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The original was posted on /r/Superstonk by /u/SM1334 on 2025-06-22 20:34:56+00:00.
If you havenāt already read my DD on IGME, go read that one FIRST then come back and read this one.
Introduction: A New Tool with a Hidden Purpose
In March 2024, a new ETF launched: the T-Rex 2x Long GME Daily Target ETF (GMEU). On the surface, it looks bullish, it offers 2x daily exposure to GME, marketed as a way for retail to double their upside on any breakout.
But the structure, timing, and mechanics suggest this ETF may not exist to benefit retail at all. Instead, GMEU may serve a far more calculated purpose: to help institutions exit large, toxic short positions, by creating a way to profit from GMEās rise while they slowly close shorts. This only works if the squeeze can be controlled, however it looks like a system was built specifically for that. This DD breaks down how GMEU works, why itās structured the way it is, and how it could be part of a larger strategy to manage a naked short position exit without triggering the full explosive consequences of a GME squeeze.
What GMEU Actually Is and How It Works
GMEU is a 2x daily leveraged ETF. Itās designed to deliver twice the daily return of GMEās share price. If GME goes up 5% in a day, GMEU is designed to go up 10%. But it doesnāt do this by buying GME shares.
Instead, GMEU uses over-the-counter (OTC) total return swaps. These are contracts between the ETF and a counterparty (usually a large bank or institution) where the fund receives twice the daily return of GMEās stock price, without buying any actual shares. There is no direct buying of GME stock, and no impact on GMEās float, volume, or spot price.
This means:
- GMEU allows for synthetic long exposure without triggering buying pressure on the stock.
- Institutions can enter or exit positions in GMEU without touching the real GME market.
- Price movement in GMEU is entirely derivative-based, not equity-based.
To retail investors, it looks like a bullish play. But to institutions, itās a way to ride GMEās upside without contributing to the breakout.
Why This Matters for Shorts
If institutions are holding large or synthetic short positions, covering those shorts would require massive buying pressure, which would likely trigger an uncontrollable price spike (ie moass).
But GMEU offers a workaround.
Since GMEU provides 2x daily long exposure through swaps, institutions can use it to gain on GMEās rise without buying the stock. If they begin covering their shorts, pushing the price up, they can simultaneously open or hold GMEU positions to profit from the same move.
This allows them to:
- Offset losses from short covering with gains from GMEU.
- Slowly unwind their positions without exposing themselves to a runaway squeeze.
- Maintain pressure off the spot market, since GMEU doesnāt buy shares.
In other words, GMEU gives shorts a back door: a way to exit without blowing up the price, as long as the move is tightly controlled.
Enter IGME: The Volatility Suppressor
Bitwise launched IGME, an ETF that mimics GME exposure but never buys GME shares. I covered this in my previous DD (here). Instead, it uses synthetic long positions and systematically sells call options to generate income. This strategy caps GMEās upside and suppresses volatility by flooding the options market with calls and lowering implied volatility.
IGME is designed to profit when GME stays range-bound and fails to break out, the exact environment needed for a controlled short unwind.
When paired with GMEU:
- IGME absorbs momentum and slows down volatility spikes.
- GMEU allows profits from controlled upside, without moving the stock directly.
- The result is a system that reduces the risk of a runaway squeeze, while providing a way to gradually exit massive short positions with minimal damage.
This timing was not random. IGME launched after GMEU, once GameStopās fundamentals were improving and the risk of a real breakout was growing. Together, these ETFs may form a coordinated system to manage the unwind.
The Controlled Squeeze Theory
The combination of GMEU and IGME suggests a strategy built around executing a controlled squeeze, one that allows institutions to exit massive short positions without triggering a price explosion.
Hereās how it works:
- Institutions begin closing short positions, which naturally pushes GMEās price up.
- At the same time, they open or increase exposure in GMEU, which delivers 2x daily returns on GMEās price movement through swaps.
- As GME rises, losses from short covering are offset by leveraged gains from GMEU.
