My understanding is that WSB caused a gamma squeeze on Friday. (As opposed to a short squeeze).
Basically the MMs sold the redditors a bunch of $60c, for very little, and then once the price went up they start hedging their bets by buying stock.
Since the availability of float is so scarce, this shot the price way up. All the people that bought absurd weekly calls for $50 or more at pennies on the share made bank.
The money markets lost 200-300 million and a bunch of redditors made millions off of a few hundred/thousand.
Not me though, I bought puts the last 2 Fridays expecting the price to tank as everyone rushes for the doors. So I'm out like 2k.
Reddit/robinhood is absolutely running the market.
I saw a thread where someone was asking if 100c 1/21/22 NIO at $12.40 a share was a good investment. Absolutely bat shit crazy.
The worst part is if you own shares you can just turn on margin and robinhood will give you 50% more to gamble, that you can also put into calls.
All those people with unrealized gains in the market for TSLA and PLUG and NIO can just use that as collateral to borrow more.
We are all truly fucked because the moment TSLA dips 20% everyone is getting margin called and the market is going to collapse in a giant cascading event.
Don't believe me? Look at total market capitalization right now. Look at total leverage in the market. Look at the volume of option trading.
But there is still money to be made. Buy some BB calls that expire 2/19 and you will make money. Now that it is all over the news everyone is going to want a piece of the next pump and dump. I'm staying out. I'm still up a lot, like a stupid amount, but I lost like 25% of my yearly salary in a week. I'm lucky to have made money and I'm scared of all this stuff.
Going to be safe and sell covered calls from now on. I expect this to keep going at least until the next stimulus check goes out. The market is going to gobble all of it up.
I'm just glad my training starts back up on the 1st. I need to just delete robinhood...
Reddit/Robinhood aren't ruining the market. Doing anything in the stock market other than very long term strategies is just gambling, and in this case your gamble didn't pay out. If you lose 25% of your yearly salary in a week, you're gambling waaaay too much in stocks.
Under that thesis, the wild speculation in the market is being driven by a huge influx of cheap OTM calls as a form of gambling that is then forcing brokers to hedge the calls as the price of the equity increases.
Or the big brokerages could just stop selling the calls
But that would make way, way, way too much sense
Why would they do that? They have a better option.
They will just raise the price. They aren't going to shut down the tables. There is too much money to be made. They are the house after all.
GME went up 100% last week and went up another 50% this week. I think the insane speed at which they were pumped caused the squeeze. It won't happen again. And if it does, they are making money on all the wild bets elsewhere. TSLA hasn't gone above 880 in three weeks. A lot of bets are expiring worthless. That's going to keep happening.
Look at the NIO call I mentioned. At the time the post was made, 100c 1/21/22 cost 12.40. the stock was at 56 I think.
To buy that contract, it would cost $1240. And the stock would have to double for you to break even. To double your money, the stock would have to hit 124.80. To out perform just holding the stock, the price would have to go up like 125%.
But people are taking that bet. That is insane. The brokers are going to get their money back.
But hey why fight it? Just sell premiums yourself and join Theta gang.
But there is plenty in the news about the massive spike in retail investment and a huge spike in option trading.
I don't see how you can look at the massive increase in retail investment activity since the pandemic, the popularity of option trading, the bubble in story stocks, the rise in popularity of zero commission trading, the popularity of trading on social media and not see how it's all related.
Calls all the way up to 115c are being offered next week for GME and the WSB community is getting fired up again.
They figured out a way to break the market and take from the MMs. I bet against WSB two weeks in a row and lost. I won't bet against them this week nor will I buy calls. But dropping 1k down on a 75c lotto ticket is tempting.
I do respect what they are doing on this though. Tune in next week.
But there is plenty in the news about the massive spike in retail investment and a huge spike in option trading.
I don't see how you can look at the massive increase in retail investment activity since the pandemic, the popularity of option trading, the bubble in story stocks, the rise in popularity of zero commission trading, the popularity of trading on social media and not see how it's all related.
