFF DIAPERS ON ITS ABOUT TO START.”) Both Elon Musk and Chamath Palihapitiya also egged on the crowd via Twitter. The frenzy has forced market makers who sold the options to buy the underlying shares to hedge their risk. As mo