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Whether the shorts were naked or not before this started, the shorts are unquestionably bankrupt with GME at or above $300. When shares are traded out from und

by zaroth 6y ago

Whether the shorts were naked or not before this started, the shorts are unquestionably bankrupt with GME at or above $300. When shares are traded out from under a short, and there’s no where left to borrow them from, and the hedge funds can’t meet collateral requirements for their short interest, and the broker needs to liquidate their position but they come up about $20 billion dollars short... That’s when you have massive failure to deliver and the whole corrupt organism goes into CYA mode and tries to shut down buying and bring the stock price back in-line with their models.

vkou 6y ago
> Whether the shorts were naked or not before this started, the shorts are unquestionably bankrupt with GME at or above $300. That is not correct. You have no idea whether or not the shorts currently open, as of today, were opened when GME was worth $12, $50, or $400. It's entirely possible that many of the $12 shorts closed when the stock first rallied. > That’s when you have massive failure to deliver and the whole corrupt organism goes into CYA mode and tries to shut down buying and bring the stock price back in-line with their models. The reason trading on shitty retail brokerages like RobinHood was shut down was because the clearinghouse collateral requirements went through the roof, and shitty retail brokerages like RobinHood weren't able to instantly come up with a couple of billion dollars to wire to the clearinghouses. (They did, eventually, which is why buys resumed on Friday.) You get what you pay for with brokerages. They are an abstraction layer over a highly technical, 19th-century layer of physical settlement of stocks. When the market isn't going crazy, this abstraction works, with minimum collateral requirements. When the market is going crazy, this abstraction stops working, and their counterparties start demanding billions of dollars in collateral.
- argonaut 6y ago
  I agree with everything you said except one nit: Robinhood still hasn't fixed their liquidity issues because they only let each account buy a maximum of one (1) GameStop share on Friday.

by zaroth 6y ago

vkou 6y ago

> Whether the shorts were naked or not before this started, the shorts are unquestionably bankrupt with GME at or above $300. That is not correct. You have no idea whether or not the shorts currently open, as of today, were opened when GME was worth $12, $50, or $400. It's entirely possible that many of the $12 shorts closed when the stock first rallied. > That’s when you have massive failure to deliver and the whole corrupt organism goes into CYA mode and tries to shut down buying and bring the stock price back in-line with their models. The reason trading on shitty retail brokerages like RobinHood was shut down was because the clearinghouse collateral requirements went through the roof, and shitty retail brokerages like RobinHood weren't able to instantly come up with a couple of billion dollars to wire to the clearinghouses. (They did, eventually, which is why buys resumed on Friday.) You get what you pay for with brokerages. They are an abstraction layer over a highly technical, 19th-century layer of physical settlement of stocks. When the market isn't going crazy, this abstraction works, with minimum collateral requirements. When the market is going crazy, this abstraction stops working, and their counterparties start demanding billions of dollars in collateral.

argonaut 6y ago
I agree with everything you said except one nit: Robinhood still hasn't fixed their liquidity issues because they only let each account buy a maximum of one (1) GameStop share on Friday.