OT: The Arizona Coyotes Lounge XVII - Office Space

[_Del_]

Bottom line:. Short sellers don't cause bankruptcy, lack of sufficient cash flow is always the culprit.

My devaluing your capital isn't the problem. You just don't have enough of it.

This is what happens when you work backwards to defend an ill-held position.

 

[MIGs Dog]

They're baaaack!

 

[Sinurgy]

Even without that the crime is so obvious. It just baffles me that some people believe this is no big deal. I can understand not following the story so you don't know what's going on but to read everything and still think this is ok/normal? Unbelievable. Just shows how they've been able to steal billions every year with no consequences. Even when it's right there in front of you, people still don't care. The population is exactly as ignorant as the rich and powerful want them to be. Sad.

Pay no attention to the man behind the curtain, instead focus on how liberals are ruining America and how almost all conservatives are racist. Yesssss...let the hate flow through you! Hate your neighbor for reasons, your neighbor hates you for reasons...neither of you pay no mind to the man behind the curtain.

 

[RemoAZ]

 

[RemoAZ]

 

[XX]

Like in 2008, the SEC and Fed won't let this happen. Melvin and a few funds will likely be liquidated and consolidated into larger entities (like Citadel). If the risk is great enough that the wider economy may cascade, they'll just halt trading of GME and force market makers to close all active positions.

 

[RemoAZ]

 

[RemoAZ]

r/wallstreetbets•Posted by
Discussion
30 Seconds From Triggering Market Nuclear Bomb

I'm glad this place has quieted down enough for some actual DD written by a monkey with a keyboard and Adderall.
Disclaimer: I am that monkey. Let me explain to you what happened, play by play. I will give you illiterates who hate reading a spoiler up front:
We were within approximately 30 seconds of triggering a nuclear bomb that would have blown up the market. Do I have your attention? Here goes:

1. ⁠Yesterday, new call option strike prices were added all the way up to $570. Do I have to go over gamma squeezes again? Really? We've been over this: when deep out-of-the-money call options start being gobbled up and the price starts moving towards being in-the-money, the call writers have to hedge their risk of having their sold calls exercised, typically by buying stock. This creates upwards pressure on the market. We've been seeing these movements all week.
2. ⁠Yesterday after market, you probably saw that coordinated effort to drive the price down and spook retail investors into a mass sell-off. It didn't work.
3. ⁠Last night, Robinhood sent out a message to users: you could no longer enter into new options. You could exercise them if you had the collateral (money in the account) to do so. Very interesting and the first sign of pants-shitting fear.
4. ⁠Today, the market opened very strong. It opened so strong that we were looking at a self-perpetuating gamma squeeze all the way up way past $570.
5. ⁠At approximately 9:58 am, the stock had reached $468 in a parabolic move.
6. ⁠Two minutes earlier, at 9:56 am, Robinhood tweeted that they were not allowing users to buy GME stock, but they would allow selling.
7. ⁠The trend instantly halted and started a collapse downwards, before picking up a bit, especially after some retail was allowed back in.

