Was the GME stock stuff really just all Wall St. Bets driven? Because if so, I wouldn't be surprised to see the sub banned. Naked organized pump&dumps like that are clearly illegal.
It will be interesting to see how the SEC comes down on it.
What they did, if they really did do it, was just buy shares and catch the shorts in a liquidity trap. It was only a coordinated effort in the sense that public information was spread saying "hey look, these hedgefunds are over leveraged here, if you buy and hold (like you would anyway if you believed in the company) they will be well and truly fucked by their own hubris"
And the whole mortgage interest deduction is just encouraging people to buy the biggest house they possibly can, to maximize that incentive. Everything is aligned to BUY BIGGER
Although the doubling of the standard deduction and SALT cap has put a damper on that for a lot of people.
Man, reading up on what's going on with that Gamestop thing is just...honestly, it highlights how there seems to be a different set of rules for the folks with money
Man, reading up on what's going on with that Gamestop thing is just...honestly, it highlights how there seems to be a different set of rules for the folks with money
Given just how accessible investing is now and the ease of spreading information, kinda wonder how this stuff is going to be enforced.
Man, reading up on what's going on with that Gamestop thing is just...honestly, it highlights how there seems to be a different set of rules for the folks with money
Given just how accessible investing is now and the ease of spreading information, kinda wonder how this stuff is going to be enforced.
Hell, we *do* have a decent amount of money and we don’t bother with stuff others can’t afford. We don’t eat at places like TGIF’s because they suck. We didn’t spend tons of money on wedding rings cause it’s a waste. We bought a house far, far below what our lender was offering since we just don’t need anything massive.
Maybe it was growing up poor, but if I spend money I want it to be worth it. The traditional status symbols jut seem pointless.
Spend to have good shoes and mattresses cause you’ll always be in one of them
I'm kind of curious how the biden admin will handle options trading going forward. I have a feeling that those were never really meant to be an democratized vehicle
Man, reading up on what's going on with that Gamestop thing is just...honestly, it highlights how there seems to be a different set of rules for the folks with money
What WSB did/is doing is totally legal in reality. All it took was some people looking at the publicly listed information like can be found here on Marketwatch and realizing that 138% of float being shorted (as shown there) just means that there aren't enough shares available for the amount of shorts issued and that if one buys the stock and holds it until the shorted contracts come due (and the contract holders have to pay back the share) they can make money because the contract holders will have to buy up any shares they can in order to meet their legally required obligations.
Like, it's literally what the protagonists of The Big Short (supposedly one of them is actually also taking part) did to the mortgage shorters, just on a much much much much much much smaller scale.
Now, the part that may have been illegal was finding out when those contracts for shorting companies are actually due and then publicly issuing that information. But I'm not sure if the SEC can enforce it.
What WSB did/is doing is totally legal in reality. All it took was some people looking at the publicly listed information like can be found here on Marketwatch and realizing that 138% of float being shorted (as shown there) just means that there aren't enough shares available for the amount of shorts issued and that if one buys the stock and holds it until the shorted contracts come due (and the contract holders have to pay back the share) they can make money because the contract holders will have to buy up any shares they can in order to meet their legally required obligations.
Like, it's literally what the protagonists of The Big Short (supposedly one of them is actually also taking part) did to the mortgage shorters, just on a much much much much much much smaller scale.
Now, the part that may have been illegal was finding out when those contracts for shorting companies are actually due and then publicly issuing that information. But I'm not sure if the SEC can enforce it.
This sounds really dumb and I’m wondering how this contributes to a more optimal allocation of capital
What WSB did/is doing is totally legal in reality. All it took was some people looking at the publicly listed information like can be found here on Marketwatch and realizing that 138% of float being shorted (as shown there) just means that there aren't enough shares available for the amount of shorts issued and that if one buys the stock and holds it until the shorted contracts come due (and the contract holders have to pay back the share) they can make money because the contract holders will have to buy up any shares they can in order to meet their legally required obligations.
