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Say more about how citadel made this happen with their trading?

infecto 2mo ago
Firms like citadel will run crowding analytics, who owns what, at what leverage and rough margin trigger points. Over simplifying but they could be shorting the longs and going long on the shorts. Everyone generally knew situational was heavily levered.
vessenes 2mo ago
To be clear, I'm not claiming Citadel created double digit drops in SK Hynix / Samsung. I am saying that as market vol hits, vol traders might choose to make it worse. And when word hits the street someone has a liquidity position, prop traders WILL come and pressure. SA's filings were clear how concentrated they were, and this was known. In this case, Citadel (hedge fund) bought, while I imagine Citadel Securities would have been doing this (speculated upon) trading. We'll know more when the filings come out though. I'll be curious what of the portfolio they kept and what they worked / rolled in the market
- Ekaros 2mo ago
  It really sounds like market manipulation... But oh well it is the biggest boys doing it so it can't be that illegal... Free markets and everything for them right?
  - bad_haircut72 2mo ago
    Im not a trader but my understanding was that some traders at Citadel heard a rumor these guys were exposed, which gave Citadel an advantage because they knew they would have to liquidate? That doesnt sound like market manipulation to me, just trading with all the information you have
  - victorbjorklund 2mo ago
    Short squeezing is legal. No need to protect short sellers from the market.
  - quickthrowman 2mo ago
    Situational Awareness filed a 13F that lists a hedge fund’s long and short positions with the SEC. It’s public information, forcing an overleveraged fund to liquidate by pressuring the instruments they’re exposed to is not market manipulation, leverage cuts both ways and all of the people/institutions involved are professional/sophisticated investors Here are all the SEC filings from Situational Awareness courtesy of SEC’s EDGAR: https://www.sec.gov/edgar/browse/?CIK=0002045724 https://www.sec.gov/edgar/browse/?CIK=0002045724
    - BoorishBears 2mo ago
      There's something amusingly circular about these conversations, because clearly laypeople like me and the person you responding to are saying "that sounds like it shouldn't be allowed" and the invariable responses are always "it is allowed!" The comment literally says it: "it can't be that illegal"
- tomp 2mo ago
  You make it sound like a conspiracy theory but it's just rational behaviour. Large amount of leverage / shorting / concentrated bets in a single stock => increase probability of large swings in that stock's price => bigger risk of sudden market moves => bigger risk to market makers => market makers limit their exposure.
jvsg_ 2mo ago
Citadel spread the rumor that the Fed was going to hike rates this week. This led to Situational Awareness getting margin called on their longs.
- moralestapia 2mo ago
  Quite similar to CZ and FTX.
- energy123 2mo ago
  That's a meme conspiracy theory on twitter that nobody in the industry takes seriously.
  - jvsg_ 2mo ago
    Please educate me what exactly is the conspiracy theory here. Are you saying it is beneath Citadel to play this trick?
    - energy123 2mo ago
      The cause and effect don't make sense because Citadel putting out such an opinion moves the entire market by only a few basis points which barely impacts what you're saying they're trying to impact. It's one of those narratives that sounds good because it's "Citadel" in both cases, which makes it go viral on social media among people who don't know what they're talking about, but it isn't coherent.
mrandish 2mo ago
Per a different WSJ article: https://www.wsj.com/finance/leopold-aschenbrenner-situational-awareness-ai-fund-597633d3 https://www.wsj.com/finance/leopold-aschenbrenner-situationa... > "Over the past week, traders at major hedge funds and other firms began sharing information about Situational’s exposure, with some placing short bets against its top holdings, hoping to profit as Aschenbrenner sold his positions to raise cash, according to two people close to the situation. The short bets by the rivals weighed on Situational’s portfolio. Meanwhile, tech shares like SK Hynix were sliding. Over the three trading days ending Tuesday of this week, hedge funds reduced their positions at a scale not seen in three years, according to Goldman Sachs." Having created (or at least amplified), the short squeeze on SA's position "Citadel executives reached out to Aschenbrenner, saying that the firm could be helpful if he needed ways to raise cash." > "Aschenbrenner partially blamed short sellers who targeted the firm’s positions for exacerbating the fund’s losses"

