Chapter 227: Signal
A short squeeze, simply put, is a phenomenon where those who started with a short sale, i.e., short sellers, are forced to buy back the stock due to market rules. This creates a ‘compression’ effect, pushing the price upward.
There are three key mechanisms at play here.
First, Forced Demand.
Short sellers must buy back the borrowed shares from the market.
As the price rises, losses increase, and if margin is insufficient, brokers initiate a forced buy-in (Buy-In).
At this point, buying becomes an ‘obligation,’ not a ‘choice.’
Second, Supply Withdrawal.
If lending institutions or holders recall the shares or stop lending (Do-Not-Lend), the number of shares available for borrowing in the market decreases.
Simultaneously, borrowing costs (CTB) spike, causing daily short-selling costs to surge.
Third, the Paradox of Hedging (Negative Gamma)
When we buy call options, market makers (dealers) must purchase more shares as the stock price rises to maintain their delta hedge.
This ‘forced hedge demand’ amplifies the initial spark and accelerates the upward movement in the negative gamma zone.
When these three mechanisms overlap, short sellers find themselves in a situation where they must all rush through a ‘narrowing corridor’ at once.
The number of buyers increases, while the number of sellers decreases—an asymmetry.
Once caught in this trap, those who were playing around can’t help but scream.
The lighting in the meeting room dimmed.
Grant pressed a palm-sized remote control to display the prepared strategy materials.
“Of the total 10 billion issued shares, 3.2 billion, or 32%, are currently in circulation.”
The remaining 68% are designated as Class B shares for management defense, with Dojin Tech and others holding most of the shares.
“Of the 3.2 billion circulating shares, 921.6 million, or 28.8%, are short sales?”
“Correct.”
“What about the remaining shares?”
“Long-term anchors that participated in the IPO, such as CIG (Singapore), the Norwegian Oil Fund, and the Abu Dhabi Investment Authority, hold 300 million shares, or 9.3%, and our DJ Capital, along with subordinate hedge funds, holds 490 million shares, or 15%.”
This means that 52.5% of the total circulating shares are tied up among short sellers, long-term anchors, and our holdings.
The rest are held by medium and small institutions and individual investors.
Lisa added,
“The core of this game is twofold: tighten the supply and maximize the number of forced buyers.”
Grant flipped to the second page of the prepared materials, revealing detailed phase strategies.
[Phase 1] Supply Disruption
· Recall & Do-Not-Lend
“We will first recall the actual borrowed shares from our 490 million holdings.”
“Notify the custodian of the partial recall and flag ‘Do-Not-Lend’ to prevent further lending?”
“Correct. This will immediately impact the shares available for borrowing in the market.”
Grant continued his explanation.
“It would also be wise to lock in the Class B shares held by the chairman and Dojin Tech through a definitive disclosure.”
“Send a signal that major shareholders will not sell under any circumstances?”
“Correct.”
The intention was to preemptively block psychological selling pressure.
The presentation moved to the next slide.
[Phase 2] Cost Pressure
“As borrowing volumes decrease, borrowing costs (CTB) naturally rise.”
With brokers increasing their collateral haircuts, it was only natural for daily short-selling costs to rise.
“We also plan to create the appearance of active trading.”
“Make it seem like there’s ample liquidity, lulling short sellers into thinking they can buy back shares anytime.”
It wasn’t a bad approach.
When I agreed, Grant opened the final slide.
[Phase 3] Demand Ignition & Exit Blockade
This slide’s meaning was immediately clear without further explanation.
“Reassure investors to boost buying demand?”
“Yes, the strategy is to publicly release ‘figures’ on the market’s concerns while keeping the design and recovery methods confidential to calm anxieties.”
Engine reignition interval distribution, heat exchanger loop stability heatmap, ECR catalyst canister pressure drop, turbopump bearing fatigue life, and more.
Keep recovery methods hidden but use data to demonstrate that ‘5 reignitions’ and ‘relaunch within 7 days’ are physically possible.
“Then, we plan to lay down a gamma ladder for call options.”
Grant enlarged the chart.
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Maturity Distribution: Ladder composed of weekly, monthly, and quarterly options
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Strike Distribution: ATM, +10%, +20%, +35% evenly spaced
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Purpose: Force dealers to delta hedge by buying (entering the negative gamma zone)
“When we buy calls, market makers, i.e., dealers, are obligated to buy more shares. As the stock price rises, they’ll have to buy even more, so with just an initial spark, upward momentum will accelerate.”
It was complex, but in summary:
Make them think they can exit anytime, while actually narrowing the exit upward.
Lisa displayed the summarized timeline on the screen.
[T-Line (Summary)]
① D-30 ~ D-25: Partial recall (Recall) of DJ Capital/Trinity Holdings holdings, apply Do-Not-Lend. Pre-coordinate with prime brokers on collateral haircut guidance.
