An Academic Critique of the SEC’s GameStop Report

On October 18, 2021, SEC staff released a long-awaited report on equity and options trading in connection with the meteoritic rise of GameStop’s share price in January 2021.  The staff report addressed several issues surrounding the GameStop episode, but one of the most widely reported was the conclusion that neither a short squeeze nor a gamma squeeze caused the increase in GameStop’s share price.  Rather, staff concluded, “it was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock.”[1]

As members of the Ad Hoc Academic Committee on Equity and Options Market Structure Conditions … Read more