Is anyone else dubious about the claims that Reddit (Wall Street Bets) is responsible for the stock's move? Retail traders aren't usually given a lot of potential to move stocks around compared to the big boys. I'd be more likely to believe it if institutional ownership of GME is low or if the stock had been thinly traded (until recently) because illiquid issues can certainly be pushed around (e.g. penny stock pump-and-dumps). I haven't really looked into either of those two metrics.
GME
- Thread starter Mark17
- Start date
Not sure who is doing the manipulating but from what I have heard some of the institutions got caught short and now they have to buy it back at a loss so there is a lot of panic buying
markets.businessinsider.com
On top of that TD announced they are putting restrictions in place for GME and a few other stocks I just tried to place a one lot OTM on the put side at TD and it was rejected saying "no opening complex options on this security at this time"
Another thing I am not sure if this is true supposedly you can short more shares of stock than what is available so that is another problem that adding to the panic I think it will come down once all the panic buying from the short squeeze is over
GameStop short-sellers Melvin Capital and Citron surrender bearish bets after 700% rally drives huge losses
The Citron managing partner Andrew Left said in a video that most of his firm's position was covered at "a loss of 100%."
markets.businessinsider.com
On top of that TD announced they are putting restrictions in place for GME and a few other stocks I just tried to place a one lot OTM on the put side at TD and it was rejected saying "no opening complex options on this security at this time"
Another thing I am not sure if this is true supposedly you can short more shares of stock than what is available so that is another problem that adding to the panic I think it will come down once all the panic buying from the short squeeze is over
Bizarre.
The share imbalance confuses me too. I was seeing numbers yesterday like short interest at 150%, etc. Float is less than total shares outstanding, but I don't fully understand it.
There's an article today in YF quoting "hedge fund veteran and DataTrek Research co-founder Nicholas Colas" who said:
> We also have to remember that 20,000 day traders working in a wolf pack don’t need a lot of individual
> capital to create a squeeze,” said Colas. “It’s like the joke about fighting one Mike Tyson or 100 little
> versions of him. In this case, it’s easier to fight one normal sized human.
He, evidently, believes it. I think it most certainly could be just a good story, but maybe it certainly is possible. The only thing I know is that we'll never know because you would have to communicate with everyone who traded stock on that day(s) to find out why they did it and in what volume.
Here is the latest restrictions from TD I got this morning
Not sure why NAK is on that list it only moved by about 10 cents unless it was confused with NOK which is already on that list
Securities with trading restrictions
We have placed some restrictions on the following securities. These restrictions will not prevent clients from making basic buy and sell transactions. This list is as of January 28, 2021, 4:00PM ET.- AMC, CVM, EXPR, FOSL, GME, NOK, BB, BBBY, FIZZ, GSX, IRBT,
- NCMI, TR, UONE, VIR, NAK, NAKD, DDS, KOSS
- Stocks - 100% holding requirement (not marginable)
- Long calls and puts are allowed
- Covered call and short put orders may only be placed with a broker. Please be aware that wait times to speak with a broker may be longer than normal due to current market conditions.
- Covered calls only allowed if your account currently has the shares
- Short puts only if you have the maintenance/cash to cover the entire exercise amount of the short puts
- All other complex options orders will not be accepted
- We may also implement additional restrictions on the opening of option trades that expire Friday, January 29th
Thanks for the info. Interesting.
With regard to the Redditors, I just want to say this one more time. We have no idea what people on discussion boards are trading. Same goes for here, social media, anywhere on the internet--even close personal friends and family, sometimes. It's one thing for a lot of people to post whatever they want online (e.g. "GAMESTOCK TO THE MOON!!") but it's quite another for those people to actually be buying/selling in enough volume to cause huge price swings. I have no idea who is buying or selling. I don't think the financial media does either (their job is to get ratings or pageviews)... nor Elon Musk, for that matter.
