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The Mechanics of a Meme Stock Rally

Curiosity Chronicle

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The Gamma Squeeze

A gamma squeeze is all about options contracts and their indirect impact on the underlying stock. As call option purchasing volumes on AMC suddenly surged, market makers had to purchase a lot of AMC stock to hedge. This set in motion a self-fulfilling prophecy. Market makers rushed to purchase AMC stock to Hedge exposure. This drove the price of AMC up. The result? Well, just check the charts.

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