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It gets downvoted because it’s nonsense. People who talk about naked shorting do not understand what it means. And in general people talking about these sorts o

It gets downvoted because it’s nonsense. People who talk about naked shorting do not understand what it means. And in general people talking about these sorts of conspiracies definitely don’t understand options/greeks. Source: career hedge fund trader

toomuchtodo 5y ago
You say this, and then it’s reported that funds are bleeding out $800M-$1B per day when GME and AMC rally, so ¯\_(ツ)_/¯ https://www.bloomberg.com/news/articles/2021-06-01/amc-gamestop-rallies-deal-shorts-another-591-million-blow https://www.bloomberg.com/news/articles/2021-06-01/amc-games...
- jw1224 5y ago
  Last week’s 8-K filing revealed GameStop are actively assisting the SEC with an investigation into ongoing manipulation of their share price. They even disclosed to investors the risk of a further short squeeze on their stock. If they don’t have reason to believe that’s a possibility, it would never have been put on the record in a public filing.
  - WJW 5y ago
    They can believe it is an exceedingly remote possibility but nonetheless put it in the filing just in case. These filings contain many risk statements about events that do not eventually come to pass. In addition, assisting the SEC about 'ongoing manipulation' can just as easily mean that the SEC may be considering mass hyping of the stock through reddit to be manipulation. It does not mean that there is definitely shady stuff going on that GameStop is worried about.
    - jw1224 5y ago
      Both fair points, thanks for your comment. GameStop’s filing did note the following [1]: “the inquiry is not expected to adversely impact us” I feel this is a statement they would be unlikely to make if they felt the SEC’s investigation was likely to result in retail sell-offs. They’ve been able to use the recent dramatic increase in their share price to pay off $216m in debt a year early, and add a further $551m to their bank account. Plus, they’re currently in the process of raising an additional $1.1bn from additional share sales. The SEC themselves have commented on the investigation too [2]: "SEC staff continues to monitor the market in light of the ongoing volatility in certain stocks to determine if there have been any disruptions of the market, manipulative trading, or other misconduct," a spokesperson for SEC said in a statement. "In addition, we will act to protect retail investors if violations of federal securities laws are found." That last sentence leaves me feeling optimistic. [1] https://www.bloomberg.com/news/articles/2021-06-09/gamestop-says-sec-is-investigating-trading-of-its-shares https://www.bloomberg.com/news/articles/2021-06-09/gamestop-... [2] https://www.reuters.com/world/us/us-sec-says-observing-market-meme-stocks-rally-2021-06-07/ https://www.reuters.com/world/us/us-sec-says-observing-marke...
      - dmurray 5y ago
        > I feel this is a statement they would be unlikely to make if they felt the SEC’s investigation was likely to result in retail sell-offs. I think that's a major misunderstanding of how the statement works. Gamestop think the SEC inquiry won't affect their business - they aren't making any claims about its effect on their stock price. In a normal world, these would be close to equivalent, and you could interpret the statement as "this will not impact us to an extent that is material to our stock price", but that's not OK to do here.
        jw1224 5y ago
        If there was a significant retail sell-off right around now that caused the share price to plummet, it would directly affect their business transformation plans. They are currently completing an at-the-market offering for 5,000,000 shares, as a means to raise capital to fund their new digital strategy. We don’t know how long this will continue to go on for. You may or may not be aware of this, but their new chairman is on a major recruitment drive and is taking on many new technology-focussed executives (lots of former Amazon execs, a total change in perspective for a brick-and-mortar retailer that was nearly bankrupt last year). This has all been disclosed in their recent filings — and so as I understand it, at the present moment their share price is directly linked to the performance of their business. Ultimately, though — I’m just speculating. This is far from the only indication they’ve given that retail investors needn’t worry. Just some food for thought. I wouldn’t normally give much weight to this if it weren’t also for everything else they’ve got going on at the moment. Time will tell!
- qeternity 5y ago
  No - see this is what I mean. You don’t understand what that data means. The options market for these stocks has become huge. Many people are long calls. If I am trading around my gamma, I will be shorting underlying against my calls. I can even be net long, even if I am short shares. There are a lot of outright shorts. But there are also a lot of shorts for other reasons, and those people aren’t bleeding.
