By selling a stock short you anticipate that you can buy it at a cheaper price.
So these big firms would have screwed the little guys for 70 billion.. Instead the little guys figured out the scam and screwed them”
To be clear. When you short a stock you are paying a fee to essentially rent someone else’s stock so that any gain or loss in a stock is taken by you, not the owner. If the stock goes down you make money because you can buy the same stock later at a reduced price in order to redeem the stock that you “rented” If it goes up however then the “Shorter” loses money because he has to pay more for the same amount of stock he rented.
So no, those losses would not have occurred either way. If you own a stock that cost you $10 and it goes to $1 you lose $9. If you buy an option on a stock for $10 and it goes to $1000 you lose $990.
Also “Little guy's” do not generally sell stock options, which is what the shorters were buying.
The people or funds who made a lot of money were the ones who had large positions in the stock when it was cheap and the foresight to sell options on their positions.
The little guy's investing are buying into a bubble. The ones who sell before the bubble bursts will do ok, but the ones who hold onto their stocks too long will lose.
That was my point. The big guys who sold short originally would have screwed all the small investors.
Instead a group of small investors got together and screwed the big investors for billions.
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