Okay, now that you are clear on the facts, understand this: The market ran out of liquidity today, or was threatening to get close enough that they killed it. What does that mean? It means they ran out of shares and/or capital. They wouldn't let you buy new shares because we were burning through all the shares on the market.
I saw an unsubstantiated post from a user (u/zshub) who said a market sell order executed at $2600 for him. Also, someone else for over $5,000 per share. Do you get the severity of the situation, if that's true? It means the buying was getting to the point where it was just about to put INFINITE pressure on the price of the shares. It means virtually any ask was getting bid.
How do you get infinite upwards pressure? A gamma squeeze triggering the mother of all short squeezes, just like we predicted. The call writers need shares to hedge. Retail is still buying more. The short sellers need over 100% of the float back. Add these together. There were more shares needed than existed on the open market. That's what a liquidity crisis is.
Listen to this to this remarkable (if infuriating) interview where the chairman of Interactive Brokers admits that they didn't have the capital to pay out the winners (us), so they took their ball and went home. DO YOU GRASP HOW INSANE IT IS THAT HE SAID THEY NEEDED TO SHUT DOWN BUY ORDERS TO "PROTECT THE MARKET"? Hello! He's not talking about the market for GME shares. He's talking about the entire market! The New York Stock Exchange. The NASDAQ. All that.
Remember the movie Snowpiercer? Do you remember that scene where the lower class people realize the soldiers who oppress them have no bullets? Go to the 1:00 minute mark of this link:
It kick starts a full blown rebellion. They have no bullets. It's the exact same in this market: No capital. No shares. Infinite losses inbound.
TL;DR: For all you who will just skip to the bottom to ask, "Do I get my tendies now?" the answer is this: they NEED NEED NEED your shares. Do you get that? HOLD. Like the guy in the movie, scream, "They're out of bullets!" and create a stampede. That's how we win.
They needed your shares so badly that they literally risked PRISON TIME to get them. They tried robbing you, and I'm not even exaggerating. They were within 30 seconds of all being wiped out today.

 

[Dirty Old Man]

*shrug* like a lot of people think both Republicans and Democrats are all bastards, in this case I think both sides are bastards. All market manipulators, big or small. Boot 'em all.

 

[MIGs Dog]

He's going to be very tired.

 

[MIGs Dog]

r/wallstreetbets•Posted by
Discussion
30 Seconds From Triggering Market Nuclear Bomb

I'm glad this place has quieted down enough for some actual DD written by a monkey with a keyboard and Adderall.
Disclaimer: I am that monkey. Let me explain to you what happened, play by play. I will give you illiterates who hate reading a spoiler up front:
We were within approximately 30 seconds of triggering a nuclear bomb that would have blown up the market. Do I have your attention? Here goes:

1. ⁠Yesterday, new call option strike prices were added all the way up to $570. Do I have to go over gamma squeezes again? Really? We've been over this: when deep out-of-the-money call options start being gobbled up and the price starts moving towards being in-the-money, the call writers have to hedge their risk of having their sold calls exercised, typically by buying stock. This creates upwards pressure on the market. We've been seeing these movements all week.
2. ⁠Yesterday after market, you probably saw that coordinated effort to drive the price down and spook retail investors into a mass sell-off. It didn't work.
3. ⁠Last night, Robinhood sent out a message to users: you could no longer enter into new options. You could exercise them if you had the collateral (money in the account) to do so. Very interesting and the first sign of pants-shitting fear.
4. ⁠Today, the market opened very strong. It opened so strong that we were looking at a self-perpetuating gamma squeeze all the way up way past $570.
5. ⁠At approximately 9:58 am, the stock had reached $468 in a parabolic move.
6. ⁠Two minutes earlier, at 9:56 am, Robinhood tweeted that they were not allowing users to buy GME stock, but they would allow selling.
7. ⁠The trend instantly halted and started a collapse downwards, before picking up a bit, especially after some retail was allowed back in.

