October 9, Friday.
New York Time: At nine o'clock in the morning, as soon as Zhao Chen walked into Era Vanguard's office, Lin Shicheng stood up from his desk and turned the phone screen to him.
On the screen was a news feed that had just popped up, from CNBC's Breaking News column, with a title of only one line -
"GameStop Announces Multi-Year Strategic Partnership with Microsoft".
Zhao Chen put Zisha Pot on the table, took the phone and read it from beginning to end.
The core content of the agreement is not complicated - GameStop will use Microsoft's Azure cloud service to manage finance, inventory and e-commerce operations.
Store employees will be equipped with Surface devices, and GameStop will sell Xbox All Access subscriptions.
For an offline game retailer with a market value of less than 700 million US Dollar, which is squeezed by both digital distribution and the epidemic,
The significance of this agreement is not at the financial level, but at the signaling level.
Microsoft is the world's second largest cloud computing company and is willing to sign a multi-year strategic agreement with a game retailer that is on the verge of transformation.
It's like giving a credit endorsement to GameStop's transformation story.
"What will happen after the market opens?" Zhao Chen returned the phone to Lin Shicheng.
"It has already risen by more than 20% before the market opens."
Lin Shicheng switches Bloomberg Terminal to GME's pre-market data,
"Yesterday's closing price was 12.04 yuan, and now it is 14.5 yuan before the market opens. There is a high probability that it will continue to rise after the market opens."
Zhao Chen sat down and poured the tea from Zisha Pot into the cup.
He didn't give any orders.
The position building plan is already in progress - Common Stock will not exceed 80,000 shares per day, scattered in the morning and afternoon, and no purchases will be made after 2:30 in the afternoon.
Options is divided into three to four batches, Strike Price twenty to thirty US Dollar, and the expiration dates are mainly January and June next year.
These rhythms were set on September 22 and will not change just because of one day's stock price fluctuations.
But the trend after the opening exceeded everyone's expectations.
At nine-thirty, GME Opening Price was 14.69 cents, 22% higher than the previous day's closing price.
In the first fifteen minutes, Trading Volume exceeded 8 million shares, which was more than three times the daily average Trading Volume.
At ten o'clock sharp, the stock price exceeded 16 yuan. At 10:30, the stock price exceeded 17 yuan.
Eleven o'clock, touching eighteen yuan.
News about the Microsoft protocol was pushed simultaneously by Bloomberg, Reuters, CNBC, MarketWatch and almost all Financial Media.
The title was upgraded from "GameStop reaches cooperation with Microsoft" to "GameStop's transformation plan is endorsed by technology giants".
Then it was upgraded to "Can GameStop become the Amazon in the gaming field".
At 12 noon, the stock price hit 19.42 cents, the highest since August last year.
The intraday increase exceeded 60%. Starting from the price of 11.88 cents when Zhao Chen launched the Add Position plan on September 22, the increase has exceeded 63% in less than three weeks.
After Lin Shicheng executed the last purchase order of the day at 2:30 in the afternoon, he pushed the transaction summary to Zhao Chen.
"I bought 78,000 shares today, at an average price of 17.2 yuan. That's 2,000 shares less than our planned upper limit of 80,000 shares--
After two o'clock in the afternoon, the stock price rose too fast and the transaction price exceeded the upper limit of the preset range, so I took the initiative to slow down the pace."
Zhao Chen turned over the transaction records and said nothing.
The average price for opening a position on Common Stock is being pushed up, and the position that was originally planned to be completed in the range of 12 to 13 US Dollar is now forced to be executed at a higher price.
He picked up a pen and calculated on the exposure monitoring table - as of the close, Common Stock held approximately 1.9 million shares.
Including the conservative conversion of Options, the total exposure is approximately 4.3%.
There is less than 0.7 percentage points left from the upper limit of 4.99%.
Based on today's stock price level, the remaining 0.7 percentage points correspond to approximately 480,000 shares.
At the current rate of more than 70,000 shares per day, it will take less than a week to complete.
"Common Stock position opening will be completed before next Wednesday."
Zhao Chen put down the exposure monitoring table, "Options where is it?"
"This afternoon I bought the first batch of Call Options, Strike Price twenty-five US Dollar, and Premium that expire in June. The cost is about three million US Dollar.
In addition to the 12 million US Dollar Options that had been opened before September, the current total Premium of Options is about 15 million US Dollar."
Lin Shicheng calls up the transaction records of Options,
"The remaining Options positions will be executed in two batches, one batch each for next week and the next week.