But it's not, right?
Do you have any further numbers or stats to back this up? Sure retail trading volume might be going gangbusters right now, but if all of those retail trades are for $50 here, $40 there through Robinhood, it still won't come close to the pure dollars and cents volume of institutional trading.
But there is plenty in the news about the massive spike in retail investment and a huge spike in option trading.
I don't see how you can look at the massive increase in retail investment activity since the pandemic, the popularity of option trading, the bubble in story stocks, the rise in popularity of zero commission trading, the popularity of trading on social media and not see how it's all related.
But it's not, right?
Do you have any further numbers or stats to back this up? Sure retail trading volume might be going gangbusters right now, but if all of those retail trades are for $50 here, $40 there through Robinhood, it still won't come close to the pure dollars and cents volume of institutional trading.
Yes, it's the story of the year. It's literally everywhere. But I can Google the news for you if you want.
Year over year, January volumes are up 92%, and from December, they are up 33%.
What accounts for these rises? Repetto believes the majority of the gains are due to increased retail participation, for several reasons:
Record volume on the Trade Reporting Facility. The TRF is the "tape" that reports trades not done on the exchanges. It includes retail trades that are routed to market makers, as well as dark pools. The vast majority of retail trades (90%) are reported to the facility. TRF volume this month reached a record 48.6% of all trading. Repetto believes most of this is due to an increase in retail trading.
Trades at retail brokers are way up. The average daily volume of the largest e-brokers in December was 6.6 million shares, a record. In January, average daily trades are at 8.1 million, a 23% increase.
Options trading is way up. December saw an average of 32.7 million contracts trade on all the equity option exchanges, also a record. In January, 39.8 million contracts a day are trading. Repetto also cites data from Cboe indicating trading in single contract options have doubled in market share (4% to 8%) and tripled in volume in contracts per day.
More GME shares traded hands yesterday than do in a typical year. 700,000 calls were sold on Friday alone. EVERY SINGLE ONE IS ITM as they only went up to 60. Every single one is many multiples what they cost. I mean sweet Jesus this is huge.
I think it's worth noting that while the stock market has a total valuation of 50+ trillion dollars, most just sits there.
The price of a stock is determined by the average between the best bid and lowest ask. Meaning that the trades each day determine the value of a stock not some preconceived notion or calculation of what the stock should be worth. If you believe in efficient markets, then they should be the same. But uh, yeah no.
So just because retail investors may only represent a small fraction of that 50+ trillion, if they represent a large portion of the trade volume, they drive the market.
I'd have to check to be sure, but from what I remember from the last FED SCF, individuals/ households owning equity directly amount to ~1/3rd of the market, and that's concentrated higher and higher in wealth quintiles. For the obvious reason.
We are all truly fucked because the moment TSLA dips 20% everyone is getting margin called and the market is going to collapse in a giant cascading event.
If Musk contracts COVID...which is looking likely since there appears to have been a super spreader event at that comedy club in TX, and ends up in the hospital in serious condition, I could see the 20% drop happening.
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MayabirdPecking at the keyboardRegistered Userregular
We are all truly fucked because the moment TSLA dips 20% everyone is getting margin called and the market is going to collapse in a giant cascading event.
If Musk contracts COVID...which is looking likely since there appears to have been a super spreader event at that comedy club in TX, and ends up in the hospital in serious condition, I could see the 20% drop happening.
He contracted it back in November, though there's always the possibility of reinfection with this virus.
Increase in retail trading and a simultaneous shift for institutional from stocks to bonds
Wait, what? There is a shift from stocks to bonds? My understanding is low interest rates drove everyone into stocks.
In institutional investment im guessing seeing all these retail traders fuckin up valuations and making the stocks unpredictably swingy made everyone trying to play the long game say, 'you know what, fuck this roller coaster, I'm getting some nice stable fuckin bonds that won't make us stupid rich all of a sudden, but also don't make us accidentally crash all of a sudden, and will get us our targeted year over year growth.
