Chapter 11
Chapter 11
I researched GameHub.
Founded in 1984, the company is headquartered in Texas.
Its main business was retail distribution of video games, as well as buying and selling used gaming consoles and games.
At one point, it was so dominant that it was nicknamed the Walmart of the gaming industry.
But as the gaming market shifted from offline to online, GameHub fell behind.
Consequently, it lost a large portion of its market power.
It was a company in decline, not one likely to see a rising stock price.
Still, I smelled a far stronger scent than anything I had experienced before.
That meant the stock price would rise...
But why?
No matter how I thought about it, I couldn’t understand.
The short-selling volume wasn’t even that high.
It was the typical amount you’d see in a struggling company.
As I checked various data points, I noticed something unusual.
The short-selling volume was increasing rapidly.
‘Does it normally rise this fast?’
As a beginner in U.S. stocks, I called the team leader over.
“Team leader, could you take a look at this?”
“What is it?”
She brought her chair and sat right next to me.
Why so close?
I shifted slightly to the side.
“It’s GameHub. The short-selling volume seems to be increasing too fast.”
“Let’s see... yeah, it’s kind of fast. But where is all this short-selling coming from? Step aside for a moment.”
She pushed me aside, took my seat, and began typing, tracking the short-sellers.
“Where’s the main player?”
She checked several info sites.
“Why are there so many hedge funds? The main short-seller is a hedge fund called Mystic... oh, there’s some short-selling from Korea too.”
She looked puzzled.
“If hedge funds are shorting this much, it’s hard for the stock to rise.”
“Exactly. No growth potential, poor earnings.”
“Then, should we short it too?”
“What? You want to short this stock? That’s too risky. Be careful with short-selling. Your profits are capped, but losses can skyrocket. Remember Salarion? We profited then, but if we had shorted, the loss would’ve been enormous.”
“Understood. I’m just in the observation stage for now.”
“If you’re observing, analyze properly. Making profits is important, but learning to analyze is crucial. That’s skill. Never buy a stock you don’t understand.”
I nodded.
She was right.
The fundamental rule of investing: analyze a company’s value properly before investing.
That increases your chance of success.
Well, that’s an exception for me.
If I smell it, I win.
Risk isn’t the same for me.
Still, I wasn’t about to neglect analysis.
I looked at GameHub and thought again:
‘Should I short it?’
Earlier, when talking to the team leader, I didn’t smell anything.
No reaction meant it wasn’t short-selling.
Then what is it?
Buying normally didn’t seem appealing either.
While I was thinking, the team leader searched on Google for Short Interest and Short Float.
“This shows the amount of unsettled short positions and the ratio to outstanding shares.”
As I reviewed the data, something felt off.
“Team leader, here the short-selling volume is higher than the number of outstanding shares. Is that even possible?”
“Yeah, it is. They can re-lend shares.”
“Re-lend?”
“Simply put, if I short-sell GameHub and someone buys it, I can lend those shares to another person who wants to short. Got it?”
“Yes.”
She explained simply.
“So if this stock spikes and a short squeeze happens, it’ll be chaos. Nothing like Salarion.”
“Right. But GameHub’s price shouldn’t rise. Stocks need either earnings or growth expectations. GameHub has neither. And a short ratio over 100 percent means Wall Street is sure this company will fail.”
“Hmm... so they’re betting it will fail?”
“Could be. With so much short-selling, the stock can’t rise.”
“How likely is a spike in GameHub’s price?”
“Almost zero.”
But I thought differently.
When I considered buying GameHub, I smelled a strong scent.
This wasn’t a normal rise—it meant a surge.
The answer was clear: a short squeeze.
“If a short squeeze happens, could it spike?”
“Theoretically, yes. But you need something to reverse the downward trend.”
“Couldn’t the retail investors unite?”
“Think that’s possible?”
The team leader snorted.
“Are you buying this?”
“I’m thinking about it.”
“Be careful. U.S. stocks are risky. You know why.”
No upper or lower limits in U.S. stocks.
A wrong move could lose everything.
A right move could yield massive gains.
She returned to her seat, and I focused on the monitor again.
I clicked on GameStop stock.
How much to buy?
[Current price: $4.30]
I had about 85 million won in my account.
At the current rate of 1,080 won per dollar, that’s roughly 79,000 dollars.
I could buy about 18,000 shares.
I hesitated before buying.
A better idea came to mind.
There’s a way to earn more than from the stock itself!
Options.
Buying GameHub options would yield much higher returns.
I searched for GameHub call options. A few appeared.
Clicking each option, I felt a pleasant scent, signaling potential profit.
Interestingly, the scent intensity varied.
Does the concentration affect profit?
I clicked the next option:
[Strike: $20]
[Premium: $2.50]
[Expiry: One month]
I considered buying.
Suddenly, a powerful scent hit me, spinning my head.
My whole body was filled with it, a thrilling sensation.
This was it!
I checked my account.
Current exchange: 1,080 won.
Converting most of my funds gave me 79,000 dollars.
I clicked the option.
Pre-market order to buy all at market price.
I mirrored the same order in my mock investment account.
