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Robinhood is a customer of Citadel to execute trades. Citadel lent $2.5 billion to the fund that shorted Gamestop. If that fund goes bust, Citadel won’t get its
by tqkxzugoaupvwqr 6y ago
Robinhood is a customer of Citadel to execute trades. Citadel lent $2.5 billion to the fund that shorted Gamestop. If that fund goes bust, Citadel won’t get its money back. It’s possible they pressure Robinhood to disallow buying Gamestop shares so the price doesn’t increase and the fund won’t suffer a fatal blow. It’s also possible Citadel simply doesn’t accept Buy orders anymore and Robinhood reacted to that by disabling the Buy button for Gamestop shares.
- ivalm 6y agoMelvin capital exited the short position two days ago, the loss is realized. Edit: It was a company announcement material to the fund's prospects, if they lied it would be grounds for a securities fraud suit from their investors. Sometimes the world is not a big conspiracy out to get you.
- cwwc 6y agoBut citadel subsequently took a new short position
- ivalm 6y agoCitadel securities is an MM in this business, they are certainly delta neutral and not short.
- llampx 6y agoThere's Citadel the market maker and Citadel the hedge fund.
- ivalm 6y agoAll 3 Citadel companies belong to Ken Griffin/are related and are unlikely to have meaningful short positions.. The company that is Robinhood's customer and pays for order flow is Citadel Securities, which is the market maker and is definitely not short GME. Citadel (hedge fund), is not short GME as they generally sell boring complicated solutions to rich people (fixed income, insurance, hedges etc). They do invest into other funds (like Melvin Capital), which may give them indirect exposure to the shorts. Citadel technologies, sells their tech.
- llampx 6y agoCitadel the fund has invested $2.75 billion into Melvin last week. Its likely they want to see an ROI.
- qeternity 6y agoSort of. Delta neutrality is a target, not a given. Gamma is what forces MMs to hedge. They have been absolutely steamrolled by gamma which would leave them massively net short when you’re facing 100-200% gaps.
- Nacdor 6y agoThat's what Melvin Capital claimed through a PR person, but that's not what anyone actually believes.
- cccc4all 6y agoThere's no proof of this. Look at actual stats, GME is STILL shorted over 100%.
- briankelly 6y agoAnd even if it is new shorts, then it becomes a race between shorts and longs, which longs would have a huge advantage barring direct manipulation.
- ivalm 6y agoI'm not saying they aren't shorted, I'm just saying it isn't Melvin. There are lots of people shorting GME when it's priced a large multiple of it's long term value. How this gets resolved given the giant short squeeze is another question. Certainly I wouldn't be brave enough to be on either side of the trade.
- thereare5lights 6y agoWe have no proof of that
- timack 6y agoMelvin capital [claimed to have] exited the short position two days ago, the loss is realized.
- ivalm 6y agoIt was a company announcement material to the fund's prospects, if they lied it would be grounds for a securities fraud suit from their investors.
- thereare5lights 6y agoDo we know if the fine that they would get is smaller or larger than the amount they stand to save by lying?
- ivalm 6y agoBut there is no reason to think they are lying. They needed $3b to close, they got 2.85b cash bailout, it makes sense that they closed.
- thereare5lights 6y agoThe reason is if they can make more money by lying. If still make a net profit even after any penalties for lying, then why wouldn't they lie? It's not like wall street has shown itself to be upstanding actors.
- ivalm 6y agoBecause they know this will be investigated throughly given the optics and they would be caught in fraud. The simpler explanation is that the current price point is clearly unsustainable and thus shorting GME is a crowded trade. As one fund exits another fund enters. If GME goes to $1000 people would still be shorting because, again, this price is unsustainable. It would be new people shorting though as most of the funds shorting at $300 would exit by the time it goes to $1000 (hypothetically). At the same time there is no world in which GME is worth more than $100 in 3 months, so the question now is who will be the greater fool holding the bag when it goes down. Whatever money shorts will lose now they will regain on the way down (although the short sellers losing money and making money might be different funds as some exit and some enter positions). Of course, the real money makers here are MMs that will be collecting a huge bid-ask spread on both directions. I don't think there is much good news for the retail investors though. As with all bubbles the people who got in early and had the acumen to sell before it pops will make boatloads, but the vast majority will lose.
- dasudasu 6y agoNo proof of that. Pure speculation. It’s also in their interest to spread such rumors.
- deleted 6y ago[deleted]
- moufestaphio 6y ago* they claim they did
- xiphias2 6y agoWe can’t know that for sure, as it wasn’t an official announcement.
- tmslnz 6y agoHow convenient to let out a public statement that they exited the short… Gives them plausible deniability on claims of collusion with Robinhood by way of Citadel!
- ww520 6y agoThey claimed they have exited "a" short position. We don't know how many short positions they will have besides that one.