Treasury securities and the muni bond market are both at record lows. That's partly the fed lowering interest rates but also insanely high demand from institutions.
Treasury securities and the muni bond market are both at record lows. That's partly the fed lowering interest rates but also insanely high demand from institutions.
Treasury securities and the muni bond market are both at record lows. That's partly the fed lowering interest rates but also insanely high demand from institutions.
Demand doesn't need to be high with QE.
The fed has ended the municipal liquidity facility, so it's not QE.
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SummaryJudgmentGrab the hottest iron you can find, stride in the Tower’s front doorRegistered Userregular
*stares at the ceiling*
guys the market opens tomorrow morning
Some days Blue wonders why anyone ever bothered making numbers so small; other days she supposes even infinity needs to start somewhere.
Looks like the short squeeze is actually happening. They are going to fucking do it. They are going to send the stock to ininifty.
If only I had bought calls instead of puts I'd be a millionaire. I guess the only thing to do is buy BB calls because everyone is going to want to be in on the next one.
Every single one of the calls WSB investors bought last week, many for less than $100 is worth at least 40k right now.
If I had to guess at least 50k reddit users are going to wake up millionaires.
Edit: BB is already up 30% in premarket in anticipation of the WSB pump.
I can't imagine an Internet community that makes everyone millions would end up being all over the news and inspire masses of people to jump in and buy lotto tickets.
This is going to go well for the economy. Lol we are in danger.
I'd guess that kind of money changing hands from big dick investors to meme chasers gets the feds involved.
On the surface I don't think what they are doing is wrong or illegal. Irresponsible sure. But regulation seems to mean bend the law as far as you have to until something is illegal so you might be right.
I think the real big fish are making so much money skimming off the top from all this, they want gambling on the market to go viral. Not that we aren't already there.
So, this is going to be all over the news. People won't act crazy at the prospect of turning 1k into a million right? Or 1.4k into 1.4 million... What's that ominous music I hear in the background?
furbat on
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
I suspect a bunch of internet people's money is about to evaporate under federal scrutiny.
Buy some puts on things you think are going to crash. I bought some puts on SNOW, the insanely overvalued tech company whose shares all free up in March. If the market crashes before May 21st. I'm gonna make bank.
furbat on
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daveNYCWhy universe hate Waspinator?Registered Userregular
I'd guess that kind of money changing hands from big dick investors to meme chasers gets the feds involved.
On the surface I don't think what they are doing is wrong or illegal. Irresponsible sure. But regulation seems to mean bend the law as far as you have to until something is illegal so you might be right.
I think the real big fish are making so much money skimming off the top from all this, they want gambling on the market to go viral. Not that we aren't already there.
So, this is going to be all over the news. People won't act crazy at the prospect of turning 1k into a million right? Or 1.4k into 1.4 million... What's that ominous music I hear in the background?
It's a bit of a weird scenario to consider, because it basically seems like they, whoever 'they' are, are just crowdsourcing a short squeeze.
Shut up, Mr. Burton! You were not brought upon this world to get it!
I can't see how anything illegal is going on though. No one is being tricked into buying a stock or lied to, and buying shares to cause a short squeeze is also legal.
It basically amounts to "Hey let's all do this and we get rich together!. As long as we work together and don't sell we get rich.' And then that gets repeated by everyone jumping in.
In a way it's actually wholesome.
Of course, I bet against them... Sometimes being a misanthrope is expensive.
furbat on
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daveNYCWhy universe hate Waspinator?Registered Userregular
I can't see how anything illegal is going on though. No one is being tricked into buying a stock or lied to, and buying shares to cause a short squeeze is also legal.
It basically amounts to "Hey let's all do this and we get rich together!. As long as we work together and don't sell we get rich.' And then that gets repeated by everyone jumping in.
In a way it's actually wholesome.
Of course, I bet against them...
