Stocks and Trading Thread - Channeling your inner Mono

[The Minsky Moment]

The one totally on the nose comment Cuban made in that AMA (re Robinhood)

Yes. There will be class action suits. And you will win. And after legal feeds you will get your $4.00 settlement check

[alfred russel]

You discussed this before, we haven't.

A one year put was knuckleheaded.  There was no way the price was going to stay inflated that long.

Knucklehead knucklehead knucklehead.

That is the point: if you take the position there is "no way" the price will stay inflated that long, you get "guaranteed" profit with a short. You can hold a short position for a year or longer without an issue.

The way puts were priced, you have to bet that not only will the stock price fall, but it will fall in the short term.

[Tamas]

I'll be pissed if my 1-stock CFD short at $250 will not be restored as an active position by my CFD broker. They still haven't come back to me regarding the glitch yesterday which stop-lossed me out of it incorrectly. I want my 100 pounds of profit dammit! 

[Admiral Yi]

That is the point: if you take the position there is "no way" the price will stay inflated that long, you get "guaranteed" profit with a short. You can hold a short position for a year or longer without an issue.

The way puts were priced, you have to bet that not only will the stock price fall, but it will fall in the short term.

Well duh.  You wanted to make a overkill sure thing bet and were butthurt that it cost a lot.  Of course it cost a lot.  How can a sure thing not cost a lot?

[DGuller]

How much flexibility do companies have to sell their own stock on short notice?  I know you can issue more stock, but it sounds like a length process.  Can Gamestop keep a supply of their own stock in a vault, maybe after buying them back, without removing them from the circulation?  If they could do that, then cashing in that vault could easily allow them mint losses for many more years.

[Barrister]

How much flexibility do companies have to sell their own stock on short notice?  I know you can issue more stock, but it sounds like a length process.  Can Gamestop keep a supply of their own stock in a vault, maybe after buying them back, without removing them from the circulation?  If they could do that, then cashing in that vault could easily allow them mint losses for many more years.

You have to issue a prospectus, get it approved, which is lengthy.

Now, if Gamestop already had a prospectus and was already authorized to sell stock from time to time, then absolutely they should be doing that.  I read some takes that this bizarre story has "saved" the movie theatre business because AMC (which also had a similar stock increase) has been doing just that.

[alfred russel]

Well duh.  You wanted to make a overkill sure thing bet and were butthurt that it cost a lot.  Of course it cost a lot.  How can a sure thing not cost a lot?

Are we talking about options or shorting?

I'm really not butthurt about either. Options pricing is fair, and shorting is cheap but logically unavailable because in high demand. I'm a bit annoyed that the response is to leave me on hold for 1 hour 40 minutes rather than just say, "shorting of this stock is in high demand and only available to our highest priority clients".

[Admiral Yi]

https://nypost.com/2021/02/02/barstool-founder-dave-portnoy-sells-gamestop-amc-shares-at-700k-loss/

Outspoken social media personality Dave Portnoy tweeted Tuesday that he has sold his shares in companies GameStop and AMC at a major loss, blaming trading app Robinhood for killing the so-called "Reddit Rally" that he joined and helped promote in recent weeks.

"I have officially sold all my meme stocks. I lost 700k ish." Portnoy tweeted, going on to take a personal shot at the CEO of Robinhood. "Vlad and company stole it from me and should be in jail."

[Josquius]

He ain't wrong though. That's the big take away from Cuban. Robinhood blocking access is when things turned.

[Admiral Yi]

He ain't wrong though. That's the big take away from Cuban. Robinhood blocking access is when things turned.

He is wrong.  Robinhood customers could have moved their funds to another broker and kept up the fight.

Things turned when sellers outnumbered buyers.  This short squeeze ponzi squeeze needed a net inflow of buyers to keep the price jacked up long enough so the shorts ran out of money to post collateral and pay the borrowing interest.

Actually Squeeze, you, and people like you killed the scheme.  Everyone who cashed out their winnings killed the scheme.

[Barrister]

He ain't wrong though. That's the big take away from Cuban. Robinhood blocking access is when things turned.

Yes, but the drive was completely unsustainable - it wasn't going to keep going up.  Robinhood may have been what started the downturn, but if not Robinhood something else would have.

[Tamas]

Robinhood customers could have moved their funds to another broker and kept up the fight.

Yes. If they reacted superfast on Thursday, realising the  restrictions were there to stay and withdrew funds immediately, they would have received them by today, and quite possibly have had their new accounts somewhere else verified, ready to make a new deposit just about now.

Come on mate. I was bloody watching the GME chart and the UnusualWhales discord as it unfolded. The momentum broke as the news came out and and as it spread the price started to fall.

No matter what, these pains and tears are how it was to end for a lot of people, but the particular way the squeeze ended was absolutely linked to Robinhood and the other popular brokers shutting people's access off.

[Admiral Yi]

Yes. If they reacted superfast on Thursday, realising the  restrictions were there to stay and withdrew funds immediately, they would have received them by today, and quite possibly have had their new accounts somewhere else verified, ready to make a new deposit just about now.

Come on mate. I was bloody watching the GME chart and the UnusualWhales discord as it unfolded. The momentum broke as the news came out and and as it spread the price started to fall.

No matter what, these pains and tears are how it was to end for a lot of people, but the particular way the squeeze ended was absolutely linked to Robinhood and the other popular brokers shutting people's access off.

Did any of this compel owners of GME to sell their shares?  The price only drops when people sell.

FYI, I linked an interview upstream that says Ameritrade never stopped trading, only prohibited naked calls.

[Tamas]

Did any of this compel owners of GME to sell their shares?  The price only drops when people sell.

FYI, I linked an interview upstream that says Ameritrade never stopped trading, only prohibited naked calls.

I would think so, as the narrative was that it'd be buying from retail investors that'd keep up the momentum.

Also it could had informed short sellers that further rise to the price is unlikely so they do not need to cover their shorts to prevent further losses.

Obviously it is speculation, but so is your assumption that stop in the upward momentum coincided with the Robinhood/other buying bans by mere accident.

[alfred russel]

To AR's bet that the 1% are monopolizing the chance to short, I think there is a misconception that people in the 1% spend their time playing the public markets.

David Portnoy is lying about losing money on the Robin Hood app. The top 1% don't play in the public markets, as CC noted above, and we know CC is never wrong.

A lot of money of the 1% is actually chasing investment opportunities in the private equity market and those investors really could not care less about placing bets on which way the public market will fluctuate.

I missed this earlier...but it is worth mentioning that to participate in a lot of private equity or angel investing you have the same the same wealth and income tests as for hedge funds, so ordinary investors are frozen out by regulation.