caroline: from bloomberg's world headquarters in new york and london come i'm caroline hyde. romaine: let's take a look at where stocks ended on the day. the s&p 500 higher on the day. joe: the question is "what'd you miss?" caroline: maybe you are missing out on the retail mania heading the markets. womanhood, rented, whatever in the forum, they are talking market shifts and using plenty of market -- plenty of

emojis. gamestop has become the name everyone is talking about. at one point today, 145%. and then it comes down quite a bit and ended up higher. the stock is a not a ground for short-sellers, triggering at least nine trading holds for volatility. it is not just gamestop we see caught up in the retail mania . you see blackberry. it is bitcoin. that is struck the side of like. joe: all kinds of blasts from the past having a monster few days. massive shortselling and a few of these names that have been left for dead. massive call buying. people on message boards. it was not gamestop everyone was talking about but blackberry and express, another one of these mall retailers. huge moves today being pulled

back a little bit from the earlier highs. express came close to finishing on the highs. it is a historic day by some measures. romaine: by some measures. we cracked jokes about all of this. at the end of the day, this kind of exposed the core of what the market is about. at the end of the day, it is about price appreciation. some people just go off the price and there you go. that white line is basically a basket of the most shorted stocks out there and the performance much of two that -- performance relative to that. in differential between what you would have gotten if you invested in the shorts versus broader. joe: joining us is sarah ponczek, bloomberg cross-ice it reporter. used to get -- cross asset reporter. now it seems they are dangling a red flag for the bulls to

charge. sarah: these days they are relentless. by some measures. the chart that romaine was just showing, the basket of the most shorted stocks, already theh, u. that would be the highest return going back to 2008. as a matter of historic measures we saw today, you can track total volume of call options trading. today, we saw over 32 million call options contracts. that is that second-highest ever on record. the record we saw was back in november. so we continue to see these unbelievable numbers just crossing the tape. he mentioned some of the names to give you a sense. blackberry, 68,000 just about calls trades. almost one million calls trades. these are records in blackberry,

amc. we saw about one million for gamestop on friday. just relentless. they continue. caroline: it is relentless. talk about the fact that they are using call options. how much more financially viable is that for a retail investor nowadays? how much more outsized impact do they have on the market because of it? sarah: so we are seeing retail buying of call options just explode higher. it really happened mid to late last year. we saw at late summer in some of the most popular tech names, in tesla, in apple for example. but it really more so moved to lesser-known stocks or stocks that have all but been forgotten that trade for lower prices. what this looks like his they are buying way out of the money call options that expire more so near-term. you see this show up in the data. for example, plenty of data has been put out on this showing

that if you look at call options, those trading fewer than 10, you can really dial it down to small retail traders. that share of the trading has really just surged and moved higher. you can see it is small traders doing much of it. therefore, it forces the never ending circle where the dealers of those options have to hedge their positions and you see the stock spiraling higher. romaine: where does this end? you have a great podcast named "what goes up" that might be renamed to "what goes down." at some point you take the fundamentals of a gamestop, put them in a spreadsheet, you are not getting any dollars per share close to that initial fundamental. at some point, you are buying future earnings. if they do not materialize,

somebody will be left holding the bag. sarah: this is clearly a trade. there are those taking the other side of it now. if you look at stored interest on gamestop, for example, it has stayed very highly elevated. hardly budged. the understanding here is why was some shorts are getting sweet, you have others opening up new positions to hopefully take advantage of what will eventually must come down. at the same time from you look at options volume in gamestop today. we sought 80,000 to 90,000 puts traded, so well above the amount of calls traded today even after the abruptness of the surge call buying the past couple days. want to take it manage of the other side of this. for months now, we have heard professional investors saying this will end badly. this is a sense of euphoria that cannot last forever. this has been going on for a month and has not ended yet. stocks only go up.

that cannot last forever. it is very difficult to pinpoint when the party will end. you look back at the late 1990's and how long that continued for example. caroline: the 1990's. sarah ponczek, thank you very much. meanwhile, coming up, we continue our conversation on the market mania. a guest says about the retail impact. this is bloomberg. ♪

romaine: welcome back. today we are focused on the retail mania in the market out there. express my blackberry, gamestop, joe. this is an emoji free show. what if i were to pick one, what would it be?