Like, it's literally what the protagonists of The Big Short (supposedly one of them is actually also taking part) did to the mortgage shorters, just on a much much much much much much smaller scale.
Now, the part that may have been illegal was finding out when those contracts for shorting companies are actually due and then publicly issuing that information. But I'm not sure if the SEC can enforce it.
This sounds really dumb and I’m wondering how this contributes to a more optimal allocation of capital
I mean if Gamestop actually needed it they could split the stock and raise capital off of it. From an economic standpoint it makes sense cause it's a bunch of people with more optimistic expectations for the company than the shorters, so they upsold. But we all know that when the contracts come due the value will drop back down to where it was, so it doesn't make sense for Gamestop to try and get more capital out of it.
And, for the record, I think quite a few people on WSB are just small timers doing it for the memes. I have a friend who's doing that and he'll make out like 87% return if he sold today.
The dumb part is allowing there to be a 138% short float in the first place and the people that did that are supposedly the experts.
Yeah, this is the dumb part. And is in fact literally why the mortgage crisis was such a big deal -- when you start going higher and higher on that % of float you're going to literally lose cash in order to cover your contract.
The October 2008 short squeeze on shares of Volkswagen AG has since been referred to as the “Mother of all Squeezes”. It was also perhaps the earliest use of the term “Infinity Squeeze”. It was during the middle of the worst financial crisis since the Great Depression, and Volkswagen was increasingly being viewed as a potential bankruptcy candidate. In other words, Volkswagen was viewed as an exceptionally attractive short candidate. However, at very depth of the crisis, an orchestrated short squeeze on VW shares caused VW to briefly become the most valuable company in the world
...
On October 26th, 2008, rival automaker Porsche made a surprise announcement that it had increased its stake in VW to over 74%. It was a stealth move, made possible through the use of multiple purchases of cash-settled derivatives which had been accumulated separately through different European investment banks.
...
Looking at the above, it is clear that heading into October of 2008, around 55% of VW shares were already unavailable in the market for any realistic purposes. As a result, when Porsche increased its stake by an additional 44%, it meant that the true available float went down from 45% of outstanding shares to around just 1% of outstanding shares. Suddenly the seemingly “low” short interest of 12.8% turned in to a massive supply and demand imbalance. Millions of shares needed to be bought immediately even though there were simply no shares available to be sold.
I would not at all be shocked if ppl are attempting to manipulate the market in WSB. I also don't think a lot of the people in there care very much if they are.
Hell, we *do* have a decent amount of money and we don’t bother with stuff others can’t afford. We don’t eat at places like TGIF’s because they suck. We didn’t spend tons of money on wedding rings cause it’s a waste. We bought a house far, far below what our lender was offering since we just don’t need anything massive.
Maybe it was growing up poor, but if I spend money I want it to be worth it. The traditional status symbols jut seem pointless.
You know, it never even occurred to me to ask my lender how much I should spend on a house. For the two houses I bought in my lifetime, I followed an old rule of thumb to aim between 2 and 3 times your gross annual household income. And then I (or we in case of house 2) worked Excel to make sure the particulars (taxes, insurance, maintenance, payment, utilities, etc) actually fit our monthly budget.
But you mentioning it made me instantly think of refinancing my first house in 2010. When my loan officer was doing the paperwork, she stated something like: “Looking at your ratios, I could get you a loan three times as big.” And when I inquired if the appraisal for my refi would go well she said: “Don’t worry, we work with that appraiser a lot. I’ll let him know what number we need.”
All I could think was: didn’t we just have a financial crisis because of exactly these things?
Hell, we *do* have a decent amount of money and we don’t bother with stuff others can’t afford. We don’t eat at places like TGIF’s because they suck. We didn’t spend tons of money on wedding rings cause it’s a waste. We bought a house far, far below what our lender was offering since we just don’t need anything massive.
