$GME price in Jan-Feb 2021. Image Credits: https://finance.yahoo.com/chart/GME
Folks like Melvin Capital and Citron Research think that GameStop is a dying business. The general public is optimistic though, be it for fundamental reasons (e.g. Ryan Cohen (chewy.com) will help GameStop can re-invent itself in the online space ), or for personal amusement, or FOMO. In particular, /r/wallstreetbets members are buying lots of call options ....
Short Selling Say $A shares are selling at $100, but I think they’re overpriced. So I borrow 10 shares, pay my brokerage interest and post some collateral. I then sell the shares for $1,000.
Whoever buys my shares has no idea that I do not own them. In a naked short, I do not actually borrow or ensure that the security can be borrowed within the standard 3-day settlement period....