What's going on moon gang, this is matt and i'm your host dumb money. I wanted to take this opportunity to explain three very important concepts: uh. Let's say the the three horsemen of buying pressure. Basically, the three things that help a sock go absolutely to the moon.

In this video i will be using amc as an example. So let's kick it right off number one, and this is the thing you're probably hearing the most about is short interest and shorts, covering and because of that stock shoot up. So, if you're new to this world, let's take a step back and let's start with what happens when you buy a stock when you buy a stock, it's at value x. You hope it goes up to y and you profit that difference when you buy a stock when you invest in it, something like that it's referred to as going long, you buy, you hope it goes up and then you sell so going short or shorting.

Is the exact opposite to create the position you sell the stock and that involves kind of some fancy things in the background where you like, borrow the stock from someone, because how could you sell something you don't own, but basically you create the position initially by selling The stock, you hope it drops from x down to z, and then you profit that difference and to close the position you would buy back into the market. So initially, when you go long you buy, then you sell. When you go short, you sell, and then you buy it's literally the exact opposite so with short interest. What's going on there, that's the ratio of the amount of shares short being bet against the company divided by the shares in existence or the free float.

So it's either outstanding shares or free float, but basically it's just a ratio. It's the amount of short shares, divided by some sort of total amount of shares, for that particular stock. The higher that number is obviously that means that there's more and more betting against the company, and it also means that, in a scenario such as amc, when you start to go up, that means that the people betting against it they're losing money. Because remember that when you're short, you want the stock to go down and when you buy a stock, your risk is technically capped, like the worst case scenario.

Is that it goes to zero, but when you're short. Theoretically, your risk is infinite because the stock can keep going higher and higher and higher, and eventually you're going to hit your pain point and you're going to have to cover, because you can't like keep hemorrhaging that money and if there's a lot of shorts. Well, when you cover to cover that means, you're buying back into the market which pushes the stock up a little bit more, and then that puts enough pressure on another short and then they have to cover. And you can see how it quickly snowballs out um, really snowballs out of control and it keeps pushing the stock higher and higher and higher.

So right now, as of june 13th, amc has about 510 million shares in existence roughly and the amount of short shares. Betting against it is somewhere between 60.45 million and 78.2 million, i'm saying somewhere in between because right here these are the live updates, and this has about 60 coverage of all prime brokerage, and this is about it's roughly an estimate so really here. The shares on loan remember what i said to take a short position. You have to borrow from someone, so here's all the the borrowing and the loaning so right there that's 78.2 million, but i want you to understand that this does not account for illegal illicit shorts.

Referred to as naked shorting, these are just the legitimate shorts, so it can honestly be even higher, but what i want to do in this is just explain what a short interest is and how like, when the short when the stock goes up, the shorts get trapped. They have to cover it, pushes it up even higher. That means more shorts are trapped and like it just it's a huge huge domino effect and it kind of leads to a stock really really going up. So right now, that's the short interest, the ratio.

As of now, according to ortex for amc, as i'm filming, this is around 12, which is pretty considerable. Most stocks in the stock market really don't even exceed like five percent, even that's kind of high, so 11.82 uh the magnitude is still pretty noteworthy. Number two is another thing we refer to as a gamma squeeze. This is the horseman number two, so horseman number one is the short interest, the short squeeze.

The second one is uh. It relates to the options market. It's a gamma squeeze. So let's go over a bit of terminology once again, this is still amc.

Let's take a look at the options chain. On the left side, we have calls uh when you buy a call, that's your right to buy a hundred shares of a stock at whatever the strike price is then on the right side. Here we have puts, and that's your right to sell 100 socks at whatever the strike price is so if we scroll down as a market, close amc was at 49.40, so any of the strike prices for the calls below that are considered to be in the money, Because that's a bullish bet so you're betting on the stock going higher, so it's called in the money because the stock is actually trading up above these strikes and then over here these puts are in the money because remember a put when you buy one is a Bearish bet and you're betting on it going down. So that's why these are considered to be in the money.

