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lostleaf posted:Melvin doesn’t own any shares if they’re shorting them. Melvin OWES shares that they have to buy from someone/anyone to return the shares. While the shorts are outstanding, Melvin also owes interest on the current price of GME not the previous price of GME. "short shares" are a position, and just as tangible as the shares themselves.
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Jan 31, 2021 19:06
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lostleaf posted:Melvin doesn’t own any shares if they’re shorting them. Melvin OWES shares that they have to buy from someone/anyone to return the shares. While the shorts are outstanding, Melvin also owes interest on the current price of GME not the previous price of GME. Is it possible for them to say “look, if we go bust we can’t keep making money for you, so let’s work this out low key”?
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Jan 31, 2021 19:08
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seance snacks posted:Woke up this morning and was greeted to this: Probably a bad idea to participate in this, but LOL if this continues to be a thing now that the cat is out of the bag. Wall Street thrown into perpetual chaos by the internet would be hilarious.
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Jan 31, 2021 19:12
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Baddog posted:Not sure what more detail you need? Melvin says we're hurting here, does anyone want to buy our short shares that are really hard to borrow right now, and anonymous fund B says yah we've been looking to get into this short, ok we'll take 'em over for $xxx. The bits don't even have to move, they could just sign a piece of paper old school style. The impact of this on prices should be identical to if it took place on the open market.
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Jan 31, 2021 19:20
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I seriously have no idea how people think his hedge fund is still "stuck" hold shorted stocks on GME esp after the epic Robin Hood lockout that brought the price down to like $150 or something for a day. When you hold all of the control of like being able to just turn off the ability for a stock to be bought by said idiots that you're fleecing... serious wow. If anything, it seems like they're perfectly aligned to short the stock a fresh and sell off $350-400 stock to idiots who buy right now? It really feels like there is some serious critical thinking skills lacking in this culture and that mob mentality blinding following whatever loud propaganda is currently blasting works 100% of the time?
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Jan 31, 2021 19:23
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pointsofdata posted:The impact of this on prices should be identical to if it took place on the open market. OK, why do you think that?
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Jan 31, 2021 19:29
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jeeves posted:I seriously have no idea how people think his hedge fund is still "stuck" hold shorted stocks on GME esp after the epic Robin Hood lockout that brought the price down to like $150 or something for a day. When you hold all of the control of like being able to just turn off the ability for a stock to be bought by said idiots that you're fleecing... serious wow. The best I can figure is that if Melvin was buying actual shares to cover their position, that volume was way too low. But I don't know if selling the short contracts themselves is tracked.
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Jan 31, 2021 19:29
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Boris Galerkin posted:Is it possible for them to say “look, if we go bust we can’t keep making money for you, so let’s work this out low key”? I've been looking for an answer to this out of curiosity, and I honestly can't find anything that says no apart from general precedent (how do you trust any published numbers if off-the-books trade deals bordering on collusion are permitted / regular things?). Maybe someone else has a better answer (I'm in the long-term investment camp, not the stock picking camp), but it looks like a "rules say nothing about dogs playing basketball" sort of thing to me. Which is to say... gonna get dunked on. quote:OK, why do you think that? The off-the-books trade would still close their existing position (otherwise why do it), which would then be reflected in the # of outstanding shorts, etc etc. What you'd be getting out of it, as the borrower, is that your counterparty was willing to accept a lower-than-market-value payout. The only potential weirdness is that, if they did that, they technically didn't get their stock back so presumably something would switch from a short/borrow to a purchase? Not sure. Sundae fucked around with this message at 19:35 on Jan 31, 2021 |
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Jan 31, 2021 19:32
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Sundae posted:The off-the-books trade would still close their existing position (otherwise why do it), which would then be reflected in the # of outstanding shorts, etc etc. What you'd be getting out of it, as the borrower, is that your counterparty was willing to accept a lower-than-market-value payout. The only potential weirdness is that, if they did that, they technically didn't get their stock back so presumably something would switch from a short/borrow to a purchase? Not sure. you guys are misunderstanding. In the scenario presented, Melvin isn't making a deal with whoever they borrowed shares from and returning the shares to the lender. They're making a deal with some other third party, giving them cash to take up the short position. There would be no change in the short position as far as the market at large is concerned. Just two Wall St dudes in a room shoveling poo poo from one person to another in exchange for cash.
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Jan 31, 2021 19:37
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Baddog posted:OK, why do you think that? Because the scenario you suggested involves a matched buyer and seller. For simplicity, suppose bid/offer is 98/102. Melvin wants to buy 1 share at the best possible price to get out of their short position. Fund B wants to sell a share to take up a short position at the best possible price. If there is some price within the bid/offer that they can agree on, then everyone is unaffected if they do the trade on the market or via some hypothetical backchannel. If they can't agree on that, then one of them would be better off doing the trade on the market than in the backchannel, so it's unlikely to occur. Lots of trades do occur outside of open markets, e.g. in dark pools or as swaps. But these are either for cost reasons or to hide information, not because the price is significantly different.