Okay, now that you are clear on the facts, understand this: The market ran out of liquidity today, or was threatening to get close enough that they killed it. What does that mean? It means they ran out of shares and/or capital. They wouldn't let you buy new shares because we were burning through all the shares on the market.
I saw an unsubstantiated post from a user (u/zshub) who said a market sell order executed at $2600 for him. Also, someone else for over $5,000 per share. Do you get the severity of the situation, if that's true? It means the buying was getting to the point where it was just about to put INFINITE pressure on the price of the shares. It means virtually any ask was getting bid.
How do you get infinite upwards pressure? A gamma squeeze triggering the mother of all short squeezes, just like we predicted. The call writers need shares to hedge. Retail is still buying more. The short sellers need over 100% of the float back. Add these together. There were more shares needed than existed on the open market. That's what a liquidity crisis is.
Listen to this to this remarkable (if infuriating) interview where the chairman of Interactive Brokers admits that they didn't have the capital to pay out the winners (us), so they took their ball and went home. DO YOU GRASP HOW INSANE IT IS THAT HE SAID THEY NEEDED TO SHUT DOWN BUY ORDERS TO "PROTECT THE MARKET"? Hello! He's not talking about the market for GME shares. He's talking about the entire market! The New York Stock Exchange. The NASDAQ. All that.
Remember the movie Snowpiercer? Do you remember that scene where the lower class people realize the soldiers who oppress them have no bullets? Go to the 1:00 minute mark of this link:
It kick starts a full blown rebellion. They have no bullets. It's the exact same in this market: No capital. No shares. Infinite losses inbound.
TL;DR: For all you who will just skip to the bottom to ask, "Do I get my tendies now?" the answer is this: they NEED NEED NEED your shares. Do you get that? HOLD. Like the guy in the movie, scream, "They're out of bullets!" and create a stampede. That's how we win.
They needed your shares so badly that they literally risked PRISON TIME to get them. They tried robbing you, and I'm not even exaggerating. They were within 30 seconds of all being wiped out today.

When the IB guy said "if the customers are unable to pay for their losses..." I'm thinking that's the brokers fault for allowing them to open a naked position. I must be a small fish, cuz I've traded with 4 different brokers and never had the permission to enter into an unsecured trade.

Or perhaps what he really meant is that the clearing houses were undercapitalized to execute all of the open positions in the short term.

 

[RemoAZ]

When the IB guy said "if the customers are unable to pay for their losses..." I'm thinking that's the brokers fault for allowing them to open a naked position. I must be a small fish, cuz I've traded with 4 different brokers and never had the permission to enter into an unsecured trade.

Or perhaps what he really meant is that the clearing houses were undercapitalized to execute all of the open positions in the short term.

The stock went from 140% shorted which is already a crime to 250%. This is the shit they've been doing for years to screw the retail investor out of billions. Now they are caught in their own trap. Will this bring about change? Maybe if they lose enough it will. Certainly all the eyes on this is not good for them.

 

[_Del_]

I think it's hysterical that they actually held today. I'm going to see what I can do about putting a little into AMC that I'm completely willing to lose entirely just to squeeze.
The squeeze on Game Stock already started. A bulk of options was due today. The hedges are either buying what they can to take their losses, or they are taking loans to cover it and issuing taking more short positions to try to wait it out (or a little of both). You never have to pay interest on the long. You can stay long until the company dies, doesn't cost you anything out of pocket beyond your purchase and opportunity cost. Can't stay short.

Let them all naked short themselves into jail or the poorhouse.

 

[cobra427]

r/wallstreetbets•Posted by
Discussion
30 Seconds From Triggering Market Nuclear Bomb

I'm glad this place has quieted down enough for some actual DD written by a monkey with a keyboard and Adderall.
Disclaimer: I am that monkey. Let me explain to you what happened, play by play. I will give you illiterates who hate reading a spoiler up front:
We were within approximately 30 seconds of triggering a nuclear bomb that would have blown up the market. Do I have your attention? Here goes:

1. ⁠Yesterday, new call option strike prices were added all the way up to $570. Do I have to go over gamma squeezes again? Really? We've been over this: when deep out-of-the-money call options start being gobbled up and the price starts moving towards being in-the-money, the call writers have to hedge their risk of having their sold calls exercised, typically by buying stock. This creates upwards pressure on the market. We've been seeing these movements all week.
2. ⁠Yesterday after market, you probably saw that coordinated effort to drive the price down and spook retail investors into a mass sell-off. It didn't work.
3. ⁠Last night, Robinhood sent out a message to users: you could no longer enter into new options. You could exercise them if you had the collateral (money in the account) to do so. Very interesting and the first sign of pants-shitting fear.
4. ⁠Today, the market opened very strong. It opened so strong that we were looking at a self-perpetuating gamma squeeze all the way up way past $570.
5. ⁠At approximately 9:58 am, the stock had reached $468 in a parabolic move.
6. ⁠Two minutes earlier, at 9:56 am, Robinhood tweeted that they were not allowing users to buy GME stock, but they would allow selling.
7. ⁠The trend instantly halted and started a collapse downwards, before picking up a bit, especially after some retail was allowed back in.

