What is going on: there are more shares of GME shorted than actually exist. That means that if the stock goes up for any reason, short sellers come under pressure to buy shares to close their short positions. But when the first short seller cracks and buys shares (taking a loss) they inadvertently drive the price up further, adding to the pressure on the other short sellers. Soon it’s a race to buy shares, but there simply aren’t enough to go around, so the price skyrockets before falling back down as shareholders finally take profits and sell. This is called a “short squeeze”. The only way a short squeeze is averted is if the stock price drops for some reason (like bad news from the company). GME is at ATH right now so it’s very unlikely that the short sellers will get out alive. It’s a matter of when they start to crack, not if. By all accounts they haven’t cracked yet, so the short squeeze hasn’t actually started.

What happened Friday was a “gamma squeeze”, which is unrelated to a short squeeze, but happens when call options are being bought extremely fast and the stock price is rising, which indirectly causes market makers to buy massive volumes of shares to hedge, driving the price higher, and so on.

The high probability of a massive short squeeze caused retail traders to plow money into shares and calls on Friday, which in then caused a gamma squeeze, causing the stock price to go higher, making the short squeeze even more likely.

If you have gambling money and you want to take part in this unique event, you either buy shares or call options. Shares are safer (since no matter when the squeeze occurs, you’re ready, while calls expire) but calls give you leverage. Calls, even far OTM and short expiry calls, are likely to be very expensive. Everybody knows this is going down, it’s been covered on major news, and retail money is flooding in as people try to get onboard before the shorts crack.

Stolen from Reddit user u/thicc_dads_club