2 ms·
In small stocks, when using leverage, they can influence things. I can’t find it now (on mobile) but I saw an analysis of HTZ that showed almost all of its rall
by christophilus 6y ago
In small stocks, when using leverage, they can influence things. I can’t find it now (on mobile) but I saw an analysis of HTZ that showed almost all of its rally was due to retail.
- maayank 6y agoIf you could find this analysis later I'd appreciate is as well, because I have OP's intuition that retail couldn't cause this
- quickthrowman 6y agoCall buying forces the options market maker to delta hedge by purchasing the underlying. Example: As of market close on Friday, a June 19, 2020 expiration HTZ $3 strike call option cost .55 ($55) and has a delta of .56; if I were to buy a 10 lot for $550, the options market maker would be short 560 deltas and would purchase 560 shares of HTZ to hedge their short call position. This can push the share price up quite a bit if there’s non-stop call buying. The converse is also true for put options, buying puts from an options market maker forces them to sell the underlying to delta hedge.
- hertzta 6y agoI worked at firm that let you trade on leverage a while back. They ended up owning so much of a small stock they couldn’t unwind the position after the leveraged client sold. I think they had to slowly unwind it and take on the risk.