Okay, now that you are clear on the facts, understand this: The market ran out of liquidity today, or was threatening to get close enough that they killed it. What does that mean? It means they ran out of shares and/or capital. They wouldn't let you buy new shares because we were burning through all the shares on the market.
I saw an unsubstantiated post from a user (u/zshub) who said a market sell order executed at $2600 for him. Also, someone else for over $5,000 per share. Do you get the severity of the situation, if that's true? It means the buying was getting to the point where it was just about to put INFINITE pressure on the price of the shares. It means virtually any ask was getting bid.
How do you get infinite upwards pressure? A gamma squeeze triggering the mother of all short squeezes, just like we predicted. The call writers need shares to hedge. Retail is still buying more. The short sellers need over 100% of the float back. Add these together. There were more shares needed than existed on the open market. That's what a liquidity crisis is.
Listen to this to this remarkable (if infuriating) interview where the chairman of Interactive Brokers admits that they didn't have the capital to pay out the winners (us), so they took their ball and went home. DO YOU GRASP HOW INSANE IT IS THAT HE SAID THEY NEEDED TO SHUT DOWN BUY ORDERS TO "PROTECT THE MARKET"? Hello! He's not talking about the market for GME shares. He's talking about the entire market! The New York Stock Exchange. The NASDAQ. All that.
Remember the movie Snowpiercer? Do you remember that scene where the lower class people realize the soldiers who oppress them have no bullets? Go to the 1:00 minute mark of this link:
It kick starts a full blown rebellion. They have no bullets. It's the exact same in this market: No capital. No shares. Infinite losses inbound.
TL;DR: For all you who will just skip to the bottom to ask, "Do I get my tendies now?" the answer is this: they NEED NEED NEED your shares. Do you get that? HOLD. Like the guy in the movie, scream, "They're out of bullets!" and create a stampede. That's how we win.
They needed your shares so badly that they literally risked PRISON TIME to get them. They tried robbing you, and I'm not even exaggerating. They were within 30 seconds of all being wiped out today.

I have been in the securities business for 30 years, I own a broker dealer, you are mostly accurate. RH mostly self clears and IB self clears, many other clearing firms are at risk as well. RH likely doesn't have the ability to allow cash only buys on the stock moving forward without changing the stock to 100% margin for everyone that owns it within their universe which creates margin calls. They can't just change is for new purchases, their system was not designed that way. Essentially, the use of margin by retail investors and the use of 10X or better margin by hedge funds has created massive systemic risk in either direction. A few things I know to be true first hand:

1. Clearing firms have regulatory requirements for the amount of capital they need in the bank based on complicated formulas and risk factors, rules established by regulators.
2. Clearing firms can require additional capital be deposited by its Broker Dealers that clear through them in excess of regulatory requirements. Essentially, if they see too much risk because of leverage, they can up the deposit requirements, that is exactly what is happening now.
3. Clearing firms and broker dealers do not completely understands how much risk they have. They don't know how much leverage is out there on the long side and they don't know how much leverage is out there on the short side.
4. If you are short and get a margin call, you have to buy in your position to cover it, making your situation worse, or put up more capital which you might not have. Same on the long side, we all know how that works.
5. If the hedge fund or the retail customer gets wiped out, the broker dealer or the clearing firm will take the loss, it has a cascading effect.
6. This is the worst part, the regulations require that the clearing firm buys you in if you are short and can't pay the margin call. If the buy in is Monday, you get bought in at the price that day, any price. You don't get to wait and see if it drops and you can't buy more time. Same thing on the long side.
7. Massive leverage on both sides has created this problem. What could happen is the short side gets squeezed next week because there is no capital left to ride it out, so the stock goes to $1,000 or more. This could wipe out Brokers dealers and a few clearing firms. It could revers and go back to $5.00 a week later and wipe out retail investors, and a few Broker dealers.
8. I suspect the regulators might stop trading in some of these stocks if they explode to the upside so that clearing firms and major broker Dealers do not go under, which will cause major systemic problems.

