A Wall Street Genius’s Final Investment Playbook
Chapter 184

The next day.

Wall Street's attention was entirely focused on Herbalife.

It was because the short squeeze declared by Ha Si-heon was intensifying fervently.

“How high will it go?”

“Can this really succeed?”

Amid the market's soaring curiosity and tension, Herbalife’s stock price skyrocketed from $53 to $74 in just a single day.

There were three decisive factors behind this surge.

“Massive influx of Herbalife call options! Strike price 75! Totaling $30 million!”

“Delta 0.50! Gamma indicators are also surging!”

The first catalyst was Ha Si-heon’s “gamma squeeze.”

He aggressively scooped up out-of-the-money (OTM) call options, forcing market makers into hedge buying.

It was a direct reversal of Ackman's previous strategy used against Valeant.

However.

The sharp wolves of Wall Street couldn’t let this opportunity pass by.

“Shall we jump in too?”

“Looks like easy money if we ride the momentum and pull out quickly…?”

Ha Si-heon's short squeeze was already common knowledge—essentially a flare signaling Herbalife’s rapid stock-price explosion.

Of course, such upward momentum wouldn't last forever.

But as the year-end approached, "sustainability" was hardly relevant.

“If we can boost our P&L even by just 1-2%…!”

Year-end was when hedge funds and asset managers polished their performance records.

If it meant maximizing portfolio results or nudging their annual returns even slightly upward, they were ready to do anything.

Therefore, numerous funds and asset managers who ordinarily would not have glanced at Herbalife seized the opportunity without hesitation.

This became the second reason behind the stock’s surge—the “Santa Claus Rally.”

And finally, the third and most explosive trigger erupted.

It was none other than the mad rebellion of retail investors.

– Let's topple the top 1%!!

– Sean’s Financial Jenga Time!

– Remove the Herbalife block, Ackman trembles – Valeant block unstable, entire tower collapses!

– Just broke my college savings fund! This is real-life education!

The WSB army hadn’t forgotten Ackman’s earlier tyranny representing the top 1%.

They passionately joined Ha Si-heon’s scheme, vowing fiery revenge.

79.23……

80.12……

81.45……

Thus, these three catalysts spun into a fierce whirlwind, nearly doubling Herbalife’s stock price.

However, Ackman was not just sitting idle and watching.

“How’s the HFT situation?”

“The algorithm is running at full capacity. IV has spiked to 120%!”

Under Ackman’s orders, High-Frequency Trading (HFT) algorithms entered the battlefield.

The screens flooded explosively with buys and sells, causing the stock to wildly oscillate between rapid gains and plunges, as if dancing madly.

The extreme volatility sharply increased implied volatility (IV).

Furthermore, with large-scale put option orders joining the fray, IV spiraled out of control.

This IV surge inflated option premium prices dramatically, thereby suppressing further option purchases.

-Premiums are insanely high lol.

-No YOLO this time, just buy shares. Driving the stock price up is key now.

-As Sean wields the iron hammer of gamma squeeze, it shall rise without end!!!

-Hold with diamond hands, straight to the moon!

-Let’s make those suits cry blood! Now we are the market!

Even retail investors, habitually aiming for options, stepped back stunned by the soaring prices.

However.

Paradoxically, this actually further fueled their purchasing fervor.

-WSB monkeys evolving: Straightforward approach with stocks, unlike option garbage.

-Weapons of the retail army:

1. Buy shares.

2. Relaxed holding.

3. 0% stress.

-Sharing advanced trading strategy: Press the buy button, delete the app, step outside onto grass, check back in 2015.

Stock trading had limited risks compared to options trading.

For beginner retail investors, this meant lowered barriers to entry.

Unlike past retail investors who lost everything through options, newcomers invested only disposable income.

Meaning there was still ample capital available.

And inspired by WSB, they were pouring their remaining assets into Herbalife stock.

“The buying from retail investors is extraordinary! Currently, half the total trading volume comes from small lots! At this rate….”

The buying frenzy showed no signs of cooling.

The madness continued, with stock prices climbing continuously.

“At this pace… we'll surpass the threshold!”

Ackman’s face stiffened.

He, too, intuitively sensed that this surge was merely a prelude.

If Ha Si-heon truly followed in his footsteps…

What would happen next was all too obvious.

The gamma squeeze would relentlessly push prices upward, ultimately triggering the infernal ‘feedback loop' of forced liquidation for short positions.

Ackman had to halt this momentum before it reached that tipping point.