So these two blue regions are in the money and then these opposite caddy coordinators are out of the money because, like you're, just not there yet in that directional bet that you're taking. So, for the point of this video with the gamma squeeze, let's focus on the calls. Once again, these are in the money: here's out of the money, so a gamma squeeze is what happens in the market when the stock trends from a lot of these being in the money and all of a sudden. The stock goes up up up from 4940 and, as you pump that up all these strikes start going in the money.

The 50 51 55 60., as amc goes up more of these go in the money from originally being out of the money. Now, if there's a lot of open interest, as in a lot of people, have been buying these off, whoever was selling them, whoever sold them is going to have to start to hedge their position, especially market makers. It's referred to as their delta exposure and basically they don't want to get blown out of the water because they sold these calls now that they're in the money they might get exercise. So it's really to protect their own book that they start to buy shares off.

Of the market, as more and more of these strikes go from out of the money to in the money. So right here don't forget that every single contract represents a hundred different shares of amc. So i did a little bit of math for you and once again this is just for june 18th. Obviously there's some for june 25th july, 2nd it just keeps going on.

This is just for this upcoming friday, which is also quadruple witching. Another thing to look into: basically, it's just futures options, there's a lot of expiration going on this friday, not bullish, not bearish, just really high volatility. So anyway, i did a little bit of math for you for this upcoming week between 50 and 59. If you add up all this open interest and then convert it to how many shares that represents, if the stock goes up, we're going to have to get the market.

Major market makers excuse me to hedge for 8 million shares, that's just between 50 and 59. Between 60 and 69 - that's another 4.5 million shares between 70 and 79. That will be another 5.7 million shares and then from 80 to 95. That will be an additional 3 million shares and then from 100 all the way up to 145.

That's actually going to be another 9 million shares, and so just in general, if like these lotto plays pay out and people are just like donald duck like swimming in, like gold coin bass. If we add all this up, if we do everything, that's just out of the money on the calls from 50 all the way to 145 - that's another 30 million shares that these market makers are gon na have to hedge for and when they hedge, for it they're Literally, just buying shares off the market, so this is why this is the horseman number two, because, as we go up and more and more of these go to in the money, the market makers have to buy more and more so it very quickly becomes a self-fulfilling Prophecy - and it just goes higher and higher because they bought it. Maybe there's there's more in the money and then because there's more in the money they have to buy more. So it's kind of that same concept of just like a short squeeze of where it's just like a giant snowball, that's getting bigger and bigger, and it's just more and more buying.

So first one is the short squeeze. Second, one is a gamma squeeze relating to the options market and now horseman number three is fomo, buying fomo anxiety that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on social media, so fomo buying relates to kind of the stock. Just really ripping and people are like hey yeah. I heard about that stock.

I would like to make some money. I don't want to miss this opportunity, so i buy and then because you buy it goes a little bit higher and then there's another fomo. Buyer who's. Like hey, i don't want to miss it either.

So then they buy. So it's it's that same concept. All three of these are like they all just become self-fulfilling prophecies. Fomo buying i'm going to buy because i don't want to miss out so i buy.

It goes up, someone else buys gamma squeeze like the market makers end up becoming their own worst enemy and they're, pushing more and more from going out of the money to in the money and then shorts. They cover because they don't want to take a big loss which pushes it up, and that means that another short is that anything bigger loss. So then they cut their loss too, which pushes it up higher. So all three of these are just like gigantic snowball effects that really really just have an amazing capability of shooting a stock from earth to whatever moon you possibly want to think of that's that's the power of these three buying horsemen.

So with all that being said, i hope, if you're new to the ape nation, the ape community, this offers a little bit of clarity of like what's going on, especially with the terminology that we use. So i hope this gives you a good foundation of kind of the three main things that i'm like particularly interested in playing out, especially for this upcoming week with amc, because i think we could be seeing one two, potentially all three of them with all. That being said, let me know your thoughts on all these. A short squeeze of gamma squeeze is fomo buying in a comment below.

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