[Ads-l] gamma squeeze

Dan Goncharoff thegonch at GMAIL.COM
Mon Feb 1 16:20:57 EST 2021


Just thought I would point out that the definition of selling short in the
OED is not strictly correct -- most of the time you borrow the stock to
deliver.

Also, if delta is not in the OED, it probably should be, since it has
become a common term in talking about anything with an option component,
and lots of things do. Perhaps gamma has arrived also, but I think it's too
early. Most people who talk about gamma don't really understand it.



On Mon, Feb 1, 2021, 2:50 PM Baker, John <JBAKER at stradley.com> wrote:

> “Short squeeze” really should be in the OED.  In this context, “short”
> derives from the verb to sell short, which the OED defines as “to effect a
> sale of stock or goods which the seller does not at the time possess, but
> hopes to buy at a lower price before the time fixed for delivery,” and the
> related adjective short, defined as “Having sold as yet unacquired stock
> which the seller hopes can be bought at a lower price before the time fixed
> for delivery.”  (Incidentally, there is an error in the OED, where short
> A.18.g, the adjective, should cross-reference short C.11, the verb, but
> instead cross-references unrelated short A.11.)
>
> A short squeeze is financial difficulty experienced by a short seller when
> the price of the security or commodity sold short then rises, so the short
> seller then must pay more to purchase the security or commodity and cover
> the short position.  The price increase also increases the amount of
> collateral that the short seller must post.  The short seller’s purchases
> will themselves tend to cause the price of the security or commodity to
> rise, so when there are many short sellers (as typically is the case in a
> large market), they can put pressure on each other.  While the current
> short squeeze is in common stock of GameStop Corp., early references tend
> to be to trades in commodities.  Here is an example from the St. Louis
> Post-Dispatch (July 21, 1882) (ProQuest):  “The “Short” Squeeze.  D.P.
> Rowland & Co. Strike a Snag, But Recover Again” (title).  The text of the
> article does not use the term “short squeeze,” but does have this
> description of events:
>
> “The late heavy advances in grain found this firm on the short side,
> principally in corn.  They met all calls for margin up to yesterday, when
> with further and heavier demands Mr. Rowland determined to suspend, as he
> found he could not get in the money due his firm and consequently would be
> unable to meet all the calls for margin made upon them.”
>
> I had not come across the term “gamma squeeze” until a few days ago, and
> it seems to be a fairly new term.  It’s a specialized term and probably
> should not be in general purpose dictionaries like the OED.  It derives
> from “short squeeze” and from “gamma,” which is a measure of the rate of
> change in the ratio of the value of an option (or other derivative) to the
> underlying security or other asset.  (Gamma is also not in the OED, and
> maybe also doesn’t belong there.)  A gamma squeeze is a short squeeze
> caused by trades in options, rather than (or, in reality, in addition to)
> trades in the security or commodity in question.  Here’s the earliest gamma
> squeeze I immediately see, from the Los Angeles Times (Sept. 8, 2020)
> (ProQuest):
>
> “”The sheer scale of call buyers both institutional and retail cause a
> ‘gamma’ squeeze situation for dealers, exacerbating moves in tech,” she
> [sc. RBC Capital Markets strategist Amy Wu Silverman] wrote in a report
> Monday.  (“Gamma” is a term for option price drift that dealers often seek
> to offset by buying or selling the underlying stock.)”
>
>
> John Baker
>
>
> From: American Dialect Society <ADS-L at LISTSERV.UGA.EDU> On Behalf Of
> ADSGarson O'Toole
> Sent: Sunday, January 31, 2021 9:18 PM
> To: ADS-L at LISTSERV.UGA.EDU
> Subject: gamma squeeze
>
> External Email - Think Before You Click
>
>
> "short squeeze" is the old lameness
> "gamma squeeze" is the new hotness
> "pump and dump" is the perennial; soon to regain popularity, I expect
>
> OED does have an entry for the stock market sense of "pump and dump".
> It does not have entries for "short squeeze" or "gamma squeeze". This
> is specialized vocabulary, but it is becoming more widely known.
>
> An entry for "gamma squeeze" was created for Wikipedia on January 23,
> 2021‎.
> https://en.wikipedia.org/wiki/Gamma_squeeze<
> https://en.wikipedia.org/wiki/Gamma_squeeze>
>
> Website: The Motley Fool
> Article: What Is a Gamma Squeeze?
> Author: Chuck Saletta (TMFBigFrog)
> Timestamp: Jan 28, 2021 at 12:00PM
> https://www.fool.com/investing/2021/01/28/what-is-a-gamma-squeeze/<
> https://www.fool.com/investing/2021/01/28/what-is-a-gamma-squeeze>
>
> The OED first cite for "pump and dump" is excellent, i.e., I could not
> antedate it.
>
> pump
> PHRASES P1.
>
> [Begin excerpt]
> pump and dump n. Stock Market (originally U.S.) a fraudulent scheme
> in which a person or company promotes a low-value stock in order to
> profit by selling shares at inflated prices; chiefly attributive.
>
> 1988 Wall St. Jrnl. 2 Feb. 1/6 For most promoters, the preferred
> scam is ‘pump and dump’—pump up the per-share price with hot air and
> hype, then dump the stock on duped investors for immense profits.
> [End excerpt]
>
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