r/wallstreetbets and the market

Whoops, guess they helped the big guys

AMC Entertainment Holdings’ second-largest holder Silver Lake has sold its entire stake in the theater chain for $713 million. https://t.co/YTQuIc0iCG

— MarketWatch (@MarketWatch) January 30, 2021

Everything I’m reading is the little guys are gonna be out mortgages soon. If you got in ground floor on this, great. But even a few hours late and you will likely be losing everything and then some. 

posted by Laley23

Everything I’m reading is the little guys are gonna be out mortgages soon. If you got in ground floor on this, great. But even a few hours late and you will likely be losing everything and then some. 

It's added something like $21B to the market cap, so SOMEONE has made a boatload of money, on paper anyway.  But there's no orderly unwinding, what happens is there are practically no buyers to cash you out at $328, or $300, or even $100.  When the music stops, you're left with something worth about $20 where it was before it all started.

Really interesting to look at trading volumes.  There are about 70M shares outstanding, and daily volume has surged over 30X to something like 22M per day, that's like 30% of shares which is crazy.  Every transaction needs a buyer and seller, and a classic short squeeze actually sucks the volume out so that short sellers can't find shares to buy to cover even at huge premiums.  So this maybe isn't that sophisticated of a scheme - it's just getting a bunch of idiots to blindly bid up a stock price.

I'm sure some hedge funds took it on the chin, in Round 1.  My guess is most swallowed their losses, re-grouped and shorted it again as it started spiking, and maybe got knocked down again.  But all the suckers coming in late were probably buying at $300+ from short sellers.  When the millennials get bored with this next week, those hedge funds will end-up making 3-4X their losses back off those chumps.

I am waiting on the Steve Madden stock

I lurk here from time to time, and the whole GME thing has me a bit fired up because 99% of everyone talking about this are turning it into a righteous narrative of 'hedge funds bad' and 'look at what Robinhood did, the system is rigged!' Not saying I know everything, this is just my understanding (and I'm sure could be off about some things).

Long story short on the Robinhood scenario: the broker doesn't actually obtain stock with your money, even if you're not trading on margin (e.g. with your own cash). 

The broker puts up money (collateral -- usually a few percent of the notional value of the transaction) to the clearing firm while the transaction clears (2 days).  The volatility spike of GME caused that collateral requirement to go up to 100%. Any broker using Apex clearing put the same restrictions on buying GME (and whatever other ticker symbols that were in that group). Robinhood used to use Apex, but I think they are partially self clearing now.

Larger more well capitalized brokers (like Fidelity) did not restrict trading because, well, they could afford it. If you watch the interview with Vlad Tenev (Robinhood CEO), he basically said this, but did an absolutely terrible job of it.  I can see why he gave such a response though -- the alternative was to say "we're too broke for this."  I do wonder if he thought "hmm, this might look bad given our conflict of interest with Citadel".  On the other hand, the CEO of WeBull explained very well IMO what the situation was.

IMO this is a must watch: https://www.youtube.com/watch?v=v2O6lXZ4rkI.

As for the whole 'hedge funds are getting f---ed right now': I don't know what to think about that. Of course, there are losses, and yeah the short float is over 100%, but the daily traded volume over the last week has sometimes been multiples of the entire short float (referencing the video above and it's easily verifiable on yahoo finance for example).  As it's put in the video I linked above, a squeeze would really only happen if there is not enough volume in a day for short positions to be unloaded. This makes sense to me. Not only that, but it is possible to hold a short position as part of a larger neutral strategy...google statistical arbitrage or dynamic (delta) hedging. The short float hasn't really decreased at all, it's still astronomically high.

posted by who_are_you

I lurk here from time to time, and the whole GME thing has me a bit fired up because 99% of everyone talking about this are turning it into a righteous narrative of 'hedge funds bad' and 'look at what Robinhood did, the system is rigged!' Not saying I know everything, this is just my understanding (and I'm sure could be off about some things).

Long story short on the Robinhood scenario: the broker doesn't actually obtain stock with your money, even if you're not trading on margin (e.g. with your own cash). 

The broker puts up money (collateral -- usually a few percent of the notional value of the transaction) to the clearing firm while the transaction clears (2 days).  The volatility spike of GME caused that collateral requirement to go up to 100%. Any broker using Apex clearing put the same restrictions on buying GME (and whatever other ticker symbols that were in that group). Robinhood used to use Apex, but I think they are partially self clearing now.

Larger more well capitalized brokers (like Fidelity) did not restrict trading because, well, they could afford it. If you watch the interview with Vlad Tenev (Robinhood CEO), he basically said this, but did an absolutely terrible job of it.  I can see why he gave such a response though -- the alternative was to say "we're too broke for this."  I do wonder if he thought "hmm, this might look bad given our conflict of interest with Citadel".  On the other hand, the CEO of WeBull explained very well IMO what the situation was.

IMO this is a must watch: https://www.youtube.com/watch?v=v2O6lXZ4rkI.

As for the whole 'hedge funds are getting f---ed right now': I don't know what to think about that. Of course, there are losses, and yeah the short float is over 100%, but the daily traded volume over the last week has sometimes been multiples of the entire short float (referencing the video above and it's easily verifiable on yahoo finance for example).  As it's put in the video I linked above, a squeeze would really only happen if there is not enough volume in a day for short positions to be unloaded. This makes sense to me. Not only that, but it is possible to hold a short position as part of a larger neutral strategy...google statistical arbitrage or dynamic (delta) hedging. The short float hasn't really decreased at all, it's still astronomically high.