That evening, I received an alert on my phone: the option was executed.
I opened my account.
[GameHub call options: 316 contracts]
In the U.S., one option contract covers 100 shares.
I secured the right to buy 31,600 GameHub shares at $20.
The mock account showed:
[GameHub call options: 851 contracts]
More in the mock, but it’s fake money.
The important ones were my 316 contracts.
I opened GameHub’s chart.
The price fluctuated wildly.
Up 1 percent, down 2 percent.
My options jumped 10 percent, then crashed 20 percent instantly.
Such volatility.
The U.S. market is terrifying.
Watching charts all night would have kept me awake.
I closed the app.
I remembered the strong scent when I planned to buy.
A clear signal—I could earn at least ten times the normal return.
At dawn, I put on running shoes and left home.
After deep breaths of the early morning air and stretching, I ran to the office in Yeouido.
An hour of running kept my stamina up.
After showering at the gym, I went to Team 9.
The office was empty.
Something had changed overnight.
Six monitors, keyboards, and mice were installed at the previously empty desk. The IT team must have set it up.
Today, my recommended Manager Choi Choong-sik and Deputy Park Sung-ho would arrive.
Manager Choi Choong-sik is in his late thirties, Deputy Park Sung-ho in his early thirties.
Hope they get along.
I sat and turned on the computer.
I reviewed last night’s events and checked the U.S. and European markets.
While scanning financial newspapers, a voice greeted me.
“Hello.”
A deep-voiced man entered Team 9.
Mid-forties.
Who is he?
“How do you do?”
“I’m Manager Choi Choong-sik, starting today in Team 9.”
I was startled.
The photo I saw of him was completely different from reality.
The photo looked late thirties, but now he looked mid-forties.
Clearly, some heavy Photoshop was used.
“Ah, hello. I’m Team 9 intern Kim Deok-su. Nice to meet you.”
“Alright. My desk is there?”
“Yes, that’s correct.”
“I’ll set things up until the team leader arrives.”
“Sure, Manager.”
He spoke in Seoul dialect with a Gyeongsang accent.
Slightly funny, but I ignored it.
He organized his desk, and I prepared the morning meeting.
Later, the team leader arrived.
“Good morning!”
She greeted with a bright smile.
“Good morning.”
“Good morning.”
Manager Choi and I stood to greet her.
“Oh, Manager Choi is here? Finish what you were doing, and we’ll introduce in the morning meeting. Deputy Park Sung-ho is on assignment at the group HQ, will arrive in about a month.”
After working individually for a while, we began the meeting.
First, a brief introduction, then we began.
“Today’s market could rise due to the interest rate cut issue. We need to check foreign and institutional positions. If both buy aggressively, the market could surge.”
The team leader nodded at my analysis.
“Your market insights are still developing, but much improved, Deok-su.”
Usually, she would call me Deok-su playfully, but with Manager Choi present, she was more formal.
“If the rise is significant, there will be opportunities in futures and options.”
Manager Choi spoke.
“Ah, you specialize in futures and options?”
“Yes.”
“Don’t overdo it. Our team’s performance is solid, so no need to take risks.”
“Understood.”
“And Deok-su, what did you do yesterday? Did you buy GameHub?”
Manager Choi’s eyes sparkled at the mention.
“Deok-su, did you buy GameHub in the intern mock trading account?”
He knew this stock.
“Ah, you know this stock too, Manager?”
“Of course. It caused a stir this morning.”
“A stir?”
“Yes. Someone on a U.S. stock site pointed out that GameHub short-selling exceeded 140 percent of outstanding shares. They rallied retail investors to unite and buy, punishing the hedge funds shorting GameHub.”
“So?”
The team leader asked.
“Normally, it’s hard to create that kind of momentum. But with GameHub, it worked. U.S. retail investors united and bought heavily. GameHub’s stock rose forty percent.”
“F-forty percent?”
I was shocked.
Focused on work, I hadn’t checked.
“Deok-su, did you buy?”
“Uh, well… no.”
“What? You didn’t?”
Her voice rose.
“I bought something else.”
“Ha...”
The team leader sighed deeply.
Manager Choi looked disappointed.
“Too bad. If you had bought that, your returns would’ve skyrocketed. Interns are evaluated by returns...”
“Couldn’t help it. I was unlucky yesterday. What did you buy instead?”
“Options.”
“Options? Even in a mock account, that’s too risky.”
“How many did you buy?”
“All of it.”
“All? Crazy.”
The team leader scratched her head.
“I told you to manage risk! And your returns are already good, why go all in? Just a small investment.”
I didn’t know how to reply.
“Deok-su, what’s your return rate?”
“Ah, 150 percent.”
Manager Choi’s eyes widened drastically.
“W-what? 150 percent? It’s only been two weeks in the mock account. How?”
“Lucky, I guess.”
“You can’t get 150 percent by luck. Skill. Intern Deok-su is the best in Team 9. Ha ha ha.”
Manager Choi laughed.
“By the way, Deok-su, what options did you buy?”
The team leader asked, displeased.
I smiled faintly.
“Ah, those... GameHub call options.”
“What? GameHub???”