YOLO Trading: GameStop vs. Bill Hwang
Posted on 04/09/2021
“YOLO” is an acronym for “you only live once”. Along the same lines as the Latin carpe diem “seize the day”, it is a call to live life to its fullest extent, even embracing behavior which carries inherent risk.
Retail investors went YOLO for Gamestop stock (ticker:GME), often taking out options and buying stock.
On the institutional side, Bill Hwang’s family office – Archegos Capital Management did a similar strategy, but focused on a few more stocks rather just one.
Archegos Capital Management started with a sizable pot of cash and borrowed more money. With that capital, the family office cornered the market on a few stocks, pushing up the prices, which then fueled the index trackers. As those stock prices increased, Archegos Capital had more equity, and the positions automatically deleverage. That equity could be used to borrow even more money and put it back into those stocks, pushing them even higher.