Yeah, it's basically the same as any random talking head on one of the finance channels talking their book. Except it's a bunch of randos instead of Very Serious Finance People, and it seems to be working. Both of which might get the SEC to pay attention.
Shut up, Mr. Burton! You were not brought upon this world to get it!
The shit WSB is doing in the regular god damn stock market is making the crypto market look almost tame and responsible by comparison
buying stock, quelle horror
This shit happens all the time except this time its retail instead of hedge funds making the play
but people hear R e d d i t and then start talking about them like the hacker known as 4chan
Well, it doesn't help their respectability when you go to the threads and they're filled with diamond hand emojis and calls for more tendies. Certainly reasonable to consider them all fools. But I gotta respect this in the end, something refreshing about the common man taking over money printing machine.
So is GME up 50% because the margin calls on the shorts are starting to happen, or is this still because the hype train on the sub is causing everyone to keep buying?
"Respectability" Really? We have Q anon and/or insurrectionist congress critters, and people on reddit being people on reddit is a mark of respectability? Get outta here with that.
(Understanding fully it's not your opinion that I'm referring to, but the general "public".)
Posts
Reddit/Robinhood aren't ruining the market. Doing anything in the stock market other than very long term strategies is just gambling, and in this case your gamble didn't pay out. If you lose 25% of your yearly salary in a week, you're gambling waaaay too much in stocks.
Why would they do that? They have a better option.
They will just raise the price. They aren't going to shut down the tables. There is too much money to be made. They are the house after all.
GME went up 100% last week and went up another 50% this week. I think the insane speed at which they were pumped caused the squeeze. It won't happen again. And if it does, they are making money on all the wild bets elsewhere. TSLA hasn't gone above 880 in three weeks. A lot of bets are expiring worthless. That's going to keep happening.
Look at the NIO call I mentioned. At the time the post was made, 100c 1/21/22 cost 12.40. the stock was at 56 I think.
To buy that contract, it would cost $1240. And the stock would have to double for you to break even. To double your money, the stock would have to hit 124.80. To out perform just holding the stock, the price would have to go up like 125%.
But people are taking that bet. That is insane. The brokers are going to get their money back.
But hey why fight it? Just sell premiums yourself and join Theta gang.
Here is a story drawing a correlation between robinhood and TSLA,
https://www.businessinsider.com/scott-galloway-robinhood-fueling-bubble-tesla-overvalued-2020-10
But there is plenty in the news about the massive spike in retail investment and a huge spike in option trading.
I don't see how you can look at the massive increase in retail investment activity since the pandemic, the popularity of option trading, the bubble in story stocks, the rise in popularity of zero commission trading, the popularity of trading on social media and not see how it's all related.
But it's not, right?
They figured out a way to break the market and take from the MMs. I bet against WSB two weeks in a row and lost. I won't bet against them this week nor will I buy calls. But dropping 1k down on a 75c lotto ticket is tempting.
I do respect what they are doing on this though. Tune in next week.
Do you have any further numbers or stats to back this up? Sure retail trading volume might be going gangbusters right now, but if all of those retail trades are for $50 here, $40 there through Robinhood, it still won't come close to the pure dollars and cents volume of institutional trading.
Yes, it's the story of the year. It's literally everywhere. But I can Google the news for you if you want.
https://www.cnbc.com/2021/01/22/trading-volume-is-up-so-far-from-2020s-breakneck-pace-as-retail-investors-get-even-more-active.html
More GME shares traded hands yesterday than do in a typical year. 700,000 calls were sold on Friday alone. EVERY SINGLE ONE IS ITM as they only went up to 60. Every single one is many multiples what they cost. I mean sweet Jesus this is huge.
Billions were traded in that stock in one day.
The price of a stock is determined by the average between the best bid and lowest ask. Meaning that the trades each day determine the value of a stock not some preconceived notion or calculation of what the stock should be worth. If you believe in efficient markets, then they should be the same. But uh, yeah no.