It’s the connection between the hedge fund and Robinhood that looks bad

posted by sportchampps

It’s the connection between the hedge fund and Robinhood that looks bad

Again, this is playing on the general public having no clue about how this shit actually works.  Citadel, one of the royalty of hedge funds, also has a huge broker/clearing company (as many large hedge funds do, to lower trading costs).

And, yes, given the obvious potential conflict of interest this is tightly regulated.  So, this shenanigans theory is simply wrong.

Also, there are DOZENS of clearing orgs and brokers.  Citadel didn't, and couldn't, break Robinhood.  No, Robinhood very clearly and understandably failed solvency and capital requirements from its counter-parties.

I think some of this comes from a misunderstanding (still, 12+ years after the housing crisis) about what a "bailout" actually is.  Citadel and Point72 gave a loan to the shortseller.  They're smart hedge funds - they made a smart bet, not without risk - that they'll get a quick 100%+ annualized return on that loan.  There's no "bail out" as some sort of free favor to "the club" - simply an investment with a favorable risk/reward profile.

They have have caused silver to go up in the pre-market.

WSB isn't actually involved with silver at all, from what I can tell from lurking on the subreddit. That's being reported by the media, but there is no silver talk at all. There are a bunch of new bots on WSB that are pushing various stocks that aren't actually WSB targets.

posted by GOONx19

WSB isn't actually involved with silver at all, from what I can tell from lurking on the subreddit. That's being reported by the media, but there is no silver talk at all. There are a bunch of new bots on WSB that are pushing various stocks that aren't actually WSB targets.

I'm seeing the same. That said, my small stack of silver appreciates the price increase nonetheless.

GME and AMC took some big hits this morning. Portnoy sold all his shares for a $700k loss (per him).

Mark Cuban did an AMA on reddit this morning, said he would be holding fwiw.

Sorry, for some reason can't find the most recent Bitcoin thread.

https://www.wsj.com/articles/behind-the-bitcoin-bubble-11612125537?mod=opinion_featst_pos2

Too lazy to do my own research, but the gist is a company called Tether raised a few billion issuing "stablecoin" that was supposed to be backed 1-to-1 with real dollars.  And while Bitcoin took off the last month and a half, Tether issuance and cap skyrocketed to over $26B.  One researcher claimed on any given day, Tether was used in as much as 2/3 of the Bitcoin purchases.  Tether is now only backed by about $0.75, and claims that is a mix of assets (including Bitcoin).  For what it's worth, a govt watchdog didn't find a correlation.

They're being investigated for fraud by NY AG.  The claim is when they stopped issuing new Tether, Bitcoin dropped 30%.

posted by iclfan2

GME and AMC took some big hits this morning. Portnoy sold all his shares for a $700k loss (per him).

Now he's crying that everyone should be sued. He bought in late at an extremely high price, hoping to make some easy money. He was basically gambling and lost.

posted by iclfan2

GME and AMC took some big hits this morning. Portnoy sold all his shares for a $700k loss (per him).

Reading a few articles today, and while it's impossible to know if people are being completely honest, many people without a pot to piss in (like college students) saw their accounts soar to over $300,000.  And they were still holding ("$1M or bust") when the article was written, presumably over the past few days before it cratered.

One guy claimed to have put $30k into call options.  That was the guy who made almost $300k.  I'm guessing those are probably out-of-the-money, now, and he's probably busted.

posted by Al Bundy

Now he's crying that everyone should be sued. He bought in late at an extremely high price, hoping to make some easy money. He was basically gambling and lost.

Again, pump-n-dump is illegal.  But this was all completely open and transparent, so I'm not sure any crimes were committed.  I imagine they'll be looking closely at the ring leaders to see if all their actions and statements were actually above board.  Like, for instance, encouraging people to keep buying and stay the course while you quietly cash out before everyone runs for the exit.

Not saying that's what happened, but I'm sure the smart traders who were in early took some gains and then let free house money ride.  Most of the donks will still be holding onto their shares at $20 a year from now, while the more experienced investors will cut their losses.  I suppose the average college course is maybe like $3k, so that would be one way to look at one's foolishness.

posted by gut

Sorry, for some reason can't find the most recent Bitcoin thread.

https://www.wsj.com/articles/behind-the-bitcoin-bubble-11612125537?mod=opinion_featst_pos2

Too lazy to do my own research, but the gist is a company called Tether raised a few billion issuing "stablecoin" that was supposed to be backed 1-to-1 with real dollars.  And while Bitcoin took off the last month and a half, Tether issuance and cap skyrocketed to over $26B.  One researcher claimed on any given day, Tether was used in as much as 2/3 of the Bitcoin purchases.  Tether is now only backed by about $0.75, and claims that is a mix of assets (including Bitcoin).  For what it's worth, a govt watchdog didn't find a correlation.

They're being investigated for fraud by NY AG.  The claim is when they stopped issuing new Tether, Bitcoin dropped 30%.

https://medium.com/nic__carter/assessing-bitcoins-liquidity-with-coinlib-data-is-indefensible-3e5fdad51646

The internet, man.

Found on R/WSB pic.twitter.com/gXyRlVZk9B

— cloudatio (@cloudatio) February 2, 2021

posted by who_are_you

I lurk here from time to time, and the whole GME thing has me a bit fired up...

Welcome.