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The original was posted on /r/Superstonk by /u/DrEyeBall on 2026-08-16 14:55:55+00:00.

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Full write-up / PDF: https://gofile.io/d/9yLzlAqg

I put together a longer market-structure thesis on what may be setting up between now and October. The short version is that I think several independent pieces are lining up in early September, with Regulation SHO Rule 204 being the most interesting potential mechanical driver.

A few important caveats up front: this is not a “GME is going on the Reg SHO threshold list” thesis. I’m talking about the ordinary Rules 200/203/204 framework. It also only matters if qualifying sales actually fail at settlement. The first-half August SEC FTD data should give us a very useful test.

The setup

June 26 produced a very unusual settlement event in EBAY, with an enormous aggregate FTD balance relative to that day’s trading volume. I do not think we can prove that event was directly caused by GameStop’s eBay position, and an EBAY fail obviously cannot simply become a GME fail.

What it does show is that very large settlement imbalances can appear around complex institutional positions and then disappear rapidly.

Separately, GameStop announced its $1.4B convertible-for-equity exchange on August 3.

That transaction creates an unusual situation: participating noteholders are expecting a large future block of GME shares, but those shares are not expected to be physically delivered until approximately September 23. GameStop explicitly warned that participants may buy/sell GME and enter or unwind derivatives while hedging the transaction.

We then saw heavy volume and price weakness after the announcement without an obvious corresponding collapse in displayed shares available to borrow.

That does not prove anything by itself. Ordinary borrowed shorting, derivatives, dealer internalization and other mechanisms could explain it.

But there is a more interesting possibility.

The Rule 204 possibility

Regulation SHO contains a narrow exception where someone can be considered to own, or be “deemed to own,” shares that they cannot physically deliver yet.

In a qualifying situation, the normal pre-sale locate requirement can be waived.

That does not mean settlement is delayed.

An August 3 sale is still due to settle at T+1.

So:

Aug. 3: qualifying holder sells future GME exposure

↓

Aug. 4: delivery is due

↓

If shares are delivered, done. No FTD.

↓

If they are not delivered, an FTD exists

↓

A qualifying deemed-owned FTD can receive the special Rule 204 close-out period of up to 35 calendar days from the trade

That is where the calendar gets interesting.

An August 3 qualifying sale maps to roughly September 7-8.

But the actual shares from GameStop are not expected until approximately September 23.

So if an early-August qualifying sale really did fail and remained unresolved, the shares that the seller expects from GameStop arrive too late to solve that early-September Rule 204 obligation.

That potentially creates a need to find or purchase GME before the exchange shares arrive.

Again: if the August FTD data are clean, this part of the thesis gets much weaker.

Why September 8-ish is interesting beyond Rule 204

The possible Rule 204 timing also happens to fall near GameStop’s normal Q2 earnings window.

Earnings could matter in two different ways.

First, strong results or another legitimate corporate update could provide the underlying demand needed to start a move.

Second, publication of earnings and other material information could give GameStop a cleaner environment for using its $2B share-repurchase authorization, assuming the board believes the stock remains undervalued and the company is legally free to trade.

I am not suggesting the company can buy shares specifically to manufacture a squeeze or force the warrants above $32.

The more reasonable interpretation is that GameStop can respond to market conditions.

If the board already thinks the stock is cheap but currently has earnings, eBay negotiations or other material information outstanding, waiting until that information is public may simply give the company a much cleaner opportunity to repurchase shares.

If that happens to coincide with settlement-related buying, that is an additional source of genuine underlying demand.

Then gamma can become the amplifier

The stock is currently sitting in a relatively depressed-volatility environment compared with prior GME events.

That matters because if the underlying starts moving before IV explodes, previously distant calls begin gaining delta.

If customers are net long those calls and dealers are net short gamma, increasing prices can force dealers to buy more underlying shares.

So the possible structure becomes:

settlement/fundamental/buyback demand starts the move

↓

spot reaches nearby strikes

↓

calls gain delta

↓

dealer hedging adds more stock demand

↓

price/IV accelerate together

The FTDs do not need to be enormous enough to create the entire move themselves.

They may only need to provide the first shove.

Why I keep coming back to Sept. 8-22

There are 11 trading sessions from September 8 through September 22.

Then the exchange is expected to close around September 23.

So my working base case remains:

Now through late August: compression / exchange hedging / ugly sentiment.

End of August: first-half August FTD data tell us whether the Rule 204 branch actually has evidence behind it.

Around Sept. 8: possible first real upward impulse.

Sept. 8-22: roughly 10-11 sessions where settlement demand, earnings, possible corporate buying and gamma could reinforce one another.

Around Sept. 23: physical exchange shares arrive.

That last point matters.

Existing convertible holders may already be short GME from the original 2025 offerings. Once they actually receive common shares, those shares can be used to close or return existing hedges.

So September 23 looks much more like a potential relief/reset event than the beginning of another automatic Rule 204 clock.

I would expect the possibility of a fairly sharp retracement or volatility reset there if the first part of the thesis works.

Then October becomes conditional

I still think a second October move is plausible because GME has historically produced “couplet” structures:

January 2021 → later February/March move.

May 2024 → June 2024 move.

Potentially:

September 2026 → October 2026.

But I would no longer claim September 23 automatically starts another 35-day cycle.

September itself would need to create new settlement failures, derivative exposure, short hedges or some other pressure cohort.

If September produces 10-11 sessions of enormous turnover and rapid repositioning, that is where I would look for the next objective seed.

And then there are the $32 warrants

GameStop has roughly 59M warrants exercisable at $32 through October 30.

Full exercise could bring the company approximately $1.9B in cash.

That creates an interesting corporate-finance asymmetry.

At depressed prices GameStop has a $2B buyback authorization.

At materially higher prices, warrant holders can effectively buy shares from GameStop at $32 and inject almost $1.9B of cash.

So hypothetically:

Company buys genuinely undervalued stock cheaply

↓

independent market demand rerates GME

↓

warrants become economically attractive above $32

↓

GameStop receives substantial new cash at a much higher equity valuation

That is very different from saying the company is trying to manipulate the stock above $32.

It is simply GameStop being positioned to benefit from both sides of its own valuation.

And we already watched management do something similar in 2024: extraordinary demand appeared, and GameStop converted that demand into more than $3B of permanent capital.

Where eBay fits

GameStop may ultimately have little reason to rush a final eBay transaction while GME trades near depressed valuations.

A substantially higher and more stable GME price would make stock-based acquisition consideration dramatically more efficient.

One possible path is that GameStop modifies or withdraws the currently announced eBay proposal, which could also simplify parts of the repurchase-law environment, then revisits eBay later after the September/October capital-structure events have played out.

That is speculation.

The broader point is simply that GameStop has enormous optionality:

GME cheap → potentially repurchase

GME expensive → retire debt / collect warrant cash / issue equity efficiently

GME sustainably more valuable → use stock as acquisition currency

Management does not have to create the market event.

It only has to recognize it and respond appropriately.

What would make me abandon this?

The biggest near-term test is simple.

If the first-half August SEC FTD file shows essentially nothing unusual beginning after August 3, then the specific:

Aug. 3 exchange → qualifying failed sales → Rule 204 → Sept. 8 pressure

argument loses a lot of weight.

The broader exchange-hedging thesis can still exist, but Ru...

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