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Meme stock

A stock whose price is driven mainly by coordinated retail attention on social platforms rather than by fundamentals.

Meme dynamics combine a small float, elevated short-interest, cheap call options, and a social feedback loop. Dealer hedging of those calls can add mechanical buying, which is the gamma-squeeze leg on top of a short-squeeze.

The practical features are a total breakdown of normal volatility assumptions, repeated limit-up-limit-down halts, borrow fees that jump to triple digits, and companies that use the price spike to run an at-the-market-offering into the demand.

Example: a stock with a 15M share float trades 90M shares in a day, turning the float over six times, then closes 40% off its high after the company announces a $500M share sale.

Related: short-squeeze, gamma-squeeze

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Bollinger bands squeezing and then expandingA price line between three curves: an average in the middle and a band above and below it that pinch together in the centre of the chart and then spread apart as the price runs higher.PRICE WITH BOLLINGER BANDS (20, 2)SQUEEZEupper bandpricemiddle band20-day averagelower bandbands widen asvolatility risesIllustrative prices. The bands sit two standard deviations from the average.
Bollinger bands: squeeze and expansion. The middle line is a 20-day average and the outer bands sit a set number of standard deviations away, so they measure how far price has recently been straying. When moves are small the bands pinch together; when moves grow they spread apart.

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