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Getting a bit far afield here, but what the heck, it's fun and educational:
> This is the main mechanism (in reverse) behind the Gamestop price spike.
Not that I looked closely at that car wreck, but I thought hedge funds were 'short' i.e. anticipating a share price fall, in the classic manner that has nothing much to do with options. Hedge funds were short Gamestop by borrowing shares for a fee, iimmediately sold the shares in the hopes of buying the shares back later at a lower price in order to return the shares and pocket the difference from this "sell high, buy low (and return the shares)" strategy. But redditors organized en masse to buy shares to pump the share price, making the short sellers have to buy back their shorts, i.e. buy shares (at a loss, which was part of the redditors goal i.e. to give hedge funds a bloody nose), and these share buybacks further contributed to the share price rise, at least for a while.
I hedged (ha!) my first sentence with the words "nothing much to do with options" because it's all fungible via put/call parity. Certainly, market makers are staying delta neutral. But my impression was that the Gamestop share price dynamics was not primarily driven by options involvement, BWDIK I only glanced at that car wreck in passing, so perhaps missed gory details.