Maybe it was growing up poor, but if I spend money I want it to be worth it. The traditional status symbols jut seem pointless.
You know, it never even occurred to me to ask my lender how much I should spend on a house. For the two houses I bought in my lifetime, I followed an old rule of thumb to aim between 2 and 3 times your gross annual household income. And then I (or we in case of house 2) worked Excel to make sure the particulars (taxes, insurance, maintenance, payment, utilities, etc) actually fit our monthly budget.
But you mentioning it made me instantly think of refinancing my first house in 2010. When my loan officer was doing the paperwork, she stated something like: “Looking at your ratios, I could get you a loan three times as big.” And when I inquired if the appraisal for my refi would go well she said: “Don’t worry, we work with that appraiser a lot. I’ll let him know what number we need.”
All I could think was: didn’t we just have a financial crisis because of exactly these things?
You need to know more about real estate and mortgages than your bank to not get screwed. Which is a problem, because they should be the ones who know more than me since I'm not a fucking banker.
Our first mortgage we got pre-approval for up to half a million. And just no. We could not afford a $500k loan. Even now, with subsequent promotions and raises that would be unreasonable.
Hell, we *do* have a decent amount of money and we don’t bother with stuff others can’t afford. We don’t eat at places like TGIF’s because they suck. We didn’t spend tons of money on wedding rings cause it’s a waste. We bought a house far, far below what our lender was offering since we just don’t need anything massive.
Maybe it was growing up poor, but if I spend money I want it to be worth it. The traditional status symbols jut seem pointless.
You know, it never even occurred to me to ask my lender how much I should spend on a house. For the two houses I bought in my lifetime, I followed an old rule of thumb to aim between 2 and 3 times your gross annual household income. And then I (or we in case of house 2) worked Excel to make sure the particulars (taxes, insurance, maintenance, payment, utilities, etc) actually fit our monthly budget.
But you mentioning it made me instantly think of refinancing my first house in 2010. When my loan officer was doing the paperwork, she stated something like: “Looking at your ratios, I could get you a loan three times as big.” And when I inquired if the appraisal for my refi would go well she said: “Don’t worry, we work with that appraiser a lot. I’ll let him know what number we need.”
All I could think was: didn’t we just have a financial crisis because of exactly these things?
You need to know more about real estate and mortgages than your bank to not get screwed. Which is a problem, because they should be the ones who know more than me since I'm not a fucking banker.
Our first mortgage we got pre-approval for up to half a million. And just no. We could not afford a $500k loan. Even now, with subsequent promotions and raises that would be unreasonable.
We worked out our range with our CFP ahead of time, but our lender made it abundantly clear that they would give us way, way more than what we were asking for. I already feel overleveraged for our income (because our local market is so damn expensive), and they were more than happy to just keep lending.
Hell, we *do* have a decent amount of money and we don’t bother with stuff others can’t afford. We don’t eat at places like TGIF’s because they suck. We didn’t spend tons of money on wedding rings cause it’s a waste. We bought a house far, far below what our lender was offering since we just don’t need anything massive.
Maybe it was growing up poor, but if I spend money I want it to be worth it. The traditional status symbols jut seem pointless.
You know, it never even occurred to me to ask my lender how much I should spend on a house. For the two houses I bought in my lifetime, I followed an old rule of thumb to aim between 2 and 3 times your gross annual household income. And then I (or we in case of house 2) worked Excel to make sure the particulars (taxes, insurance, maintenance, payment, utilities, etc) actually fit our monthly budget.
But you mentioning it made me instantly think of refinancing my first house in 2010. When my loan officer was doing the paperwork, she stated something like: “Looking at your ratios, I could get you a loan three times as big.” And when I inquired if the appraisal for my refi would go well she said: “Don’t worry, we work with that appraiser a lot. I’ll let him know what number we need.”