The use of way too much leverage, and naked shorting has created a systemic problem. The rules need to change because this will happen again. The power retail investors have with a smart phone to place orders is an expanding global phenomenon. If they collectively decide to buy something way short, this will happen again.

 

[Coyotedroppings]

You know Greg Turlip by any odd chance? He’d be about 58 years old these days, I won a state championship with him in our net, back in the day. Anyway, his Dad (Don Turlip) was a stock broker, they lived in Naperville , but his Dad worked out of the Aurora National Bank building in beautiful Aurora.

 

[_Del_]

What could happen is the short side gets squeezed next week because there is no capital left to ride it out, so the stock goes to $1,000 or more. This could wipe out Brokers dealers and a few clearing firms

Pretty sure that's the whole point...

It could revers and go back to $5.00 a week later and wipe out retail investors, and a few Broker dealers.

If people weren't willing to lose what they had invested in the squeeze, they should have cashed out yesterday before close when the bulk of known shorts were due.

But the price can absolutely go up further if they hold. We already know that firms had to take outside capital to ride this out. There's interest on that. There already exist liquidity problems in the market. There isn't enough money in the banks to let the firms ride this out if the retailers are willing to hold.I

naked shorting has created a systemic problem. The rules need to change because this will happen again.

Again, I think that's the point. Investors found an untenable position being held by huge firms who have continually leveraged collective power and never had anyone call the play for what it is. They recognized it and initiated the squeeze. Good for them. They can cash out some of their holdings now, make a tidy profit and wait for the capital to dry up to send an F U to people noone has sympathy for.

Now that the squeeze begun the last few weeks, you can be sure that Citadel frontran all the orders they processed through their agreement with Robinhood. They won't be left completely high and dry. They'll still make their money. Maybe even try to ladder attack with the hedgefunds to get the panicky people out and save the hedges some money.
It's just whacking tentacles, not the beast. But good for these guys for recognizing a vulnerable position and making a profit of it while exposing it to everyone.

 

[KG]

I find it interesting how this GME thing has morphed from a money thing into some sort of social cause. Personally, I think its largely self-reinforcing propaganda, and people are becoming more and more emotional about it.

 

[XX]

I find it interesting how this GME thing has morphed from a money thing into some sort of social cause. Personally, I think its largely self-reinforcing propaganda, and people are becoming more and more emotional about it.

Reddit is easy to manipulate. All WSB had to do was vote the daily gains post up to the top of one of the most visited pages on the internet each day. Like moths to a flame, people bought in, even if they don't understand a lick about the trade. Whatever reasonable gains there were to be had based off of new management have morphed into a massive pump and dump that is being manipulated by pretty much everybody. There are multiple large funds that are riding this both ways like Blackrock. Certain players are using bot farms to try to influence discussion. It's quite the spectacle.

This is a funny demonstration of the power of memes, but it's not exactly the ending to Fight Club some pumpers are promising.

 

[_Del_]

I just don't see the hedge funds who hire PR firms, openly collude, go on TV and trade among themselves to manipulate algorithms as victims. F those guys.
Somebody looked and said, "look, they collectively (not individually of course, that would be illegal *wink, wink*) shorted more shares than were even in circulation". And they leveraged their power buy purchasing and holding. The ones smart enough will make a mint, the dumb ones and the hedges will get screwed. That's the market.