② D-24 ~ D-20: Activate liquidity mirage. Maintain surface trading volume but thin out depth. Target Days-to-Cover from 4.6 to 6 days.
③ D-19: First Data-First Briefing → Release reignition, ECR, and thermal response figures.
④ D-18 ~ D-14: Build first gamma ladder (weekly/monthly ATM+10%). Trigger dealer delta hedging.
⑤ D-10: Second briefing (turbopump, thermal fatigue limits), expand anchor recalls. Target CTB increase to 20%.
⑥ D-9 ~ D-6: Second gamma ladder (+20%, +35%). Enter negative gamma zone.
⑦ D-5 ~ D-1: Monitor Fail-to-Deliver, agree on forced Buy-In triggers with primes.
⑧ D-Day: Live launch telemetry. If price breaks upper limit, gamma chain explodes → short cover domino.
Seong-hwan gasped at the lengthy but neatly organized timeline.
“It’s a bit complicated, but… if we do this, when Leviathan launches successfully, buying demand will explode, making short covering virtually impossible, right?”
Grant smiled.
“Not quite impossible… but forcing them to buy at any price.”
Lisa continued.
“When CTB hits the mid-to-high 20s, share utilization exceeds 90%, and Days-to-Cover stretches to 6-7 days, brokers will issue margin calls overnight. If they can’t meet them, forced Buy-Ins will kick in. Then it becomes a race to see who collapses first.”
The timeline we laid out is the gasoline, and the successful launch is the spark—that was the message.
…
Golden Edge Main Trading Floor
Red bars flashed consecutively on the giant ticker board.
【 DJFT: $11.28 ▼-6.7% 】
【 Intraday Low: $10.96 】
Lionel set down his coffee cup, looking excited.
“New low today?”
Sarah Morgan drew a line on the chart.
“After the gap down, the lows came precisely at our targeted times. Option volatility is also holding at the upper range.”
Sarah pulled up another chart.
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Short Selling Increase: 32 million shares (3-day total)
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Borrowing Costs (CTB): 18.4% → 20.9%
“CTB already surpassed 20%?”
“Yes, with our rapid increase in short selling and some institutions recalling lent shares, borrowing costs rose more sharply than expected.”
While CTB was higher than usual, it wasn’t a major concern.
“Compared to what we’ve earned so far, these fees are nothing.”
“Agreed.”
“But why are the institutions recalling shares?”
They were making substantial profits, so the sudden halt in lending was puzzling.
“With the stock price falling so quickly, they likely judged it better to sell and reduce risk rather than lend.”
Lionel nodded in agreement with Sarah Morgan’s explanation.
Then, he spoke firmly.
“Fees are no issue. Borrow more if necessary to keep the stock price firmly down.”
“Understood.”
Exiting the meeting room, Sarah Morgan immediately increased the short-selling volume.
As Golden Edge continued its aggressive selling, the institutions following them competed to increase their short positions.
And around that time, a new post appeared on Kang Tae-joon’s feed.
[KTalk Feed] - @Kang Tae-joon | Followers: 134,872,531
DJFT Data-First Briefing
Reignition Interval Distribution (μ=71s, σ=5s, n=50)
ECR Canister ΔP: 0.33x Critical (Long-term Operation ±7%)
Heat Exchanger Loop ΔT Margin: +22%
Turbopump Bearing MTBF: 100k cycles
#Trustme #Failureisnotanoption #Leviathan
└ What… what’s this supposed to mean?
└ Looks like data… Can someone interpret?
└ Damn, stop posting this crap and tell us what you’re doing about the stock price!
└ Seriously, what’s the plan for the stock price? It feels like $10 could break any moment.
└ Lol, always with the ‘Trust me.’
└ Looks like engine test data to me.
└ Engine test?
└ μ=71s, σ=5s, n=50 ⇒ Mean reignition interval is 71 seconds, standard deviation is 5 seconds, sampled 50 times.
└ Bro, can you explain that more simply?
└ In short, the “on-off-on” cycle timing is consistent. A 5-second deviation means the control logic, valves, and ignition system are stable.
└ So, does that mean ‘reusable launch vehicle’ and ‘relaunch within 7 days’ are possible?
└ I don’t know about that. But if these numbers are real, at least the reignition itself is stable. The details below suggest the same.
└ Lol, what use is this data? There’s still no mention of the landing legs.
└ Without landing legs, it can’t return anyway, right?
└ That’s why the stock keeps falling.
└ …
Even though Kang Tae-joon directly signaled ‘no issues,’ most investors didn’t stop selling.
Golden Edge and the hedge funds following them also showed no intention of closing their short positions.
Time passed…
And now, only 9 days remained until the Leviathan launch.