- Meanwhile, IGME works in the background, selling calls and suppressing implied volatility to prevent momentum from getting out of control.
- The squeeze is kept within a narrow band, avoiding massive gamma ramps, retail FOMO, and runaway breakouts.
If managed properly, this system lets institutions offload synthetic or naked short exposure while appearing to be net long, without driving GME into the six- or seven-figure territory.Itās not about stopping a squeeze outright, itās about controlling it just enough to get out alive.
Risks, Timing, and Fail Conditions
This strategy only works under tight control. If any part of the system breaks down, the entire plan can fail, and with it, the ability to exit short positions without triggering a full-scale squeeze.
Key risks:
- Retail awareness and pressure: If retail identifies the unwind in real time and begins aggressively buying or DRSing shares, it can overwhelm IGMEās suppression effect and break the containment.
- GMEUās compounding flaw: GMEU resets daily. Holding it over multiple days introduces compounding distortion, especially in high-volatility environments. If GME makes large swings, GMEUās performance can deviate heavily from expected returns, making it unreliable for longer-term hedging.
- Liquidity and volume exposure: If institutions try to unwind too fast, the buy pressure from covering will overwhelm market makers. This could trigger gamma squeezes as option sellers are forced to hedge with real shares.
- Sentiment reversal: A sudden shift in public perception (e.g., DFV making a comeback (again, again), S&P 500 speculation, or another major catalyst) could cause a surge in demand that invalidates the controlled unwind.
The entire system depends on precision, timing, and suppressed retail participation. Without that, GMEU becomes a liability, and IGMEās suppression fails.
(TLDR) Conclusion: GMEU May Be a Trojan Horse for Short Exit
GMEU was presented as a bullish product, a 2x long GME ETF aimed at traders seeking amplified exposure. But when you look deeper, it appears to serve a different purpose entirely.
It allows synthetic long exposure without buying shares. It gives institutions a way to profit from GMEās rise while closing short positions in the background. And when paired with IGME, a product explicitly designed to suppress volatility and cap upside, and advertised directly to retail investors. It forms a system that looks engineered to let shorts out slowly, without triggering the squeeze everyone expects.
This is not about helping retail. Itās about protecting institutional positions. GMEU provides the profits. IGME provides the suppression. Together, they offer a potential path for shorts to escape a catastrophic loss, by containing the explosion before it happens.
Retail needs to understand what these products really are:
- GMEU is not buying GME, itās making bets off to the side.
- IGME is not exposure to GME, itās designed to prevent momentum.
- Together, they donāt support GME. They help control it.
This is not a coincidence. Itās a system, built to manage the unwind. And unless retail breaks the pattern or overwhelms the fuse, thats how it will play out.
Before you decide to post a comment saying you think I'm wrong, and that these ETFs are NOT going to be used to kill off MOASS. Let me say this, there is a very clear way here that they can use these ETFs to kill MOASS, do you honestly think they are going to sit there and let MOASS happen, and not even make a slightest attempt to use these conveniently setup ETFs to their advantage to last āJust 1 more dayā? Do you honestly believe that? Probably not.
Do I think MOASS is dead at this point?
No, not at all.
In my opinion, thereās still a very slim chance this whole hedge fund unwind strategy actually works for them, and that chance relies on two major assumptions going their way:
- Retail FOMOs into IGME instead of GME. They need people to believe that buying IGME is the same as buying GME, even though IGME never buys shares and actively suppresses price action. If retail sees through that, the inflow fails.
- Weāre wrong about the size of the naked short position. This entire plan only works if the short exposure is manageable. But if the naked shorts are truly multiple times the float, as many here believe, then no amount of suppression or swap-based hedging will be enough. Eventually, theyāll have to close in a market that doesnāt have the shares and thatās when MOASS happens.
So no, I donāt think MOASS is dead. I think theyāre trying to delay it, contain it, and exit with as little damage as possible. But theyāre betting everything on a very narrow path. If even one piece fails, the entire structure collapses and that fuse becomes a detonation.