If they keep doubling down and brokerages themselves start going under instead of letting the hedges fail, then that's why we created the SIPC in the 70's. It won't save them from an eventual stock price collapse, but it'll save their holdings.

 

[Bondurant]

People on Reddit think they are beating Wall Street options pro's. They may have won a dust up but Wall Street will win in the end. I feel bad for the people getting hoodwinked into buying GME. How healthy is Gamestop? How many people are buying physical media versus downloading from their system directly? What is Gamestop doing to innovate and grow? These millennials on Reddit want to rant and rave about Wall Street manipulation but they have no regard for the people they are manipulating with their own get rich quick schemes. Are they really any different?

 

[bluesXwinXtheXcup]

I did well at work this week and feel proud

 

[awfulwaffle]

People on Reddit think they are beating Wall Street options pro's. They may have won a dust up but Wall Street will win in the end. I feel bad for the people getting hoodwinked into buying GME. How healthy is Gamestop? How many people are buying physical media versus downloading from their system directly? What is Gamestop doing to innovate and grow? These millennials on Reddit want to rant and rave about Wall Street manipulation but they have no regard for the people they are manipulating with their own get rich quick schemes. Are they really any different?

Everyone knows gamestop is a dying brand like blockbuster.

 

[bluesXwinXtheXcup]

Everyone knows gamestop is a dying brand like blockbuster.

I didn't...

 

[cobra427]

You know Greg Turlip by any odd chance? He’d be about 58 years old these days, I won a state championship with him in our net, back in the day. Anyway, his Dad (Don Turlip) was a stock broker, they lived in Naperville , but his Dad worked out of the Aurora National Bank building in beautiful Aurora.

I don't know him or his Dad, my career has mostly been in AZ.

 

[cobra427]

I just don't see the hedge funds who hire PR firms, openly collude, go on TV and trade among themselves to manipulate algorithms as victims. F those guys.
Somebody looked and said, "look, they collectively (not individually of course, that would be illegal *wink, wink*) shorted more shares than were even in circulation". And they leveraged their power buy purchasing and holding. The ones smart enough will make a mint, the dumb ones and the hedges will get screwed. That's the market.

If they keep doubling down and brokerages themselves start going under instead of letting the hedges fail, then that's why we created the SIPC in the 70's. It won't save them from an eventual stock price collapse, but it'll save their holdings.

I'm not even sure what your trying to say or conclude with your last 2 posts and I understand the business pretty well. I'll make a few points. Citadel makes money by buying at one price and selling at a slightly higher price at the same time. They share that profit with BD's like RH, its called POF or payment for order flow. The more action, the more they make, they really don't ever take a position, they are a middle man, I know them well.

I don't know who the smart ones or dumb ones are at this point, too hard to tell how this will shake out. The middle man are usually the smart ones as they get a piece of the action on the way by, that might be only Citidel and other market makers at this point. The BDs are at risk because of high margin purchases, the clearing firms are at risk because of the same thing and the risk they have on the short side from hedge funds margining. Prime brokers are at risk because they lent the money to the hedge funds. DTCC was at risk, they clear and match all trades.

The reason RH and others had to invest additional capital this week is because DTCC raised the margin requirements to 100%. Typically, when you purchase stock, it settles in 2 days. In the mean time, clearing firms are required to have roughly 20% of that capital up, using there balance sheets, until the trade settles in 2 days. DTCC feared trades would break if they weren't paid for on settlement if the stock crashed or exploded in price. Raising that requirement is why RH and others stopped trading the stock until they could get sufficient capital to DTCC.

The scary part is, I know some of the players well, nobody knows how much stock is margined on the long side and how much is margined on the short side. It is next to impossible to calculate with multiple clearing firms, BD's and Prime Brokers involved. We just don't know. There might be enough systemic risk that you could see some of these names stop trading via the regulators, not to save the hedge funds, but to prevent a collapse of the clearing system.