  - toomuchtodo 5y ago
    I own the underlying and participate in the options market for these securities. I understand the mechanisms very well.
    - qeternity 5y ago
      I don’t doubt that you participate. Nothing you have said indicates you understand professional options markets.
      - deleted 5y ago
        [deleted]
      - ceh123 5y ago
        Hey, just a random spectator here. I'm super interested in learning as much as I can about this stuff. (currently a math PhD student considering a career in hedge funds) Are there any resources or books or anything you'd suggest checking out? Right now I'm definitely at an early "learn as much as possible" stage and would love to hear any suggestions you might have on how to get exposure to this world. Thanks.
        jw1224 5y ago
        I wasn’t sure whether you’re asking for resources about options trading in general, or info about the GME situation specifically. Presuming it’s the latter, I would start here: https://reddit.com/r/Superstonk/comments/nwqaj0/gme_moass_thesis_summary_20_summarization_of_the/ https://reddit.com/r/Superstonk/comments/nwqaj0/gme_moass_th... That’s a link to a comprehensive beginner’s guide covering the GME saga so far, and offers plenty of supporting research in favour of a further potential squeeze. I hope it’s a useful starting point for you, assuming that’s what you were asking after!
- tedunangst 5y ago
  Curiously, I never see such headlines when GME or AMC drop. GME is down 30% since earnings. How much did the shorts lose?
  - jw1224 5y ago
    This is a well-recognised phenomenon. “Forget GameStop” is a running joke by this point: https://www.reddit.com/r/GME/comments/mhc9vf/dont_forget_to_forget_gamestop/ https://www.reddit.com/r/GME/comments/mhc9vf/dont_forget_to_... — and that post was from nearly 3 months ago. These headlines haven’t slowed down since! Some people speculate hedge funds are allowing AMC to squeeze, as a way to raise money to cover their GME shorts — not outside of the realms of possibility, given Citadel hold long positions on AMC. The timing of AMC price spikes has also correlated with FTD cycles, but that’s a whole other can of worms. AMC seems to be covered by the media far more often than GME. On days when GME’s price has rocketed up, there appeared to be media blackouts, and it goes largely unreported. The same thing doesn’t seem to be happening with AMC (at least, not to anywhere near the same extent). Other common observations include trading apps like Robinhood only sending users push notifications when GME’s price drops significantly — but never when it’s rising. This has not been observed with any other stocks, as far as I’ve seen.
rezahussain 5y ago
I am very interested in hearing the opposite side against GME. Can you provide some points on why the main premise(that there is still a large short position which is underwater) could be false? The DTCC new rules + ongoing restrictions at brokerages suggests to me something is going on. For instance tdameritrade makes me call in to sell covered calls on my GME position while they allow me to sell covered calls through the web interface for my other positions.
- qeternity 5y ago
  > Can you provide some points on why the main premise(that there is still a large short position which is underwater) could be false? I never said this wasn’t true. By all accounts this appears to remain true. What I take issue with is all this talk of “naked shorting” which is a very specific thing and I’ve not seen any data to suggest this has happened at scale. It also fundamentally misunderstands now Citadel Securities makes money or even just options basics (the vast majority of retail are buying calls which means any MM will be long underlying against their short calls). It’s the conspiracy theory stuff which is nonsense.
  - jw1224 5y ago
    > the vast majority of retail are buying calls This is almost certainly NOT the case. Do you have any data to back this statement up? The MOASS theory relies simply on retail investors buying and holding shares. On the rare occasion when someone posts to Superstonk about their GME options, the user is quickly warned against them, without fail, every single time I’ve seen it happen. Retail investors were no doubt trading options through Robinhood back in January. But after all the drama back then, Robinhood has since suffered a mass exodus of users to different brokerages. It’s clear from spending any time at places like Superstonk that retail investors who’ve read any of the DD have moved away from RH en masse. There was a big push across the community to do this back in February, but I appreciate this isn’t obvious knowledge to someone who hasn’t kept up-to-speed with it for the past 6 months. Options are normally only ever mentioned by uninformed new users.
    - 5y ago
paulpauper 5y ago
Also, many hedge funds are betting on GME going up. To say that this GME rally hurts hedge funds demonstrates a lack of understanding about the market.
gifnamething 5y ago
Whether or not it's true is irrelevant. The point about the motivations and beliefs of the traders.

