The Interstellar Yoyo ⭐🪀⭐
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| Author       | Source       | 
| :-------------: |:-------------:|
| [u/dirkson](https://www.reddit.com/user/dirkson/) | [Reddit](https://www.reddit.com/r/wallstreetbets/comments/le6v6v/the_interstellar_yoyo/) | 

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[DD](https://www.reddit.com/r/wallstreetbets/search?q=flair_name%3A%22DD%22&restrict_sr=1)

Hallo all. I've been watching what's going on with great interest. There have been many things I can't explain. So I sat down and did a Think. But I know we're all just simple apes here, so why don't I tell you a bedtime story instead?

Story Time

Imagine there's a GME market participant, looking for a quick buck, with not the best grip on morality. I know that's a big stretch, but just go with me. We'll call him 'Snidely'.

Snidely is big into shorts, where you borrow a stock from someone, sell it immediately, and have to buy it from someone else later. But normal shorting isn't quite exciting enough for him. He wants to go naked. A naked short is when you skip that whole 'borrow' step at the beginning.

So Snidely notices that, due to [17 CFR 242.203 b 3](https://www.law.cornell.edu/cfr/text/17/242.203#b_3), he can issue a short without actually having to go through the annoyance of borrowing it, and has 13 "settlement" ("business") days to actually find someone willing to lend him that stock. This is great news for Snidely! It means that he can sell a stock he made up on the spot, then look for ideal times in the next 2-3 weeks to find someone he can borrow from to un-make it. So long as the stock price even temporarily falls below his sale price sometime in the timeframe, he can make money by borrowing at that point. He just found a freakin' cheat code for cash!

And so Snidely issues the naked short sell, and sells off his newly minted "stock". He finds ample buyers, and has no problems with that bit. Shucks, he can actually sell a little under market level if he needs to - After all, he can always just print more stock. Hahaha, Snidely goes brrrrr.

But then the unthinkable happens. Some idiots actually buy the stock, and the price stays higher than he bought for the entire 13 settlement day period. FUCK. Now he HAS to borrow, or he loses access to his wonderful money printer, as per [17 CFR 242.203 b 3 iv](https://www.law.cornell.edu/cfr/text/17/242.203#b_3_iv).

So he does. And loses some money. It sucks. Oh, and the stock price went up, because he had to buy so much. And then some moronic internet forum notices him doing this, and starts to buy too. Fuck. FUCK. If this idiots actually manage to peg the stock at this level, he'll be out of a job. He might actually have to buy the cheap caviar, or whatever it is the poors eat.

So Snidely looks in his bag of tricks... and only sees one trick. And so he begins naked short selling stocks that he knows he doesn't have yet. He does it a little below market rate, because that helps cool the stock off, which helps him. He has 13 whole days for the stock price to drop, after all. He uses the money from the new shares to start borrowing shares to cover his old ones. Weirdly, the liquidity isn't as low as the numbers would suggest, and he's able to borrow enough to cover his position fairly easily.

Plot twist - Snidely isn't the only Snidely. Snidely is legion. And as each Snidely pursues this plan, the stock price drops, since they all feel comfortable selling a little below market. And while they're covering, they *buy up each other's made up stocks*.

They haven't fixed the problem. They've just moved it 13 settlement days down the road. And made it bigger.

And once one of them starts buying to cover their new position, the rest will panic and join in, and the stock will soar again.

Evidence

Sooo... if this story is somewhat true, what events should we have already seen?

-   We should expect to see a slightly less than 13 settlement day period between stock increases, because if Snidely's wait too long they lose access to the ability to naked short. Given that GME first jumped in price on [Jan 12th](http://www.google.com/search?q=gme), then again on the 26th, that gives an 11 day period - Exactly in line with what we expect.

-   We should expect to see anger and push back from wall street in that same slightly-less-than-13-settlement-day period, fading rapidly as they choose to 'cover' their positions by selling more fake shares. This is more or less exactly what we saw on this subreddit.

-   Shorts should be extremely eager to tell us the closed out their positions, because they also opened new positions and NEED the stock to go back down before their time limit runs out. Yup, we sure as fuck saw that.

-   We should have seen Failure-to-deliver figures high, and growing. [Yup, that's exactly what we see in GME.](https://wherearetheshares.com/)

-   We should expect to see a sky-high official short rate that *isn't* reflected in third party data. We already see that in the existing data.

-   We should see the SEC being uninterested in the shorts/Snidely, because no actual laws were broken by this behavior. And wow would "uninterested in the shorts" be a motherfucking understatement for what the SEC is up to.

Anti-Evidence

Some stuff doesn't fit neatly into this theory, and needs other explanations or caveats.

-   Robinhood and other brokers shutting off buying is not directly explained by this. Buuuut I feel like the current explanations of increased capital requirements due to Snidely-induced volatility mostly does a fine job of explaining this.

-   We shouldn't see firms resorting to illegal tactics like ladder attacks, since they can accomplish their goals legally. But every instances of a 'ladder' attack we've seen is better explained by a Snidely bulk selling naked shorts.

-   The push for the fake 'Silver squeeze' is not explained by this. I think that was just an opportunistic play, rather than an actual distraction attempt.

Predictions

-   An actual short squeeze will never happen. The Snidely's can just print more naked shorts whenever they need them.

-   We should see Failure-to-deliver figures jump when the next data dump occurs. [Watch here.](https://www.sec.gov/data/foiadocsfailsdatahtm)

-   We should see a growing official short interest that isn't reflected in third party figures.

-   *We should expect to see a massive rise in the stock price about 11-13 settlement days after the last large stock rise. Which puts the date for expected movement around Feb 10-12*

Conclusions

Sorry friends, this isn't a VW-style short squeeze, infinite squeeze, or rocket to the moon. It's a fucking interstellar yoyo that's going to keep shooting up higher and higher in nearly-13 day intervals until *something* breaks.

Stock owners aren't the bag holders. The Snidely's are.

Dirkson, what should I dooooo ?

Oh, hell if I know. I'm not a lawyer, your lawyer, a stock dude, CPA, CFA, CFP, or whatever. I'm just some idiot who thought it was a good idea to buy two shares at $300. I wasn't even one of you before the Vast Migration, and I still don't talk right.

None of this is legal or financial advice, I'm just discussing what I think is happening. Think for your own damn self!

TL;DR

No🚀🌕. Yes ⭐🪀⭐.

*Edit: Feel free to copy/paste this anywhere else you like, just PM/ping me when you do. I'm interested in what other people think about this idea, and don't care who reposts it.*
