[gruez]

>Melvin Capital claiming they got out of short positions, without any significant changes in short %.

That's not too strange. It's entirely possible for them to close their short position by doing a private sale to another hedge fund. I don't imagine it's too hard to find takers given how inflated GME is.

[throwaway-571]

Don't they have to buy stock to exit the position? How do you sell a "short position" that is hemorrhaging money?

(genuinely curious, I'm learning about this to distract myself from covid-19)

[gruez]

You can offload it to someone else. Say you shorted 100 shares at $50, but the price later goes to $100. One way to exit the short is to buy 100 shares on the open market, taking a loss of $5000. You can also find someone who wants to short, pay them $10,000, and transfer the position to them. Now the short position is off your hands, and the other person effectively entered into a short position at $100. It's kind of like taking over a lease.