joe: a fire one or a rocket. that seems like the obvious one. trading in gamestop, talking about it more, going absolutely nuts. look at the volume the last few days. there has never been anything like it in its history. the redditors have taken hold of this one and taking it to new heights. caroline: it has to be the emoji with the brain exploding. joe: that is a good one. caroline: that would be my choice. joe: let's bring in ben. ben explains these phenomenons better than anyone. what is a gamut squeeze? maybe that has something to do with what is going on today. if you had to explain it to a five-year-old, what is it? >> sure. great to see you again. the community and real investors more and general this year have taken to buying options and

buying short-term out of the money call options to express their views on stocks they like going up. what that does, when there is very happy buying, particularly short-term out of money call options, call options are something a dealer sells to a client to manufacture that exposure. when the client buys the call options, the dealer finds the stocks to hedge the directionality. we may only have a small amount of sensitivity but as the stock goes up enough, the sensitivity of those options grows and grows and grows as the options near the strike price of the call options. that causes the dealer to buy more and more stock. so you get the positive feedback effect. think of them as accelerants.

romaine: we have seen these types of squeezes before in the past. a lot of people drawing parallels to what we saw in the 1990's. we saw a retail traders come in using message boards back then to coordinate or even collude, but it seems like there is more access or easier access to options and derivatives that did not necessarily exist back then. benn: i think that is right. it is a broader phenomenon. i remember dentists and doctors and lawyers would talk about their options positions on yahoo! and everything at the time. but it was smaller penetration. now you see a number of option enabled accounts across retail brokerages in the u.s. skyrocketed and very widespread use. you see platforms like robin hood that make it easy to get options accounts.

i think the breadth of this activity is much larger and the coordination of this activity is relatively large as well when you see effectively instead of it being a legacy stock trying to convince its friends of getting them to buy it, you see someone doing the same thing but on their youtube channel. why gamestop is a good trade. someone had been pitching the stock with a slide deck and a view. we can argue with his view or not but it is an articulated view on the stock. his audience is retail and he is trying to convince retail this is right. caroline: meanwhile, some big titans of wall street getting caught on the others of this. melvin capital had to take more

money because he is out of money have been shorted gamestop. we have seen some having to back off of these bets. we will see investors with money behind them having to read read an awful lot more -- read read it -- read reddit a lot more. benn: the short squeeze is very related in the sense that a retail investor buying a call option has a long position. if the stock is running to the upside, he can make more and more money. you have a $100 million short position, the stock doubles against you, now you are short

$2 million. and you are forced to cover. it is not that different from being short call options. so you get again the squeeze amplified by large short positioning in the marketplace. joe: we know there is a perpetual motion of money machine. at some point, it will converge. from your perspective, are there indicators you can look at to see when the buying is exhausted or when dealers have caught up or other things you look for to see how far these moves can run? benn: i think part of what you have seen is this online trading community rotating across themes. there are a variety of themes they have been interested in the last six to eight months.

in may and june, it was cruise ship's and a distressed reopening basket to mega cap tech and then it shifted to more like unprofitable very speculative new tech. now it is into gamestop, which is a little bit back to the distressed theme. i think what you see is this real rotation of interest. people get bored with a particular theme and then move on. you look back at the stocks three months or six month later and a lot of them are past what they run up to. from an option buying perspective, what you see is people move on from these things. you see volumes fall dramatically. but in any one particular -- for the market as a whole, this kind of activity can be sustained for a long period of time unless the community starts to lose a

lot of money on a sustained basis. you have seen large losses in some pockets. you need a sideways choppy market for six months for out of the money option buying lighting catch on fire. romaine: good to have you on. helping us break down some of the bubble stocks if you want to call them that. bitcoin, remember when that was a bubble? we will talk about that after the break. we will have more coming up here. this is bloomberg. ♪

