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Come on man, there's no where near enough volume there to move anything but the most low volume of stocks. All they trade in is meme stocks like TSLA, NFLX, MSF
by safog 7y ago
Come on man, there's no where near enough volume there to move anything but the most low volume of stocks. All they trade in is meme stocks like TSLA, NFLX, MSFT, AAPL etc., and a few 100k on calls here or there won't budge the price in the slightest.
On top of that, it's not even a P&D group, people there are just trading against each other, you have both bears and bulls and thetas. There's never been a concerted effort to pump SPCE for instance.
- rantwasp 7y agohmm... what about MU, AMD, BYND, SHOP. you’re not paying attention. imho, robinhood gets the most out of it. the number if issues this reddit sub has found with RH is mind-boggling
- metalliqaz 7y agoinfinite money!
- rantwasp 7y agocannot literally go... sideways what about box spreads? it’s foolproof!
- blaser-waffle 7y agoI mean didn't the dude come out ahead? To the tune of like $10K?
- rantwasp 7y agobox spreads? nah. he lost 60K
- cbHXBY1D 7y agoThey've definitely moved MVIS before.
- AnotherGoodName 7y agoI have a theory that WSB are so bad at trading that they actually do manipulate stocks due to messing up every automated trading platform that assumes there'd be some logic to the trades being made. Someone's just bought a $1000 call option on a stock that's currently $400? Automated trading systems will probably raise alerts on that stock since someone must know something for that to happen. This appeared to happen when WSB were meme-ing on TSLA and a whole bunch of them bought $1000 call options when it was $400. Shortly afterwards TSLA skyrocketed in value.
- mixedbit 7y agoCan they be bad at trading? https://xkcd.com/2270/ https://xkcd.com/2270/
- chipperyman573 7y agoWow, I'm not sure if it was intentional but the alt text can be interpenetrated to be the same as GP's idea
- ipnon 7y agoI learned a new word today https://www.wordnik.com/words/interpenetrate https://www.wordnik.com/words/interpenetrate
- chipperyman573 7y agoHahaha I meant interpret
- rhizome 7y agoThere should be a sniglet for this situation.
- Majromax 7y agoWhile amusing as hell, the answer to the question posed by that XKCD is 'yes'. It's trivial to give away arbitrage opportunities, so the average expected loss – especially net of transaction fees – can be substantial.
- creaghpatr 7y agoIf they can influence the conversation then they can impact the price movement- the volume comes from institutional investors that get spooked by calls on meme stocks relative to normal stocks, then their algos (which aren't trained to handle meme stock banter) go nuts. That's just my theory though.
- dwd 7y agoOutside of institutional traders who can individually move large volumes of stock it's all herd mentality. Where the algos have the advantage is they see the herd moving either way earlier and react quicker. On a naive level you could just think of the Reddit group simply spooking the herd to start going in a certain way. All fun and games. In reality it's likely the same few individuals doing the triggering making it an effective pump and dump scheme. Someone has to lose out when stocks move with no underlying justification.
- 6gvONxR4sf7o 7y agoFYI for anyone else who didn't know what "bears and bulls and thetas" means (skip the top answer, or better yet come back to it after reading later ones): https://www.reddit.com/r/wallstreetbets/comments/ef0xhj/eli5_theta_gang/ https://www.reddit.com/r/wallstreetbets/comments/ef0xhj/eli5...
- doingmyting 7y agoEasier just to spell it out right here. Bear gang wants the market to die, Bull gang wants the market to moon (go up) and theta gang wants the market to not move at all. P.S: Stonks only go up! ... I mean down (as of late).
- nabla9 7y agoIMX (TD Ameritrade The Investor Movement Index) tracks retail investors sentiments from real portfolio data. IMX trails what happens in the markets. Retail investors don't create trends, they follow them off the cliff.
- peterlk 7y agoIt is worth noting that a user was recently banned for pumping a penny stock. Additionally, it seems within the realm of possibility that powerful people could use a shitposting forum to signal each other for market movements.