The new Premium is controlled between four million and six million US Dollar, and the total Premium does not exceed 20 million US Dollar.
Based on the most conservative Delta conversion, the total exposure of Options is approximately between 1% and 1.3%."
Zhao Chen put the two documents together and leaned on the back of the chair.
"One more thing." Lin Shicheng switched Bloomberg Terminal to the Twitter page,
"Ryan Cohen tweeted this morning."
On the screen was a screenshot - Cohen only posted a picture on Twitter without any text.
The picture is a stock price chart of GameStop. The horizontal axis runs from January to October this year, and the vertical axis runs from three US Dollar to twenty US Dollar.
The curve began to climb slowly from around 3 US Dollar, then sharply rose on October 9, drawing an almost vertical upward line at the end.
There is a small watermark in the lower right corner of the picture, which is the logo of RC Ventures.
"In less than two hours after this tweet was posted, it had more than 5,000 retweets."
Lin Shicheng showed Zhao Chen the screenshot in the comment area.
"One of the most popular replies said 'Ryan Cohen is telling Short Sellers that you don't have much time',"
Another one said 'Microsoft agreement is just the beginning', and another one said 'I bought two thousand shares and followed Cohen'.
The number of posts about GME on WallStreetBets Forum today has quadrupled from yesterday.
Someone took a screenshot of Cohen's tweet and opened a separate post with the title 'RC Ventures' silent signal'."
Zhao Chen returned the phone to Lin Shicheng without commenting on the tweet.
He asked a more practical question. "What's the reaction from Short Sellers?"
Lin Shicheng switches Bloomberg Terminal to the Short Selling data page.
GME's Short Selling ratio did not drop significantly today--
There were about 66.41 million shares on September 15th, and about 68.63 million shares on September 30th.
Today's latest data is about 69 million shares, and the proportion of Short Selling remains at more than 90% of Circulating Supply.
Short Sellers has not closed its positions on a large scale because of the Microsoft agreement and the increase in stock prices.
On the contrary, Short Sellers interest continues to climb, meaning that Short Sellers is paying more and more when borrowing stock Short Selling.
"Short Sellers didn't run away and can't run away."
Lin Shicheng enlarges the data of Short Selling,
"They are carrying it. The Microsoft agreement has no substantive changes to GME's short-term Fundamentals,
Q3 Report will most likely still be losing money, and the structural pressures of store closures and digital distribution are still there.
Short Sellers is betting that the market will re-examine GME's Fundamentals after Q3 Report comes out.
Citron has not publicly commented yet, but their Algorithmic Trading may have been monitoring GME anomalies Buying Pressure."
Zhao Chen Put the teacup down.
"Citron will not take action before Q3 Report. They need the loss data of Financial Report to support the logic of Short Selling.
But starting today, they will start paying attention to GME's Buying Pressure structure.
We still have the last week to build a position, so keep the pace as it is and don't speed up just because the stock price has risen.
Common Stock will be completed by Wednesday and Options will be completed by next week."
He stood up and walked to the window.
GME's stock price closed at around 19 yuan, which was more than 60% higher than the price of 11.88 cents on September 22.
This increase meant that Common Stock's cost of opening a position was nearly half higher than originally planned, but he did not adjust the exposure limit.
Four point ninety-nine percent is a hard boundary. No matter where the stock price rises, exposure cannot cross it.
This is what he said to Lin Shicheng and Shen Zhiyi on September 22nd -
"4.99% is our upper limit and our umbrella.
Above this number, Era Vanguard's name will appear on the 13G application documents.
All Wall Street will know that someone is messing with Ryan Cohen."
Shen Zhiyi walked over from the Legal Department's workstation, holding a newly updated exposure calculation report in his hand.
"Total exposure after today's close is 4.31 percent.
Common Stock has 1.9 million shares, and Options conservatively converts to about 560,000 shares.
According to the speed of position building, after Common Stock is completed next Wednesday, the total exposure will be about 4.8, and Options will make up the last 0.2.
The exposure monitoring process ran normally today and no warnings were triggered."
Zhao Chen took the report, read it over, and signed the last page.
"Keep watching. The faster the stock price rises, the faster the Delta value of Options changes.
If the total passive exposure after the close of a certain day exceeds 4.95,
The first thing I did when the market opened the next day was to sell the same amount of Common Stock to bring back the exposure."
Shen Zhiyi put the report away and returned to his workstation.