In my last post, I found it interesting that Colas said it could happen. That doesn't mean it is happening now. Short squeezes happen with some regularity but--who is on either side of those positions? We really don't know (AND people can have all kinds of ulterior motives to claim they are on a particular side regardless of whether it's actually true).
With regard to the Redditors, I just want to say this one more time. We have no idea what people on discussion boards are trading. Same goes for here, social media, anywhere on the internet--even close personal friends and family, sometimes. It's one thing for a lot of people to post whatever they want online (e.g. "GAMESTOCK TO THE MOON!!") but it's quite another for those people to actually be buying/selling in enough volume to cause huge price swings. I have no idea who is buying or selling. I don't think the financial media does either (their job is to get ratings or pageviews)... nor Elon Musk, for that matter.
In my last post, I found it interesting that Colas said it could happen. That doesn't mean it is happening now. Short squeezes happen with some regularity but--who is on either side of those positions? We really don't know (AND people can have all kinds of ulterior motives to claim they are on a particular side regardless of whether it's actually true).
Well we do know Citron and Melvin Capital were on the short side since they admitted they lost a lot of money
Who is on the long side may be more difficult to determine
Perhaps it started small in Reddit and than it had a snowball effect where as the stock went higher more traders piled in maybe some speculators that want to make a quick buck or maybe some HFT It's kind of like bitcoin It goes up because traders are buying and traders are buying because it goes up Hopefully they know what they are doing and can make a quick exit before it all comes down
That's the one thing we think we know, but we really don't and it can't be verified right? What if they're actually long and sensing this divide, they said they were short as a twisted way to pump the stock? Would you put it past a hedge fund manager to do that?
Wow... I just googled and found this link: . The post has been removed for some reason but... I find it quite ironic given my last post!
I think that is more like speculation or conspiracy theories
I could be wrong but I think they would be in a lot more trouble for lying than for loosing on the stock, besides in that article I posted it was reported that Citadel and another company made an investment in Melvin Capital so they are not hurting that bad I don't see a reason to lie and get hit with a big fine from the fcc and perhaps some jail time
From the same article "The stock leaped on Tuesday after the billionaire investor Chamath Palihapitiya tweeted that he had bought call options on the stock with a February 19 expiration date."
So we know at least someone who is on the other side we just don't know the quantities involved
I just think they got caught with shorting too many shares
Otherwise if they were lying and everyone was long there would be no reason for the short squeeze and the stock would not have gone up or there would not have been such a high short interest
I could be wrong but I think they would be in a lot more trouble for lying than for loosing on the stock, besides in that article I posted it was reported that Citadel and another company made an investment in Melvin Capital so they are not hurting that bad I don't see a reason to lie and get hit with a big fine from the fcc and perhaps some jail time
From the same article "The stock leaped on Tuesday after the billionaire investor Chamath Palihapitiya tweeted that he had bought call options on the stock with a February 19 expiration date."
So we know at least someone who is on the other side we just don't know the quantities involved
I just think they got caught with shorting too many shares
Otherwise if they were lying and everyone was long there would be no reason for the short squeeze and the stock would not have gone up or there would not have been such a high short interest
If you are still interested, here is an explanation of the situation. Worth reading for everybody not familiar with the topic of shorting.
market-ticker.org
The Market Ticker Error: Post Not Available
Listened to first one. Not quite right. He blames excessive leverage for the situation. That may be true and probably is, but that's not the core of the problem. Beside excessive leverage is not criminal (means allowed by low and not forbidden by prospectus). Robinhood did what he did, and with all background behind I suppose there is slim chance it will be punished as it deserves, especially those who lost $$ because of RH actions wont be compensated. But what RH did is criminal, is highly unjust and harmful for the whole society, not only investors. Do not let this point to be sidelined in your mind. I'm pessimistic about the outcome. Remember MF Global?
