Markets
Play
Episode 178
Featuring Lily Francus
Demetri Kofinas speaks with Lily Francus about how market structure and memes were used to coordinate a community-sourced stock pump that caused chaos on Wall Street and left the financial press and the public scrambling for answers.

In Episode 178 of Hidden Forces, Demetri Kofinas speaks with Lily Francus, a 25-year-old PhD student in bioinformatics who spends her time modeling complex, dynamic systems, trading meme stocks, and writing about options, derivatives, and how stories and ideas spread on the Internet.

Unless you’ve been living under a rock or don’t have an Internet connection you will already know that some really crazy shit happened in the last couple of weeks involving the video game retailer GameStop, a number of large, Wall Street institutions, and the online community subreddit r/Wall Street Bets, which has now grown to over 8 million users.

There have been so many competing explanations put forward for what happened here that it would be impossible to try and summarize them all. Instead, this episode attempts to explain the mechanics of how it all happened. In other words, how an online community consisting primarily of retail investors managed to pump the price of GameStop’s stock to such a level that institutional investors who were short the stock were forced to cover and in the case of hedge fund Melvin Capital, get bailed out to the tune of nearly 3 billion dollars.

In this conversation, we look at how both market structure and the endogenous dynamics of the options market, combined with the proliferation of narrative in the form of Internet memes were used to organize, coordinate, and execute what was effectively a community-sourced short squeeze that caused chaos across wall street and left the financial press and the public, scrambling for answers.

While the conversation about options is specific to wall street, the memetic aspect of this story is perhaps the most fascinating, not only because understanding online culture and how narratives spread on the Internet can help you capitalize on trends and monetize momentum, but also because its application extends to pretty much any use-case you can imagine.

This week’s overtime segment is a conversation Demetri had with Real Vision Senior Editor and former CNBC reporter Ash Bennington, who he invited on the program to discuss the events of the last week and what we might expect going forward.

The episode overtime, as well as the transcript and rundown to this week’s episode are available through the Hidden Forces Patreon Page. All subscribers gain access to our overtime feed, which can be easily added to your favorite podcast application.

Time Codes:

9:38 Summary and update on "what happened" with GameStop, r/WallStreetBets, and institutional Wall Street

21:15 Discussion about market structure and endogenous factors related to options & positioning

41:37 Discussion about role of narrative and Internet memes in driving the price of GameStop

If you enjoyed listening to today’s episode of Hidden Forces you can help support the show by doing the following:

Subscribe on Apple Podcasts | Spotify | Stitcher | SoundCloud | YouTube | CastBox | RSS Feed

Write us a review on Apple Podcasts

Subscribe to our mailing list through the Hidden Forces Website

r/WallStreetBets Joker Meme mentioned during episode: https://www.reddit.com/r/wallstreetbets/comments/l1u036/wsb_gets_emotional_on_mad_money/ 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Subscribe & Support the Podcast at https://patreon.com/hiddenforces

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

Follow Demetri on Twitter at @Kofinas

Episode Recorded on 02/02/2021

Lilly Francus is a 25-year-old PhD student in bioinformatics at the University of California, San Diego. Before she got into the markets and started her PhD, she was a software engineer for multiple years at LinkedIn and Stripe. She’s passionate about data and modeling complex, dynamic systems, and has a strong interest in options and memes, in that order. Her background is primarily a mixture of computer science and business administration.

Lock

Content Locked

FREE SAMPLE RUNDOWN

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Phasellus hendrerit. Pellentesque aliquet nibh nec urna. In nisi neque, aliquet vel, dapibus id, mattis vel, nisi. Sed pretium, ligula sollicitudin laoreet viverra, tortor libero sodales leo, eget blandit nunc tortor eu nibh. Nullam mollis. Ut justo. Suspendisse potenti.

Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

Lock

Content Locked

FREE SAMPLE RUNDOWN

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Phasellus hendrerit. Pellentesque aliquet nibh nec urna. In nisi neque, aliquet vel, dapibus id, mattis vel, nisi. Sed pretium, ligula sollicitudin laoreet viverra, tortor libero sodales leo, eget blandit nunc tortor eu nibh. Nullam mollis. Ut justo. Suspendisse potenti.

Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

Lock

Content Locked

FREE SAMPLE RUNDOWN

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Phasellus hendrerit. Pellentesque aliquet nibh nec urna. In nisi neque, aliquet vel, dapibus id, mattis vel, nisi. Sed pretium, ligula sollicitudin laoreet viverra, tortor libero sodales leo, eget blandit nunc tortor eu nibh. Nullam mollis. Ut justo. Suspendisse potenti.

Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.



00:00