♪ caroline: today we are focused on some of the mania two-hit equities like gamestop. -- to hit equities like gamestop. we cannot forget our favorite, bitcoin. now, just 32. joe: i remember bitcoin for a while was this really hot thing

making a lot of people money. i guess people moved onto stocks. there you see the chart. still obviously it has done well. romaine:romaine: i remember when we use to see bitcoin every single day on the show. the soon to be treasury secretary janet yellen weighed in on it last week at her confirmation hearing, what she thought about crypto. >> cryptocurrencies are a particular concern. many are used mainly to elicit financing. i think we need to examine ways in which we can curtail their use and make sure anti-money laundering does not occur through those channels. joe: so joining us with more insight, michael. i saw on twitter today you are making a big donation to coin

center, mdc lobbying -- in d.c. lobbying. what are your big concerns? you heard janet yellen talking about the potential use of crypto there. how do you want to see regulation move forward in a positive way from your perspective? >> i think we made the donation because we feel there has never been a better time to invest in this asset class. i think when we start seeing statements like what was just made, the biggest component missing here, those who dug in on this asset class know that using assets like bitcoin for anything the least bit nefarious, elicit, etc., is the worst mechanism possible since every single transaction leaves a digital breadcrumb. supporting entities like coin center interest policymakers,

regulators, however it may be, when there is legislation in front of their death, they are not aware of it or up to speed on it. -- in front of their desk, they are not aware of it or up to speed on it. caroline: the education system seems to be in on the asset class. i want to ask about what you are been down for you are one of the biggest fund tracking bitcoin overall. sometimes at an amplified effect and sometimes at it let simplified effect. with a new administration, what does that mean in terms of the competition for you? michael: i think at the moment, my team is really focused on looking to grow the product suite over the course of this year and driving investor demand for exposure to other parts of

the asset class. certainly no shortage of new entries but we do not view them as competitors so much as we view them as helping grow the pie chart. in 2020, we raked in over $5.7 billion last year, which is over 4x we experienced in the prior six years. that should underscore how much demand there is, not to mention the fact that 85% of that was from institutional investors. when you start talking about hedge funds and endowments, really wanted to ensure they are able to have capital in a calm client way. dust in a compliant way. -- been a compliant way. romaine: this ties back to what janet yellen said. the idea of your utility of

bitcoin and other crypto assets, what are institutional investors saying they are using this for? is just simply to store wealth. -- wealth? michael: you guys remember our drop gold advertising campaign from a few years ago. that is a widely held narrative now what i don't think it is coincidence. bitcoin at its all-time highs late in 2020 at the same time we saw a record outflows from gold products. i think in addition to that narrative over the course of the year we sought evermore fiscal stimulus being injected into the financial system. many investors were drawn to bitcoin. i believe that continues to be a theme that attracts them to the asset class and not be something we will be getting off of anytime in 22 anyone. -- 2021.

holding an asset that is scarce versus one being diluted. important for a lot of investors as they evaluate the product. joe: we were talking about all these options trading on robinhood, gamestop, and all these others, and there is a lot of places that the retail individual investor can have a lot of fun and a lot of volatility speculating. we know that is part of the appeal of crypto, but there is a lot of speculative activity. do you see that as competition whereas once maybe they would have had to look at cryptocurrencies or the more speculative parts of their portfolios, giving them a greater range of options? michael: this coming year, you will see more options for the investor to attack this asset class. last year, a lot were encouraged by the move at square, some other financial services were

able to bring forward. 2021, i would not be surprised to see additional avenues opened up for investors to be able to access the class. the more axis there is, the more education it is -- there is, the more it solidifies it is here to stay. caroline: great to have you are now that you are chief executive. it is the age-old question now. used to roll over and check tesla or money supply. more like 1990's, the year 2000. what are you going to be looking at now? what do you want to go for now? joe: i went to see if hot topic is being treated but they were acquired. i am sure they will be a new one i totally forgot about. romaine: got an upgrade today. joe: they are taxed.

we will check them first thing tomorrow. caroline: the 4:00 a.m. quick flip through twitter. that is it for "what'd you miss?" joe: "bloomberg technology" this up next in the u.s. romaine: and daybreak australia is up next. this is bloomberg. ♪

♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." the biggest tech companies set to report earnings this week, including apple, amazon, google and facebook. president biden's team continues to shape up. how could a biden administration shape the internet? we have some e