This past week I have watched two different documentaries on the GameStop (GME) phenomenon of January 2021ish. Watching the doc Gaming Wall Street, the topic of “naked short selling” came up and spurred on some thoughts, which I would like to share. From my knowledge, GME had a short interest of 130%+, however, let's say the shorts had only borrowed 100% of the outstanding shares to short sell. My underlying question is, how then would option traders be able to sell calls or buy puts, if the underlying shares would have been borrowed for short selling purposes?
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