This Is A Meme's World.
The dangerous game of volatility harvesting in the world's hottest market segment.
TLDR Summary
Investors are typically volatility averse. All else equal, the more volatile an asset, the less they are willing to pay for it. The higher the VIX, the lower the S&P 500.
In contrast, meme stocks feed on volatility. The more volatile they are, the quicker they can make their owners rich. Volatility attracts capital. The more volatility priced into Tesla stock options, the higher its market cap.
Shrewd management teams are taking advantage of that by issuing warrants and similar derivatives structures. This suppresses volatility by countercyclically managing share supply. Ultimately, this destroys the ability of the meme stock to serve its purpose. Option leverage will disappear. And with it large amounts of market capitalization.
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