I am not sure about what is the right amount of excessive but I would think more than 100% is excessive and without that leverage this could have been avoided On the other hand if it's not excessive why not double or triple the amount ? Who is to say what is excessive ? But if you play that game you should be willing to take the consequences and go bankrupt when it's time to buy the shares back and you don't have the money and not be bailed out by the government or anyone else
As far as Robinhood that is a liquidity issue but I am not sure if that is criminal
They did not have enough money to put up so they had to do something
If they did not do anything they may had to stop trading in all the stocks not just the one that were shorted and than a lot more traders would have been affected
I am sure those who lost money won't be compensayed but I heard there are about 30 lawsuits already against Robinhood
Not sure how thy are going to work that out
What is a little more disturbing is why did TD restricted trading in those names ?
I don't think TD has any liquidity issues so why did they restrict trading in those names ?
As far as Robinhood that is a liquidity issue but I am not sure if that is criminal
They did not have enough money to put up so they had to do something
If they did not do anything they may had to stop trading in all the stocks not just the one that were shorted and than a lot more traders would have been affected
I am sure those who lost money won't be compensayed but I heard there are about 30 lawsuits already against Robinhood
Not sure how thy are going to work that out
What is a little more disturbing is why did TD restricted trading in those names ?
I don't think TD has any liquidity issues so why did they restrict trading in those names ?
There are two separate issues.
One is rational investing - did shorts were extensively leveraged, should they cover at $4 or should they add to winning position.
Second issue is if what was done adhered to the legal rules.
I'm talking about the last one.
Short positions, to what I've heard, were way over 100% of the float. That means that somebody sold shares he didn't have aka sold counterfeited (fake) shares to the public.
I don't understand what you said about Robinhood and liquidity. GME shares were on 100% margin, so RH shouldn't have any risk on the book. I don't know, maybe RH do have a fine print in the contract saying that they keep all rights to clients accounts and they can do with them whatever they want if they feel like it or if their books are in jeopardy.
To illustrate this point more. Imagine you have a fully paid off house. There is some turmoil in the housing market and some entity (bank, mortgage company, insurance, borough, whatever) sells your house because they want to calm down house market by injecting liquidity or because they want to protect their books or just see it as good $ opportunity. If such behavior is allowed/tolerated by the justice system (MFGlobal) then it is bad.
That's my point.
Not to be misunderstood. I do not know details of RH situation or their clients or hedge funds involved. Maybe what has happened was perfectly legal. If so, there is no point of whining. What can be done in this situation is fixing the law. The worst case would be what is in the title of the article I linked. I hope you remember time where some voices were talking about risk being pushed to the public where profits were kept by inside players. I will be watching how RH clients react. Lawsuits is a good sign, but still I don't hold my breath.
One is rational investing - did shorts were extensively leveraged, should they cover at $4 or should they add to winning position.
Second issue is if what was done adhered to the legal rules.
I'm talking about the last one.
Short positions, to what I've heard, were way over 100% of the float. That means that somebody sold shares he didn't have aka sold counterfeited (fake) shares to the public.
I don't understand what you said about Robinhood and liquidity. GME shares were on 100% margin, so RH shouldn't have any risk on the book. I don't know, maybe RH do have a fine print in the contract saying that they keep all rights to clients accounts and they can do with them whatever they want if they feel like it or if their books are in jeopardy.
To illustrate this point more. Imagine you have a fully paid off house. There is some turmoil in the housing market and some entity (bank, mortgage company, insurance, borough, whatever) sells your house because they want to calm down house market by injecting liquidity or because they want to protect their books or just see it as good $ opportunity. If such behavior is allowed/tolerated by the justice system (MFGlobal) then it is bad.
That's my point.
Not to be misunderstood. I do not know details of RH situation or their clients or hedge funds involved. Maybe what has happened was perfectly legal. If so, there is no point of whining. What can be done in this situation is fixing the law. The worst case would be what is in the title of the article I linked. I hope you remember time where some voices were talking about risk being pushed to the public where profits were kept by inside players. I will be watching how RH clients react. Lawsuits is a good sign, but still I don't hold my breath.