‘The momentum looks strong, but…'

He still had sufficient chances of victory.

At this point, the frontline was only occupied by Ha Si-heon and retail investors.

Despite Ha Si-heon's talent, he was ultimately still just a rookie fund manager.

Even with Icahn by his side, he couldn’t overcome his lack of experience.

And retail investors represented just 20% of the market at most.

They inevitably lacked both experience and capital.

They were entirely manageable.

With the right strategy,

Ackman coldly opened his mouth.

“We’ll initiate action at the resistance line.”

***

The resistance line was where buying turned into selling.

It represented a psychological boundary, where investors dumped their holdings for profit realization.

Thus, the resistance line set by Ackman was $85.

This was Herbalife’s historical peak price.

Crossing that line would implant doubt in investors' minds.

‘Isn't this level a bit too much?'

The point where psychological pressure intensifies, causing massive sell-offs for profit realization.

Ackman decided to set his trap precisely at this spot.

"We've reached 84 dollars!"

“Release it.”

The news quickly spread through the media.

<Herbalife faces potential fines of $900 million to $1.2 billion if pyramid scheme confirmed>

<GT Group: "FTC investigation results possibly released within the year… regulatory risks must be considered…">

These headlines emphasized regulatory risks surrounding Herbalife, delivering a powerful psychological shock to the market.

Institutional investors, in particular, were extremely sensitive to such risks.

Regulations are unpredictable and can inflict immediate damage to stock prices.

“Under normal circumstances, the impact of this news would have been somewhat anticipated…”

But most institutions currently flocking to Herbalife were opportunists riding the Santa Claus rally.

These were groups chasing immediate profits without thoroughly analyzing fundamentals or potential risks.

"The moment they see this news, they'll either halt their moves here or hurry to realize profits."

The chart faithfully followed Ackman's predictions.

85.21……

86.11……

85.42……

"Sell orders are rapidly increasing!"

Negative news broke out precisely at the all-time high.

The timing was perfect.

Those who had impulsively jumped into the momentum sold off their holdings without second thought.

However,

Ackman knew.

This selling pressure was only a temporary shock.

It wasn't enough to entirely reverse the upward momentum.

A bigger trap was needed to launch a genuine counterattack, capitalizing on this moment.

"Deploy the Iceberg."

At his command, the first trap activated.

The “Iceberg” mentioned here was an Iceberg Order.

An Iceberg Order displays only a small portion of massive sell orders, like the tip of an iceberg above the surface.

While seemingly only 1,000 shares appear on the sell side, tens of thousands of hidden shares remain submerged.

As trades are executed, these hidden orders gradually surface, maintaining constant selling pressure.

Although it doesn't directly collapse prices, it delays the upward movement, slowly eroding investor sentiment.

Thoughts like, ‘Maybe this rally is over?' or ‘Is everyone else selling but me?' begin to emerge.

89.12……

88.02……

89.29……

88.12……

Each time the price tried to rise, it collided with the iceberg and fell back.

Investors started to waver.

Anxiety spread, prompting more sell-offs to avoid greater losses.

"This should at least shake off the retail investors."

Ackman murmured coldly, observing the situation carefully.

Institutions possess sophisticated algorithms capable of detecting market patterns and anomalies.

They would quickly recognize the Iceberg Order as a trap, stepping back and observing the genuine upward momentum before moving again.

However, retail investors lacked both the tools and patience for such analysis.

They'd see only the volatile chart before them, becoming anxious and eventually pressing the sell button.

After releasing countless icebergs into the market sea, Ackman prepared his next move.

"Has the Sell Wall been set?"

A Sell Wall is a massive barrier of sell orders.

Constructing this barrier means buyers must fully absorb enormous sell volumes for prices to climb.

Institutions usually have various means of detecting this wall, but if the barrier is too substantial, hesitation inevitably follows.

What if they spend significant funds breaking the wall only to find no upward momentum afterward?

It would be a waste of capital.

Normally, they'd thoroughly research the upward trajectory, but now they, too, were swept by the Santa Claus rally, moving on instinct alone.

They wouldn't dare breach the wall.

Thus, Ackman placed a massive Sell Wall at $100.

"The liquidity trap is at $110. Cut off buying momentum."

He set yet another trap.

The Liquidity Trap strategy involved absorbing all buy orders above $110.

Buyers would be trapped, unable to purchase due to insufficient volume.

Repeated experiences like this would ultimately cause them to abandon active buying altogether.

It was akin to chasing a desert mirage.