All I could think was: didn’t we just have a financial crisis because of exactly these things?
You need to know more about real estate and mortgages than your bank to not get screwed. Which is a problem, because they should be the ones who know more than me since I'm not a fucking banker.
Our first mortgage we got pre-approval for up to half a million. And just no. We could not afford a $500k loan. Even now, with subsequent promotions and raises that would be unreasonable.
We worked out our range with our CFP ahead of time, but our lender made it abundantly clear that they would give us way, way more than what we were asking for. I already feel overleveraged for our income (because our local market is so damn expensive), and they were more than happy to just keep lending.
I mean, I suspect that banks typically make way more money from people who can pay for only so money years and then have to sell or get foreclosed on, than those who pay off their mortgages. So from their perspective it probably makes perfect sense. Sell the same thing 3X = $$$
The dumb part is allowing there to be a 138% short float in the first place and the people that did that are supposedly the experts.
And that's what a lot of what's going on WSB seems to be about. On the macro level it's basically a protest against the predatory practices of short sellers like Citron Research, who has had some famously dead wrong price forecasts and yet is considered a market expert.
Even though I suspect there's deeper manipulation at work, I can't really fault WSB stripping the veneer off the day to day trading to show that the market is completely detached from reality and pretty much the plaything of rich gamblers. Ultimately though the short sellers are probably right that the fundamentals of Gamestop aren't great for the future.
Now, the part that may have been illegal was finding out when those contracts for shorting companies are actually due and then publicly issuing that information. But I'm not sure if the SEC can enforce it.
All I ever saw was speculation that those shorts were coming due in the next week or two, did someone ultimately leak the actual dates?
At this point it almost seems dumb NOT to throw money at whatever meme stock WSB is pumping.
Yeah..and that's the part of this equation I don't think the "experts" have quite realized yet. Also..Andrew Left from Citron has not been doing himself any favors (IMO) by putting out several tweets that make him look like 1 part kid who just got caught with a hand in the cookie jar, and 1 part unsophisticated rube. It's no wonder Reddit smelled blood in the water when he's practically shouting that he got too greedy shorting GME.
There's no small part of me that doesn't want to buy in on whatever the flavor of the moment is for WSB because it's fucking stupid.
But on the flip-side, it being fucking stupid is a testament to how stupid the entire system is, and money is still fucking money, even if gotten via stupid means.
At this point it almost seems dumb NOT to throw money at whatever meme stock WSB is pumping.
Is it cool if you notice someone doing a pump and dump and you just ride the pump out for a short gain. Is that not somehow illegal to like take advantage of obvious malfeasance?
At this point it almost seems dumb NOT to throw money at whatever meme stock WSB is pumping.
Is it cool if you notice someone doing a pump and dump and you just ride the pump out for a short gain. Is that not somehow illegal to like take advantage of obvious malfeasance?
how can I possibly be responsible for what's public knowledge?
Also, I think the argument could be made that WSB isn't pumping the stock to dump it, they're pumping it because they believe in making a point about the market, and they're planning to hold it - specifically to cause a squeeze on the short sellers.
Man, reading up on what's going on with that Gamestop thing is just...honestly, it highlights how there seems to be a different set of rules for the folks with money
Given just how accessible investing is now and the ease of spreading information, kinda wonder how this stuff is going to be enforced.
I feel like the same kind of rules that would help kill super fast trading would probably deal with a lot of the dumb problems with all these random people on their computers at home gambling on Wall St now.
If you’re not pumping I don’t see what your crime is
But again this is investing on the meta and I still have no clue how this benefits society
It doesn't.
Also, the notion that competitive markets are more efficient than a command economy is over the medium to long term. Daily fluctuations in the stock market are always meaningless.
WSB was promoting shipping companies that we're going bankrupt for like a year so I don't think the track record of the reddit is actually that great. Most of us just happen to hear about it after it hits the news at which point it's either going to be a dramatic failure or success as only those cases are news worthy.