There is an explanation about Robinhood in the second video
It's kind of complicated but from what I understand it has something to do with the NSCC which is the clearing firm for Robinhood where they have something called the the VAR (Value At Risk) formula that is somewhat proprietary or arbitrary and they were asking Robinhood $3Billion to be deposited which they did not have but they negotiated a deal to $700 Million with the part of the deal being that they only allow closing positions
It's kind of complicated but from what I understand it has something to do with the NSCC which is the clearing firm for Robinhood where they have something called the the VAR (Value At Risk) formula that is somewhat proprietary or arbitrary and they were asking Robinhood $3Billion to be deposited which they did not have but they negotiated a deal to $700 Million with the part of the deal being that they only allow closing positions
Thanks, I watched the whole second video. All right maybe RH was forced to do what it did. Question of legality still holds, separately for short sellers and RH. Again, if customers were on 100% margin there was no risk to the broker.
I don't refer to restricting trading to closing orders only. Such an action can have some merits. I was refering to info that RH arbitrary sold customers accounts. See pic. Now I also see the RH denied such actions, so there maybe no RH fault at all. Everybody is taking RH but I didn't see any data confirming that RH's client actions caused short squeeze (which is legal, nothing wrong with that). In anyway, my intend is not to blame RH but to point potential illegality of what happened. If somebody can legally sell more shares that is in circulation then this is bad and no surprise people a pissed off. As said other side is what those people were thinking if they want to buy more GME at $400 - just this is not illegal.
I don't refer to restricting trading to closing orders only. Such an action can have some merits. I was refering to info that RH arbitrary sold customers accounts. See pic. Now I also see the RH denied such actions, so there maybe no RH fault at all. Everybody is taking RH but I didn't see any data confirming that RH's client actions caused short squeeze (which is legal, nothing wrong with that). In anyway, my intend is not to blame RH but to point potential illegality of what happened. If somebody can legally sell more shares that is in circulation then this is bad and no surprise people a pissed off. As said other side is what those people were thinking if they want to buy more GME at $400 - just this is not illegal.
Attachments
That's interesting,
4500 shares sounds like quite a big account depending on the price of GME and it also doesn't say if that was a closing transaction that was bought back if it was shorted or a selling if the shares were bought I thought RH had a lot of small accounts
4500 shares at 118 that's over half a million dollars that's good if it was bought at a low price but what if 4500 shares were shorted ?
The 100% margin does not work on that
I just sold 4500 shares naked as a simulation on TOS and it shows $595K margin requirement and that is just from the current price of $66 a share and up to $198 if it goes above that the margin is even higher At $400 it's about $1.5 million margin requirement
On top of that I believe they can adjust the margin requirements with the VAR so the margins are higher which I imagine what happened
4500 shares sounds like quite a big account depending on the price of GME and it also doesn't say if that was a closing transaction that was bought back if it was shorted or a selling if the shares were bought I thought RH had a lot of small accounts
4500 shares at 118 that's over half a million dollars that's good if it was bought at a low price but what if 4500 shares were shorted ?
The 100% margin does not work on that
I just sold 4500 shares naked as a simulation on TOS and it shows $595K margin requirement and that is just from the current price of $66 a share and up to $198 if it goes above that the margin is even higher At $400 it's about $1.5 million margin requirement
On top of that I believe they can adjust the margin requirements with the VAR so the margins are higher which I imagine what happened
Option volumes were extremely high in GME. A lot of the puts were far OTM low deltas. With the calls, many more were higher deltas. If you posit that many of the WSB participants were buying calls rather than stock, the market makers selling those calls would have shorted the underlying in order to hedge their positions. Perhaps the short sellers were also buying calls to hedge, rather than buying back shares.
Just a thought.
Just a thought.