So just because retail investors may only represent a small fraction of that 50+ trillion, if they represent a large portion of the trade volume, they drive the market.
https://www.businessofapps.com/data/robinhood-statistics/
I'd have to check to be sure, but from what I remember from the last FED SCF, individuals/ households owning equity directly amount to ~1/3rd of the market, and that's concentrated higher and higher in wealth quintiles. For the obvious reason.
Yes.
But volume is what drives the market not assets under management.
Wait, what? There is a shift from stocks to bonds? My understanding is low interest rates drove everyone into stocks.
If Musk contracts COVID...which is looking likely since there appears to have been a super spreader event at that comedy club in TX, and ends up in the hospital in serious condition, I could see the 20% drop happening.
He contracted it back in November, though there's always the possibility of reinfection with this virus.
In institutional investment im guessing seeing all these retail traders fuckin up valuations and making the stocks unpredictably swingy made everyone trying to play the long game say, 'you know what, fuck this roller coaster, I'm getting some nice stable fuckin bonds that won't make us stupid rich all of a sudden, but also don't make us accidentally crash all of a sudden, and will get us our targeted year over year growth.
Here is an excellent article I just saw at Forbes, it explains how OTM calls and retail investors impact the market.
https://www.forbes.com/sites/danrunkevicius/2021/01/21/1400-stimulus-checks-will-blow-up-the-stock-market/
The author explains pretty much everything I been trying to say, but better.
Demand doesn't need to be high with QE.
The fed has ended the municipal liquidity facility, so it's not QE.
guys the market opens tomorrow morning
I continue to hope DIS rockets and Bitcoin crashes, because otherwise I'm doomed (in my bets)
Looks like the short squeeze is actually happening. They are going to fucking do it. They are going to send the stock to ininifty.
If only I had bought calls instead of puts I'd be a millionaire. I guess the only thing to do is buy BB calls because everyone is going to want to be in on the next one.
I just can't get myself to do that.
If I had to guess at least 50k reddit users are going to wake up millionaires.
Edit: BB is already up 30% in premarket in anticipation of the WSB pump.
I can't imagine an Internet community that makes everyone millions would end up being all over the news and inspire masses of people to jump in and buy lotto tickets.
This is going to go well for the economy. Lol we are in danger.
On the surface I don't think what they are doing is wrong or illegal. Irresponsible sure. But regulation seems to mean bend the law as far as you have to until something is illegal so you might be right.
I think the real big fish are making so much money skimming off the top from all this, they want gambling on the market to go viral. Not that we aren't already there.
So, this is going to be all over the news. People won't act crazy at the prospect of turning 1k into a million right? Or 1.4k into 1.4 million... What's that ominous music I hear in the background?
It's a bit of a weird scenario to consider, because it basically seems like they, whoever 'they' are, are just crowdsourcing a short squeeze.
It basically amounts to "Hey let's all do this and we get rich together!. As long as we work together and don't sell we get rich.' And then that gets repeated by everyone jumping in.
In a way it's actually wholesome.
Of course, I bet against them... Sometimes being a misanthrope is expensive.
Yeah, it's basically the same as any random talking head on one of the finance channels talking their book. Except it's a bunch of randos instead of Very Serious Finance People, and it seems to be working. Both of which might get the SEC to pay attention.
You're not gonna find me begrudging some folk actually -playing- the market and coming out on top against shit companies like Citron.
penny arcade bets
to the moon!
buying stock, quelle horror
This shit happens all the time except this time its retail instead of hedge funds making the play
but people hear R e d d i t and then start talking about them like the hacker known as 4chan
Sir, this is a casino.
Well, it doesn't help their respectability when you go to the threads and they're filled with diamond hand emojis and calls for more tendies. Certainly reasonable to consider them all fools. But I gotta respect this in the end, something refreshing about the common man taking over money printing machine.
So is GME up 50% because the margin calls on the shorts are starting to happen, or is this still because the hype train on the sub is causing everyone to keep buying?
(Understanding fully it's not your opinion that I'm referring to, but the general "public".)