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MonwynApathy's a tragedy, and boredom is a crime.A little bit of everything, all of the time.Registered Userregular
At this point it almost seems dumb NOT to throw money at whatever meme stock WSB is pumping.
Is it cool if you notice someone doing a pump and dump and you just ride the pump out for a short gain. Is that not somehow illegal to like take advantage of obvious malfeasance?
It is absolutely legal. If you have forty-five minutes to kill, here's a video from a talk at DefCon about doing exactly that.
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...
What WSB did/is doing is totally legal in reality. All it took was some people looking at the publicly listed information like can be found here on Marketwatch and realizing that 138% of float being shorted (as shown there) just means that there aren't enough shares available for the amount of shorts issued and that if one buys the stock and holds it until the shorted contracts come due (and the contract holders have to pay back the share) they can make money because the contract holders will have to buy up any shares they can in order to meet their legally required obligations.
Like, it's literally what the protagonists of The Big Short (supposedly one of them is actually also taking part) did to the mortgage shorters, just on a much much much much much much smaller scale.
Now, the part that may have been illegal was finding out when those contracts for shorting companies are actually due and then publicly issuing that information. But I'm not sure if the SEC can enforce it.
Dr. Burry was one of the first ones in on GME actually.
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. This creates a positive feedback loop. With enough bets and an increase in price, the bets themselves force the price to go up.The bets then pay off, the gamblers have more to gamble, and people on the sidelines want to jump in.
If you want wealth to be distributed to the little guy, that is absolutely what is happening right now. At least at the moment. Until the music stops.
If something is changed, I'd expect it to prevent the little guy from having the same access that the big guys do. Regulation is just a tool to keep the little guys from competing with the big guys after all.
furbat on
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MonwynApathy's a tragedy, and boredom is a crime.A little bit of everything, all of the time.Registered Userregular
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
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
Posts
It will be interesting to see how the SEC comes down on it.
What they did, if they really did do it, was just buy shares and catch the shorts in a liquidity trap. It was only a coordinated effort in the sense that public information was spread saying "hey look, these hedgefunds are over leveraged here, if you buy and hold (like you would anyway if you believed in the company) they will be well and truly fucked by their own hubris"
That is the most '20s thing I ever heard.
If you want another fun example for this thread...
/r/wallstreetbets used to have this header
This is the real yacht from the image
I know because I can see it out my office window, because it belongs to my boss.
Also on Steam and PSN: twobadcats
Although the doubling of the standard deduction and SALT cap has put a damper on that for a lot of people.
Given just how accessible investing is now and the ease of spreading information, kinda wonder how this stuff is going to be enforced.
Poorly.
Spend to have good shoes and mattresses cause you’ll always be in one of them
*click* "Always has been."
Like, it's literally what the protagonists of The Big Short (supposedly one of them is actually also taking part) did to the mortgage shorters, just on a much much much much much much smaller scale.
Now, the part that may have been illegal was finding out when those contracts for shorting companies are actually due and then publicly issuing that information. But I'm not sure if the SEC can enforce it.
This sounds really dumb and I’m wondering how this contributes to a more optimal allocation of capital
I mean if Gamestop actually needed it they could split the stock and raise capital off of it. From an economic standpoint it makes sense cause it's a bunch of people with more optimistic expectations for the company than the shorters, so they upsold. But we all know that when the contracts come due the value will drop back down to where it was, so it doesn't make sense for Gamestop to try and get more capital out of it.
And, for the record, I think quite a few people on WSB are just small timers doing it for the memes. I have a friend who's doing that and he'll make out like 87% return if he sold today.
Yeah, this is the dumb part. And is in fact literally why the mortgage crisis was such a big deal -- when you start going higher and higher on that % of float you're going to literally lose cash in order to cover your contract.
I would not at all be shocked if ppl are attempting to manipulate the market in WSB. I also don't think a lot of the people in there care very much if they are.