toomuchtodo 5y ago

You say this, and then it’s reported that funds are bleeding out $800M-$1B per day when GME and AMC rally, so ¯\_(ツ)_/¯ https://www.bloomberg.com/news/articles/2021-06-01/amc-gamestop-rallies-deal-shorts-another-591-million-blow https://www.bloomberg.com/news/articles/2021-06-01/amc-games...

jw1224 5y ago
Last week’s 8-K filing revealed GameStop are actively assisting the SEC with an investigation into ongoing manipulation of their share price. They even disclosed to investors the risk of a further short squeeze on their stock. If they don’t have reason to believe that’s a possibility, it would never have been put on the record in a public filing.
- WJW 5y ago
  They can believe it is an exceedingly remote possibility but nonetheless put it in the filing just in case. These filings contain many risk statements about events that do not eventually come to pass. In addition, assisting the SEC about 'ongoing manipulation' can just as easily mean that the SEC may be considering mass hyping of the stock through reddit to be manipulation. It does not mean that there is definitely shady stuff going on that GameStop is worried about.
  - jw1224 5y ago
    Both fair points, thanks for your comment. GameStop’s filing did note the following [1]: “the inquiry is not expected to adversely impact us” I feel this is a statement they would be unlikely to make if they felt the SEC’s investigation was likely to result in retail sell-offs. They’ve been able to use the recent dramatic increase in their share price to pay off $216m in debt a year early, and add a further $551m to their bank account. Plus, they’re currently in the process of raising an additional $1.1bn from additional share sales. The SEC themselves have commented on the investigation too [2]: "SEC staff continues to monitor the market in light of the ongoing volatility in certain stocks to determine if there have been any disruptions of the market, manipulative trading, or other misconduct," a spokesperson for SEC said in a statement. "In addition, we will act to protect retail investors if violations of federal securities laws are found." That last sentence leaves me feeling optimistic. [1] https://www.bloomberg.com/news/articles/2021-06-09/gamestop-says-sec-is-investigating-trading-of-its-shares https://www.bloomberg.com/news/articles/2021-06-09/gamestop-... [2] https://www.reuters.com/world/us/us-sec-says-observing-market-meme-stocks-rally-2021-06-07/ https://www.reuters.com/world/us/us-sec-says-observing-marke...
    - dmurray 5y ago
      > I feel this is a statement they would be unlikely to make if they felt the SEC’s investigation was likely to result in retail sell-offs. I think that's a major misunderstanding of how the statement works. Gamestop think the SEC inquiry won't affect their business - they aren't making any claims about its effect on their stock price. In a normal world, these would be close to equivalent, and you could interpret the statement as "this will not impact us to an extent that is material to our stock price", but that's not OK to do here.
      - jw1224 5y ago
        If there was a significant retail sell-off right around now that caused the share price to plummet, it would directly affect their business transformation plans. They are currently completing an at-the-market offering for 5,000,000 shares, as a means to raise capital to fund their new digital strategy. We don’t know how long this will continue to go on for. You may or may not be aware of this, but their new chairman is on a major recruitment drive and is taking on many new technology-focussed executives (lots of former Amazon execs, a total change in perspective for a brick-and-mortar retailer that was nearly bankrupt last year). This has all been disclosed in their recent filings — and so as I understand it, at the present moment their share price is directly linked to the performance of their business. Ultimately, though — I’m just speculating. This is far from the only indication they’ve given that retail investors needn’t worry. Just some food for thought. I wouldn’t normally give much weight to this if it weren’t also for everything else they’ve got going on at the moment. Time will tell!
qeternity 5y ago
No - see this is what I mean. You don’t understand what that data means. The options market for these stocks has become huge. Many people are long calls. If I am trading around my gamma, I will be shorting underlying against my calls. I can even be net long, even if I am short shares. There are a lot of outright shorts. But there are also a lot of shorts for other reasons, and those people aren’t bleeding.
- toomuchtodo 5y ago
  I own the underlying and participate in the options market for these securities. I understand the mechanisms very well.
  - qeternity 5y ago
    I don’t doubt that you participate. Nothing you have said indicates you understand professional options markets.
    - deleted 5y ago
      [deleted]
    - ceh123 5y ago
      Hey, just a random spectator here. I'm super interested in learning as much as I can about this stuff. (currently a math PhD student considering a career in hedge funds) Are there any resources or books or anything you'd suggest checking out? Right now I'm definitely at an early "learn as much as possible" stage and would love to hear any suggestions you might have on how to get exposure to this world. Thanks.
      - jw1224 5y ago
        I wasn’t sure whether you’re asking for resources about options trading in general, or info about the GME situation specifically. Presuming it’s the latter, I would start here: https://reddit.com/r/Superstonk/comments/nwqaj0/gme_moass_thesis_summary_20_summarization_of_the/ https://reddit.com/r/Superstonk/comments/nwqaj0/gme_moass_th... That’s a link to a comprehensive beginner’s guide covering the GME saga so far, and offers plenty of supporting research in favour of a further potential squeeze. I hope it’s a useful starting point for you, assuming that’s what you were asking after!
tedunangst 5y ago
Curiously, I never see such headlines when GME or AMC drop. GME is down 30% since earnings. How much did the shorts lose?
- jw1224 5y ago
  This is a well-recognised phenomenon. “Forget GameStop” is a running joke by this point: https://www.reddit.com/r/GME/comments/mhc9vf/dont_forget_to_forget_gamestop/ https://www.reddit.com/r/GME/comments/mhc9vf/dont_forget_to_... — and that post was from nearly 3 months ago. These headlines haven’t slowed down since! Some people speculate hedge funds are allowing AMC to squeeze, as a way to raise money to cover their GME shorts — not outside of the realms of possibility, given Citadel hold long positions on AMC. The timing of AMC price spikes has also correlated with FTD cycles, but that’s a whole other can of worms. AMC seems to be covered by the media far more often than GME. On days when GME’s price has rocketed up, there appeared to be media blackouts, and it goes largely unreported. The same thing doesn’t seem to be happening with AMC (at least, not to anywhere near the same extent). Other common observations include trading apps like Robinhood only sending users push notifications when GME’s price drops significantly — but never when it’s rising. This has not been observed with any other stocks, as far as I’ve seen.

