A veteran options trader breaks down the intricate strategy that Reddit traders used to outsmart Wall Street’s bet against GameStop – and shares 2 ways the parabolic rally could permanently alter the stock market

• Steve Sosnick is the chief strategist of Interactive Brokers and head trader of its trading unit Timber Hill.
• Sosnick breaks down the short squeeze and gamma squeeze Reddit traders put in place for GameStop.
• He also shared how the parabolic moves of these meme stocks could permanently alter markets.

Markets were possessed by GameStop mania this past week, and it was hard not to pay attention.

The brick-and-mortar, video-game retailer that was once left for dead in the coronavirus-induced lockdown has surged over 1,300% in the past month. 

GameStop’s stratospheric rally, mostly driven by Reddit’s WallStreetBets traders, upended hedge funds such as Melvin Capital and Citron Research. According to data provider Ortex, GameStop short-sellers have lost around $19 billion in 2021.