Here’s an interesting conversation between Robinhood’s CEO and Elon Musk. They spoke Sunday night on a live stream of Clubhouse, an invitation-only social networking app that’s been gaining popularity.
“The request was around $3 billion, which is, you know, about an order of magnitude more than what it typically is,” Robinhood Chief Executive Vlad Tenev said.
There are some savages out there picking up ITM calls and then immediately exercising them to get around the restrictions (if they have the cash).
At about 3pm today all my indicators fired off at the same time that this party is over. The marines have been called in and many people are going to lose a lot of money.
The smart money really played this perfectly starting w that 2% dip in the spy last week. They took down some of their most liquid/best winners (faang) and rotated into shorting the meme stocks. After close today they hit GameStop. People will need to puke out…
Game over.
There are several factors that will prevent these stocks from rising.
The short squeeze is over. The hedge funds that had sizeable short positions have covered. Any institution that remains short will only do so if they have a considerable balance sheet.
Brokers are still limiting the purchases of these names or they’re requiring a 100% margin. Both limit additional buying pressure.
Also, if retail traders aren’t able to buy call options (or they’ve become too expensive due to sky high IV), they lose their ability to “gamma squeeze” the dealers (where dealers are forced to add additional long shares to hedge which pumps the rally further).
For GME, put volume has overtaken call volume in recent days. As more puts are bought, dealers, who are hedged with long shares, peel off their holdings adding more selling pressure.
And as the price of GME declines, this reduces ITM calls, which allows dealers to sell off even more shares, causing the price to fall further. This causes more puts to be bought, which allows dealers to dump even more shares. And a self-reinforcing downward price spiral ensues.
I believe institutions were given a free hand to sell back and forth to unwind the price.
The court case will take 10 years and by that time nobody will even remember.
They are not even liquidating. They have been given a clear field to bounce their shares back and forth to unwind the price. It’s theft, But because it’s only the poor they are stealing from, needless to say, it’s legal.
The price continues to fall because the only buyers left at this point are retail buyers while everyone else is getting out.
Retail buyers are being frozen out. I trade with IG and you cant trade, GME
What would be your thesis for buying a stock @ $100 that traded 1/10th of that a few weeks ago?
That if a group get together and force huge losses onto the holders of a short position, You can make a lot of money by getting them to capitulate. The net effect is a huge transfer of wealth from the wealthy (hedge funds) to the predominantly poor who make up the group.
Unless you control the market, its always gambling. For a couple of days the rabble controlled the market and made stacks of cash. When the poor take from the rich the reaction is instant…Total shut out.
What is your thesis for companies driving companies out of business by driving down the price of shares and starving them of loan collateral?
Capitalism.
Not if you control supply and demand. I think thats called…Corruption.
Chasing 
Honest is the best policy
Not corruption if there are no laws that explicitly prohibit the behavior.
Being frozen out implies you’re not able to liquidate your position.
There were other brokers who had no restrictions in trading these names. The ones who put up restrictions were simply undercapitalized.
As for IG, they have to hedge their risk so if all its customers are going long, it has to offset this net exposure and and go long the underlying. Since it’s putting up buying restrictions, it’s either 1) can’t find enough shares or 2) ithey can but the funding cost is too expensive for their biz model. It’s probably the latter.
Not really M8, Frozen out implies, you cant get in.
Never seen IG stop all trades. They occasionally partially fill. As for being undercapitalised, IG is the number one broker in the number 1 trading hub in the world. I think we both know what happened here.
They are refusing any new positions on GME and AMC - they allow closing any existing trades.
They don’t clarify beyond stating this policy is “In order to prioritise the service we give our existing clients”.
Vlad the Stock Impaler has already stated multiple times (specifically r.e. Robinhood) that it was a liquidity issue. They received billions in Citadel injections. The shorts were caught off guard, the brokers were caught off guard, and retail pounced.
The shorts made their money back. (Bailed out)
Robinhood got their injections. (Bailed out)
Liquidity providers KILLED it in fees. (Bailed out)
And retail lost all their money. (Walked right into the trap. No bailout).
While some may find recent current events upsetting, this isn’t anything new.
Retail traders will always be at a disadvantage. Are financial markets rigged in some shape or form? Absolutely. You see banks getting away with “wrist slaps” by just having to pay some fine after being found guilty whether it’s Barclays, Citigroup, JP Morgan, MUFG and RBS rigging the FX market or JPMorgan rigging the commodity markets.
You can complain about your broker, complain that you don’t like the rules, or that the game is rigged but it’s a waste of energy and time.
All you can do is be aware of what you’re getting into and accept it. Nobody is forcing you to compete in this rigged game but if you choose to play, then “man up”.
When you enter the “waters”, it’s full of huge sharks that are out to take your money. You just have to do your best to take money from them instead and lose less money than you take. It’s as simple as that.