You desperately run toward the distant oasis, only to realize it's just sand.

Repeated disappointments eventually make you hesitate even when you see a real oasis.

Having meticulously set up all his traps, Ackman folded his arms and stared coldly at the screen.

"Now, we wait."

Time would soon reveal the outcome—whether his plan succeeded or failed.

But at that moment—

"We've breached $90! The Iceberg orders have been completely exhausted!"

Ackman's jaw dropped open involuntarily.

"…!?"

He couldn't believe that massive Iceberg Order had vanished in just 30 minutes.

This area was designed as the first defensive line to shake off retail investors.

He was certain they'd crumble here, focusing subsequent traps exclusively on institutional investors.

Yet…

Had retail investors really shattered all those Iceberg Orders?

“Nonsense!”

Breaking through the iceberg meant that no retail investors had converted to selling at the peak.

But that was impossible.

"Are institutions intervening?"

"No, small-lot transactions indicate these are individual investors."

"That can't be…!"

Retail investors were the most fickle, impulsive, and easily tempted of all market players.

With profits nearly doubled, they should have eagerly cashed out immediately.

Yet…

Had they genuinely refused to realize immediate profits?

"The atmosphere among retail investors right now is unusual."

Confused, Ackman was handed a tablet by an analyst.

The screen was filled with passionate cries from retail investors.

-We're definitely making this short squeeze succeed!

-Sean & Retail: "We've learned how to squeeze!"

-Ackman: "Wait…!"

-It's time to reclaim with interest everything taken from retail investors!

-Let’s go to $1,000!

None of them were calculating profits.…

"What is this…?"

The shouts from WSB couldn’t even be called investments at this point.

-Keep holding even after breaking $100! Diamond hands! Hedge funds are spreading FUD, but we all know it's nonsense!

-We haven't even entered the stratosphere yet! Straight to Saturn from here!

-Every share retail holds is a nail in the coffin of short-sellers!

They were armed with a strange sense of mission, urging each other to march toward higher targets.

But then—

“The Sell Wall has been breached!”

“The liquidity trap as well…!”

All the defenses that Ackman expected to hold for at least a day were collapsing one after another.

Ackman’s face twisted ominously.

"What are you doing?! Deploy more Icebergs! Hold the line at $150!"

“Maximize the HFT! Do I have to tell you again that when one wall falls, you immediately add another?!”

His usual composure was nowhere to be seen.

In panic, he desperately attempted to reset numerous traps, but…

150.23……

152.99……

153.06……

The price wouldn't stop rising.

Retail investors didn't budge.

“Why on earth…?”

His mind spun with confusion.

Retail investors were supposed to be the weakest players in the market—scattered, disorganized, impulsive, and impatient.

But now… something was different.

They seemed like crusaders armed with religious zeal.

-Believe in Saint Sean! VX was our trial of faith, HL is the promised land!

-Sean's Ten Commandments: YOLO with faith. Do not become paper-handed; do not doubt the master's plan…

-It doesn't matter how high the price goes or how strong the resistance is. We're going all the way.

-Diamond Hands!!

Their buying wasn't driven by mere greed or impulse.

It was pure conviction.

A belief incomprehensible to outsiders.

‘All this… just for revenge…?'

It was hard to accept.

If losses had been their issue, shouldn’t they be rushing to realize current profits instead?

Though baffling, their inexplicable conviction was unimaginably solid.

Thus, without temptation or fear, they crushed Ackman's Icebergs, pierced his walls, crossed deserts, and marched endlessly forward.

191.23…

193.23…

195.12…

The stock price was now nearing $200.

The ascent became even steeper.

As retail investors dismantled all the traps, momentum traders lurking on the sidelines flooded in, further accelerating the rise and openly mocking Ackman’s strategy.

Gradually, Ackman’s mind went blank.

‘If this continues…?'

Two days—no, not even one day would pass before reaching the hellish feedback loop.

Positions of short sellers would forcibly liquidate, and each surrendering short seller would trigger another, spiraling into an endless abyss of upward pressure.

He couldn't allow it to reach that point.

He had to stop the retail investors.

But to do so…

Ackman anxiously bit his nails, finally reaching a conclusion.

“We attack their leader.”

He might not understand this madness… but he could narrow down its cause to one person.

‘Ha Si-heon.'

That man must have lit another flame of instigation somewhere.

That’s why everyone had lost their rationality, succumbing to this frenzy.

In fact, weren’t the retail investors chanting his name as they advanced?

“We have to turn them against Ha Si-heon…!”