- greenie_beans 7y agoMatt Levine has an interesting take in his email newsletter that refutes your claim. Basically, by so many people buying calls, it forces market movers to purchase the underlying stock to cover their call and this perpetuates an upward movement.
- thaumasiotes 7y agoThat's the opposite of what he said. Look at his latest article: > We have discussed this theory before, during Tesla’s wild rally, and I conceded that they’ve got a point. Not a perpetual motion machine, but a motion machine, sure. The machine runs on leverage. If you have $100, you can buy $100 worth of stock, and the stock will go up a little; your trade will be self-reinforcing. If you get a margin loan, you can buy $200 worth of stock, and the stock will go up a bit more; your trade will be a bit more self-reinforcing. On the other hand if the stock then goes down a bit, your broker might call more margin from you, and if you can’t put up more money the broker will liquidate your whole position and the stock will go down. Trading on margin magnifies swings Or what he originally wrote: > the call options should have a volatility-increasing effect: Dealers who sell call options have to buy stock to hedge, and they have to buy more stock to adjust their hedge as the stock goes up (and sell as it goes down), meaning that speculators who buy Tesla call options to bet on the price and volatility going up also to some extent cause that to happen. To some extent! “LOL BLOOMBERG ADMITTING THAT AS LONG AS WE BUY THE CALLS THE STOCKS WILL GO UP BECAUSE OF HEDGING ALGORITHMS,” was Reddit’s takeaway from Kawa’s article, and I would not personally go that far. How do you get from Matt Levine saying "this cannot perpetuate an upward movement" and "other people are taking this to mean that the stocks will keep going up as long as we keep buying the calls, but those people are wrong" to "Matt Levine says this perpetuates an upward movement"? He made a direct, first-person statement of what he thinks, and you've inverted it.
- tybit 7y agoNot a perpetual motion machine, but a motion machine, sure. The GP was correct, Matt clearly says it can create some upward momentum, albeit not an unlimited amount.
- vidanay 7y agoThe ONLY way that I would believe WSB is "manipulating" anything is if some quant has an AI bot that scours social media and is using that to influence their trades. So...a second order derivative manipulation at best.
- alpineidyll3 7y agoAs Matt correctly points out ppl who work in finance like me cannot look away from wsb. Everyone follows the garbage fire, so it's actually kinda real!
- mrandish 7y ago> there's no where near enough volume there to move anything I was imagining that some big money quant fund had written bots and scrapers to use r/wsb as an algorithmic amplifier since over time they can make money on tiny shifts. Or maybe that would just make a good movie plot.
- chrischattin 7y agoYou're definitely not the first to think of this. I know of a couple of people have done sentiment analysis on r/wsb over the years. I've thought about doing it myself. But, doubt it'd be worth much other than a fun exercise.
- manicdee 7y agoSweet summer child. It is precisely because so few feel it is worth the effort, that the effort is worthwhile.
- FilterSweep 7y agoThere are also a few hardened investment professionals on there who will throw bad picks just to watch the fallout
- derefr 7y agoI imagine there's a few professionals on there (and other places) who will seed interest in / make a meme out of a stock in order to pump vega (or whatever you call "the predictability of the timescale on which volatility of the option becomes less predictable"—meta-vega? The thing in decision-theory that lets you capture utility when only you know that someone is pursuing a true-random mixed strategy, when they haven't actually done anything yet.)
- H8crilA 7y agoYou haven't looked at the numbers. There's so much option trading that it affects the entire market a lot: https://themarketear.com/posts/cqKGhoO98L/image/0 https://themarketear.com/posts/cqKGhoO98L/image/0 Pair that with poor price discovery: few actively managed funds; shit-ton of indexation (both explicit and closet). We may, and I repeat - may, see some interesting action here. Legends like Michale Burry or David Einhorn often complain about price discovery. Which is even more strange given the fact that the number of publicly traded companies in the US was cut down in half since 1996.
