Dubai resident Akshay Nair made a profit of $65,000 in one week by trading in GameStop shares. What protected Mr Nair from the stock's recent volatility was a hedge he purchased to save him from steep market losses.
After reading about the trading frenzy on Reddit's WallStreetBets forum and other market reports, the 35-year-old Indian expat last week bought around 500 shares of the Texas-based video game retailer when it was trading at $84.
He invested in tranches with an initial amount of $10,000, while his overall investment in GameStop at one point last week was $50,000. As the stock price went up, he sold the shares and started booking profits.
"Once the stock price went up too much and reports claimed it was overhyped, I took a hedge," the senior investment consultant told The National.
"I bought a few puts worth $16 last week on Interactive Brokers. That would protect me if the stock fell below $90. On Monday, the stock tumbled, so the protection made me money.”
GameStop, which has been the poster child for Redditors looking to squeeze short sellers, fell 60 per cent on Tuesday and eased another 5 per cent in after-hours trading, with shares closing below $100 for the first time in a week. Several other Reddit favourites, including movie theatre chain AMC Entertainment Holdings, also tumbled. GameStop shares erased more than $27 billion in market value after peaking at $483 a share last week.
Mr Nair has since exited the hedge and feels he is lucky to have made a profit when GameStop stock was both rising and dropping. However, he bought another 100 shares in GameStop for $94 each on Tuesday.
“I have re-invested $10,000, which is only a part of my profits," said Mr Nair, whose confidence grew when his bets paid off last week.
"I start slow and build up when I start making profits. I also take a hedge after a particular period. If I am in profit, I first remove my capital and then play around with the profits.” He also bought shares in AMC, Nokia and BlackBerry, investing $5,000 to $6,000 in each stock.
“I am willing to take some risk and hold onto these shorted stocks for the next few days to see where they go. I only hedge when my position size increases,” he added.
Extremely high levels of short interest drove retail investors to bid up shares in GameStop and AMC. At one point, short interest in GameStop reached about 150 per cent of the equity float, Vijay Valecha, chief investment officer at Century Financial, said.
“It was the perfect candidate for a short squeeze, a phenomenon which occurs when there is a lack of supply and an excess demand for the stock due to short-sellers covering or liquidating their positions. Once the number of buyers acquired a perfect mass, the stocks just took off,” Mr Valecha added.
However, the lack of new buying and hedge funds covering their short positions drove the share prices of these companies down.
Frenzied trading always tends to end up in tears as the opportunity window opens and closes and those caught at the top are generally unsophisticated traders who end up paying the price when the stock crashes, according to Stephen Innes, chief global market strategist at Axi.
However, the general market consensus is that the GameStop short-squeeze story is coming to an end.
“The Reddit WallStreetBets story showed us that there is power in unity and a similar event could happen to other heavily shorted stocks if traders stick together and act in perfect collaboration as they did for GameStop and AMC Entertainments,” Ipek Ozkardeskaya, senior analyst with Swissquote Bank, said. “But the slightest misstep would trigger chaos.”
The GameStop trading mania has taught investors that their portfolios should be managed well so that a single trade loss will not materially affect them, Mr Valecha said.
“The news of GameStop underscored the fundamental misunderstanding that most people have about stock market investment," Stuart Ritchie, director of wealth advice at AES, said.
"The golden rule of investing is don’t panic. When you have complete faith in your strategy and portfolio, nothing can sway you. Not the news, politics or pandemics.”
Read more about the coronavirus
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The Greatest Royal Rumble card as it stands
50-man Royal Rumble
Universal Championship Brock Lesnar (champion) v Roman Reigns in a steel cage match
Intercontinental Championship Seth Rollins (champion) v The Miz v Finn Balor v Samoa Joe
SmackDown Tag Team Championship The Bludgeon Brothers (champions) v The Usos
Casket match The Undertaker v Chris Jericho
John Cena v Triple H
Matches to be announced
WWE World Heavyweight Championship, Raw Tag Team Championship, United States Championship and the Cruiserweight Championship are all due to be defended
SPECS
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Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
UAE currency: the story behind the money in your pockets
COMPANY%20PROFILE
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
PROFILE OF STARZPLAY
Date started: 2014
Founders: Maaz Sheikh, Danny Bates
Based: Dubai, UAE
Sector: Entertainment/Streaming Video On Demand
Number of employees: 125
Investors/Investment amount: $125 million. Major investors include Starz/Lionsgate, State Street, SEQ and Delta Partners
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
A Long Way Home by Peter Carey
Faber & Faber
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Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
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Three ways to limit your social media use
Clinical psychologist, Dr Saliha Afridi at The Lighthouse Arabia suggests three easy things you can do every day to cut back on the time you spend online.
1. Put the social media app in a folder on the second or third screen of your phone so it has to remain a conscious decision to open, rather than something your fingers gravitate towards without consideration.
2. Schedule a time to use social media instead of consistently throughout the day. I recommend setting aside certain times of the day or week when you upload pictures or share information.
3. Take a mental snapshot rather than a photo on your phone. Instead of sharing it with your social world, try to absorb the moment, connect with your feeling, experience the moment with all five of your senses. You will have a memory of that moment more vividly and for far longer than if you take a picture of it.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
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On sale: Now
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'Manmarziyaan' (Colour Yellow Productions, Phantom Films)
Director: Anurag Kashyap
Cast: Abhishek Bachchan, Taapsee Pannu, Vicky Kaushal
Rating: 3.5/5
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
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Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Match info
Uefa Nations League Group B:
England v Spain, Saturday, 11.45pm (UAE)
Company profile
Name: GiftBag.ae
Based: Dubai
Founded: 2011
Number of employees: 4
Sector: E-commerce
Funding: Self-funded to date
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Company: Instabug
Founded: 2013
Based: Egypt, Cairo
Sector: IT
Employees: 100
Stage: Series A
Investors: Flat6Labs, Accel, Y Combinator and angel investors
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
RESULTS
6.30pm Maiden (TB) Dh82.500 (Dirt) 1,400m
Winner Meshakel, Royston Ffrench (jockey), Salem bin Ghadayer (trainer)
7.05pm Handicap (TB) Dh87,500 (D) 1,400m
Winner Gervais, Connor Beasley, Ali Rashid Al Raihe.
7.40pm Handicap (TB) Dh92,500 (Turf) 2,410m
Winner Global Heat, Pat Cosgrave, Saeed bin Suroor.
8.15pm Handicap (TB) Dh105,000 (D) 1,900m
Winner Firnas, Royston Ffrench, Salem bin Ghadayer.
8.50pm UAE 2000 Guineas Trial (TB) Conditions Dh183,650 (D) 1,600m
Winner Rebel’s Romance, William Buick, Charlie Appleby
9.25pm Dubai Trophy (TB) Conditions Dh183,650 (T) 1,200m
Winner Topper Bill, Richard Mullen, Satish Seemar
10pm Handicap (TB) Dh102,500 (T) 1,400m
Winner Wasim, Mickael Barzalona, Ismail Mohammed.
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ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Zayed Sustainability Prize
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