Firms like citadel will run crowding analytics, who owns what, at what leverage and rough margin trigger points. Over simplifying but they could be shorting the longs and going long on the shorts. Everyone generally knew situational was heavily levered.

vessenes 2mo ago

To be clear, I'm not claiming Citadel created double digit drops in SK Hynix / Samsung. I am saying that as market vol hits, vol traders might choose to make it worse. And when word hits the street someone has a liquidity position, prop traders WILL come and pressure. SA's filings were clear how concentrated they were, and this was known. In this case, Citadel (hedge fund) bought, while I imagine Citadel Securities would have been doing this (speculated upon) trading. We'll know more when the filings come out though. I'll be curious what of the portfolio they kept and what they worked / rolled in the market

Ekaros 2mo ago
It really sounds like market manipulation... But oh well it is the biggest boys doing it so it can't be that illegal... Free markets and everything for them right?
- bad_haircut72 2mo ago
  Im not a trader but my understanding was that some traders at Citadel heard a rumor these guys were exposed, which gave Citadel an advantage because they knew they would have to liquidate? That doesnt sound like market manipulation to me, just trading with all the information you have
- victorbjorklund 2mo ago
  Short squeezing is legal. No need to protect short sellers from the market.
- quickthrowman 2mo ago
  Situational Awareness filed a 13F that lists a hedge fund’s long and short positions with the SEC. It’s public information, forcing an overleveraged fund to liquidate by pressuring the instruments they’re exposed to is not market manipulation, leverage cuts both ways and all of the people/institutions involved are professional/sophisticated investors Here are all the SEC filings from Situational Awareness courtesy of SEC’s EDGAR: https://www.sec.gov/edgar/browse/?CIK=0002045724 https://www.sec.gov/edgar/browse/?CIK=0002045724
  - BoorishBears 2mo ago
    There's something amusingly circular about these conversations, because clearly laypeople like me and the person you responding to are saying "that sounds like it shouldn't be allowed" and the invariable responses are always "it is allowed!" The comment literally says it: "it can't be that illegal"
tomp 2mo ago
You make it sound like a conspiracy theory but it's just rational behaviour. Large amount of leverage / shorting / concentrated bets in a single stock => increase probability of large swings in that stock's price => bigger risk of sudden market moves => bigger risk to market makers => market makers limit their exposure.

jvsg_ 2mo ago

Citadel spread the rumor that the Fed was going to hike rates this week. This led to Situational Awareness getting margin called on their longs.

moralestapia 2mo ago
Quite similar to CZ and FTX.
energy123 2mo ago
That's a meme conspiracy theory on twitter that nobody in the industry takes seriously.
- jvsg_ 2mo ago
  Please educate me what exactly is the conspiracy theory here. Are you saying it is beneath Citadel to play this trick?
  - energy123 2mo ago
    The cause and effect don't make sense because Citadel putting out such an opinion moves the entire market by only a few basis points which barely impacts what you're saying they're trying to impact. It's one of those narratives that sounds good because it's "Citadel" in both cases, which makes it go viral on social media among people who don't know what they're talking about, but it isn't coherent.

mrandish 2mo ago

Per a different WSJ article: https://www.wsj.com/finance/leopold-aschenbrenner-situational-awareness-ai-fund-597633d3 https://www.wsj.com/finance/leopold-aschenbrenner-situationa... > "Over the past week, traders at major hedge funds and other firms began sharing information about Situational’s exposure, with some placing short bets against its top holdings, hoping to profit as Aschenbrenner sold his positions to raise cash, according to two people close to the situation. The short bets by the rivals weighed on Situational’s portfolio. Meanwhile, tech shares like SK Hynix were sliding. Over the three trading days ending Tuesday of this week, hedge funds reduced their positions at a scale not seen in three years, according to Goldman Sachs." Having created (or at least amplified), the short squeeze on SA's position "Citadel executives reached out to Aschenbrenner, saying that the firm could be helpful if he needed ways to raise cash." > "Aschenbrenner partially blamed short sellers who targeted the firm’s positions for exacerbating the fund’s losses"