rezahussain 5y ago

I am very interested in hearing the opposite side against GME. Can you provide some points on why the main premise(that there is still a large short position which is underwater) could be false? The DTCC new rules + ongoing restrictions at brokerages suggests to me something is going on. For instance tdameritrade makes me call in to sell covered calls on my GME position while they allow me to sell covered calls through the web interface for my other positions.

qeternity 5y ago
> Can you provide some points on why the main premise(that there is still a large short position which is underwater) could be false? I never said this wasn’t true. By all accounts this appears to remain true. What I take issue with is all this talk of “naked shorting” which is a very specific thing and I’ve not seen any data to suggest this has happened at scale. It also fundamentally misunderstands now Citadel Securities makes money or even just options basics (the vast majority of retail are buying calls which means any MM will be long underlying against their short calls). It’s the conspiracy theory stuff which is nonsense.
- jw1224 5y ago
  > the vast majority of retail are buying calls This is almost certainly NOT the case. Do you have any data to back this statement up? The MOASS theory relies simply on retail investors buying and holding shares. On the rare occasion when someone posts to Superstonk about their GME options, the user is quickly warned against them, without fail, every single time I’ve seen it happen. Retail investors were no doubt trading options through Robinhood back in January. But after all the drama back then, Robinhood has since suffered a mass exodus of users to different brokerages. It’s clear from spending any time at places like Superstonk that retail investors who’ve read any of the DD have moved away from RH en masse. There was a big push across the community to do this back in February, but I appreciate this isn’t obvious knowledge to someone who hasn’t kept up-to-speed with it for the past 6 months. Options are normally only ever mentioned by uninformed new users.
  - 5y ago

paulpauper 5y ago

Also, many hedge funds are betting on GME going up. To say that this GME rally hurts hedge funds demonstrates a lack of understanding about the market.

gifnamething 5y ago

Whether or not it's true is irrelevant. The point about the motivations and beliefs of the traders.