Let's once again solidify the reasons behind the significant drop in SMCI stock over the past two Fridays.

Retail investors and institutions heavily bought call options of a company.

Options market makers prevent exercise and are compelled to buy the underlying stock.

3. Options market makers buying call options is a normal behavior and becomes a driving force for stock prices.

4. When the stock price rises significantly, retail investors and institutions buy more call options.

5. Options market makers are forced to buy the underlying stock again.

6. This process above repeats continuously, ultimately forming GAMMASqueeze, where everyone in the market is buying bullish.

7. Options market makers have bought too much of the underlying stock, accumulating significant risks.

8. Options market makers then conduct Delta hedging, adjust their buying and selling quotes, and indirectly influence the market price of options. If market prices change, the calculated implied volatility (IV) will also change accordingly based on options pricing models like the Black-Scholes model. This means that although market makers cannot directly set IV, their quoting strategies and market behavior can impact the market price of options, indirectly affecting the level of IV. Market makers making buying call options less profitable leads retail investors and institutions to no longer buy call options.

9. Since no one is buying call options, options market makers will sell the underlying stock, creating selling pressure. Retail investors and institutions then start taking profits, leading to a decline in stock prices, and they begin buying put options.

11. Options market makers need to hedge put options, so they are forced to sell the underlying stock, further triggering options market makers to accelerate selling the underlying stock.

12. The above process is repeated continuously, forming a reverse GAMMA squeeze, where everyone in the market is selling.

13. Forming a bottoming out, a huge drop comes in a very short time.