- H8crilA 7y agoPS. Individual names: https://themarketear.com/posts/cfmnQdKdbu/image/0 https://themarketear.com/posts/cfmnQdKdbu/image/0
- EpicEng 7y ago>You haven't looked at the numbers. There's so much option trading that it affects the entire market a lot The question is "what effect does have?", not "does option trading effect the market?"
- H8crilA 7y agoThat I cannot really tell you - I don't know. The standard story is about delta hedging (i.e. the buyers are speculators that don't delta hedge, but the sellers do hedge, introducing a lot of gamma into the market, thereby amplifying moves). My larger point is that in this state of the market one really has to wonder who's ultimately setting the prices.
- nabla9 7y agoRetail investors are are doing so small portion of option trading that it has no effect.
- FatDrunknStupid 7y agoTea leaves, charts, greeks - why should word of mouth be discounted? Like poker, you play the people not the cards.
- sjc33 7y agoI wish people talked more about how Robinhood really enabled this sort of reckless speculation. Day trading on your smartphone was not really a "thing" pre-Robinhood, and then they came along with commission free trades on both stocks and options. So not only did they make it easier to day trade given no explicit fees for doing so, they also mainstreamed options trading, which is actually what most people in WSB do almost exclusively, and really the only way you can 10x-100x your money in a few months (or in less time).
- conanbatt 7y agoThe Gain/Loss posts on that sub are surreal. There's a guy that made 500k with 12k in two weeks with a series of daily bets that is off the charts.
- jayrot 7y agoThe depressing reality of these is that they're no different from lottery winners in that's they basically got lucky, with the added, pernicious factor, that they probably convince themselves that there was some type of skill or finesse which means they will likely keep trying.
- conanbatt 7y agoWay better odds than the lottery!
- manigandham 7y agoIt depends entirely on the security. Sometimes users will pick far out of the money strike with little volume and be the entire market for that day, but major stocks like AMZN have such deep option pools and liquidity that even the entire sub buying the same thing would be insignificant. Options are derivatives of the security so any influence on share price will be a very diluted reaction based on risk and general market sentiment which I don't think a few thousand users are capable of. They would need to carry serious notional volume (in the 9+ figures) or major hedging risk with their brokers for any price action to occur, and even that might not last beyond days or hours.
- simonebrunozzi 7y agoWhat's a "theta" ?
- siculars 7y agosomeone who plays the sideways game. aka premium burn. google options greeks theta.
- manigandham 7y agoOptions are contracts that let you buy or sell shares at a certain price up until a certain date in the future where they expire. These contracts slowly lose value up to that date (outside of moves in stock price that make the contract worth more or less in the meantime). Some people sell these contracts on the probability that they will expire worthless and they keep all the money that someone else paid for them.
- kccqzy 7y agoIt's one of the option greeks. The original definition is basically the partial derivative of option price wrt time, i.e. it's the amount by which an option would lose in value per unit of time, when all else is equal. It's always negative. Theta gang just means someone who sells options and expects that option to expire worthless, thereby profiting from the slow decay of option value due to theta. It's a legitimate strategy in the options world for professionals, not just for WSB autists. Here's a random example of a finance professional running this strategy successfully in his personal account: https://earlyretirementnow.com/2019/03/27/passive-income-through-option-writing-part-3/ https://earlyretirementnow.com/2019/03/27/passive-income-thr... Disclaimer: I don't know this person, nor do I recommend copying his strategy if you don't know the options greeks; actually the amount of money you would need to execute his strategy would probably make most options beginner uncomfortable anyways.
- throwlaplace 7y agoin that post what does this mean >I use some leverage to overcome the lower premium revenue. he uses the premium from the OTM short puts to borrow?
- conanbatt 7y agoSPCE was most definitely pumped in WSB.
- abbadadda 7y agoI disagree and I think your "come on man" comment is ignorant, as though a journalist did not put in effort on the article you so blithely dismiss. On top of that your lack of insight or significant analysis is stunning for a comment with 100+ upvotes. And no, I'm not on Reddit. As you offered nothing but your opinion I'll leave this as mine.