You know, it never even occurred to me to ask my lender how much I should spend on a house. For the two houses I bought in my lifetime, I followed an old rule of thumb to aim between 2 and 3 times your gross annual household income. And then I (or we in case of house 2) worked Excel to make sure the particulars (taxes, insurance, maintenance, payment, utilities, etc) actually fit our monthly budget.
But you mentioning it made me instantly think of refinancing my first house in 2010. When my loan officer was doing the paperwork, she stated something like: “Looking at your ratios, I could get you a loan three times as big.” And when I inquired if the appraisal for my refi would go well she said: “Don’t worry, we work with that appraiser a lot. I’ll let him know what number we need.”
All I could think was: didn’t we just have a financial crisis because of exactly these things?
You need to know more about real estate and mortgages than your bank to not get screwed. Which is a problem, because they should be the ones who know more than me since I'm not a fucking banker.
Our first mortgage we got pre-approval for up to half a million. And just no. We could not afford a $500k loan. Even now, with subsequent promotions and raises that would be unreasonable.
We worked out our range with our CFP ahead of time, but our lender made it abundantly clear that they would give us way, way more than what we were asking for. I already feel overleveraged for our income (because our local market is so damn expensive), and they were more than happy to just keep lending.
I mean, I suspect that banks typically make way more money from people who can pay for only so money years and then have to sell or get foreclosed on, than those who pay off their mortgages. So from their perspective it probably makes perfect sense. Sell the same thing 3X = $$$
And that's what a lot of what's going on WSB seems to be about. On the macro level it's basically a protest against the predatory practices of short sellers like Citron Research, who has had some famously dead wrong price forecasts and yet is considered a market expert.
Even though I suspect there's deeper manipulation at work, I can't really fault WSB stripping the veneer off the day to day trading to show that the market is completely detached from reality and pretty much the plaything of rich gamblers. Ultimately though the short sellers are probably right that the fundamentals of Gamestop aren't great for the future.
All I ever saw was speculation that those shorts were coming due in the next week or two, did someone ultimately leak the actual dates?
Yeah..and that's the part of this equation I don't think the "experts" have quite realized yet. Also..Andrew Left from Citron has not been doing himself any favors (IMO) by putting out several tweets that make him look like 1 part kid who just got caught with a hand in the cookie jar, and 1 part unsophisticated rube. It's no wonder Reddit smelled blood in the water when he's practically shouting that he got too greedy shorting GME.
But on the flip-side, it being fucking stupid is a testament to how stupid the entire system is, and money is still fucking money, even if gotten via stupid means.
Is it cool if you notice someone doing a pump and dump and you just ride the pump out for a short gain. Is that not somehow illegal to like take advantage of obvious malfeasance?
how can I possibly be responsible for what's public knowledge?
I feel like the same kind of rules that would help kill super fast trading would probably deal with a lot of the dumb problems with all these random people on their computers at home gambling on Wall St now.
But again this is investing on the meta and I still have no clue how this benefits society
It doesn't.
Also, the notion that competitive markets are more efficient than a command economy is over the medium to long term. Daily fluctuations in the stock market are always meaningless.
It is absolutely legal. If you have forty-five minutes to kill, here's a video from a talk at DefCon about doing exactly that.
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...
Dr. Burry was one of the first ones in on GME actually.
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. This creates a positive feedback loop. With enough bets and an increase in price, the bets themselves force the price to go up.The bets then pay off, the gamblers have more to gamble, and people on the sidelines want to jump in.
If you want wealth to be distributed to the little guy, that is absolutely what is happening right now. At least at the moment. Until the music stops.
If something is changed, I'd expect it to prevent the little guy from having the same access that the big guys do. Regulation is just a tool to keep the little guys from competing with the big guys after all.
Or the big brokerages could just stop selling the calls
But that would make way, way, way too much sense
yeah, that's crazy talk