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Jan 31, 2021 19:41
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pmchem posted:you guys are misunderstanding. In the scenario presented, Melvin isn't making a deal with whoever they borrowed shares from and returning the shares to the lender. They're making a deal with some other third party, giving them cash to take up the short position. There would be no change in the short position as far as the market at large is concerned. Just two Wall St dudes in a room shoveling poo poo from one person to another in exchange for cash. "Just two Wall St dudes in a room shoveling poo poo from one person to another in exchange for cash." this is the same as a dark pool or a swap or whatever. it happens all the time, the venue of the trade doesn't (to a first order approximation) affect the price. One way to think about it is imagine you're Melvin's counter party. You're not going to sell them shares (or enter a swap contract, or whatever) for less than you can get on the market, and they aren't going to buy them off you for more than they can get on the market. You might enter into an off market contract, but the price will be based on the going price. If the quantities are mismatched, then one of you might go to the market for the rest, which could push the price in a certain direction. But it would have done that anyway, if the trade venue had been an open exchange! distortion park fucked around with this message at 19:49 on Jan 31, 2021 |
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Jan 31, 2021 19:46
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So if you give RH the benefit of the doubt and say that freezing buys is completely legal and leave aside any accusations of "market manipulation", isnt the real problem that they could be facing an insider trading  ? Because, as far as im aware, no public notice was given and they didnt limit buys down into a freeze so the question becomes who knew what and when, as well as why they werent transparent about the liquidity issue when they must have at least been aware of it. Not an RH user so im not personally invested (ive got 100usd in amc hoping for some beer money lol), just seems like something i thought more people would be talking about.
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Jan 31, 2021 19:51
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pointsofdata posted:Because the scenario you suggested involves a matched buyer and seller. The market is a bit distorted right now to say the least. Fund B has no assurances that they will be able to source all those shares they want to short if Melvin closes their position out. Melvin is not sure just how high the price will go if they have to close out their position on the open market. The transaction may have been done at a price higher than the open market bid/ask if Melvin was really desperate, or it might have been done lower if fund B really wanted to get a *ton* of short shares and didn't have any other way to get them except through Melvin. We don't really know, but what we do know is that if the transaction was handled between the two parties that it did not impact the open market at all.
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Jan 31, 2021 19:53
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BIG PUFFY NIPS posted:So if you give RH the benefit of the doubt and say that freezing buys is completely legal and leave aside any accusations of "market manipulation", isnt the real problem that they could be facing an insider trading What trades would robinhood, the broker, have made on the basis of insider information?
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Jan 31, 2021 19:54
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Ahahaha doge hasn’t crashed yet and it’s making another run for .1. 
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Jan 31, 2021 19:55
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pmchem posted:you guys are misunderstanding. In the scenario presented, Melvin isn't making a deal with whoever they borrowed shares from and returning the shares to the lender. They're making a deal with some other third party, giving them cash to take up the short position. There would be no change in the short position as far as the market at large is concerned. Just two Wall St dudes in a room shoveling poo poo from one person to another in exchange for cash. Ah, yep, I completely misread that. Sorry! I was interpreting it as "Yo, these retail fuckers are trying to gently caress with us and causing huge volatility. How about you guys accept $X which is more than your base value but way less than these fuckers have driven the price up, they get left holding the bag, and we forget this whole sorry mess ever happened?" More of a lost-library-book scenario. I have no idea how to interpret third-party involvement. 
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Jan 31, 2021 19:56
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DoomTrainPhD posted:Ahahaha doge hasn’t crashed yet and it’s making another run for .1. Doge to $1!
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Jan 31, 2021 19:56
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Baddog posted:The market is a bit distorted right now to say the least. Fund B has no assurances that they will be able to source all those shares they want to short if Melvin closes their position out. Melvin is not sure just how high the price will go if they have to close out their position on the open market. The transaction may have been done at a price higher than the open market bid/ask if Melvin was really desperate, or it might have been done lower if fund B really wanted to get a *ton* of short shares and didn't have any other way to get them except through Melvin. We don't really know, but what we do know is that if the transaction was handled between the two parties that it did not impact the open market at all. This doesn't make much sense as liquidity has been extremely high in gme all week. There are loads of shares available to buy or sell! Imagine that they want to buy/sell 1000 shares. If they do that behind closed doors, or they both put in orders within the spread, would the price be affected in different ways?
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Jan 31, 2021 19:59
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pointsofdata posted:This doesn't make much sense as liquidity has been extremely high in gme all week. There are loads of shares available to buy or sell! There are millions of shares available to short sell right now?
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Jan 31, 2021 20:01
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pointsofdata posted:What trades would robinhood, the broker, have made on the basis of insider information? This isn't material. You're liable for information you give someone even if you don't individually profit from it. There's some pretty obvious material they could have given select people. Not that I know that they did.
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Jan 31, 2021 20:04
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Baddog posted:There are millions of shares available to short sell right now? The supposed transaction has no impact on the total shares lent, so would have roughly no impact on the borrow cost
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Jan 31, 2021 20:07
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pointsofdata posted:What trades would robinhood, the broker, have made on the basis of insider information? Didnt the clearing house that handles thier transfers make the call? Maybe im wrong but I'd imagine there was some discussion within both companies before the decision, so plenty of time for information to get around. Im not saying the ceo of rh was buying gamestop at the dip or something. Just seems like thats going to be an issue.
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Jan 31, 2021 20:09
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pointsofdata posted:The supposed transaction has no impact on the total shares lent, so would have roughly no impact on the borrow cost You think the per unit borrow cost (and the ability to find the shares to short) is the same for 10 shares as for a million?
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Jan 31, 2021 20:12
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leper khan posted:This isn't material. You're liable for information you give someone even if you don't individually profit from it. Sure, but doesn't this apply to basically every company all the time? Maybe they did do something illegal, lot's of people do, but they "could have" isn't actual evidence!
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Jan 31, 2021 20:14
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Kunabomber posted:This is hyper illegal oh yeah, 100%. But if someone tells you they're running a scam to pump and dump a stock, so instead of participating you short that stock/crypto, is *that* illegal I'm not going to touch the poop either way, was just curious smoobles posted:Probably a bad idea to participate in this, but LOL if this continues to be a thing now that the cat is out of the bag. Wall Street thrown into perpetual chaos by the internet would be hilarious. Big news leads to an influx of newbies, which leads to snake oil salesmen capitalizing. Everything old is new and the cycle goes on
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Jan 31, 2021 20:15
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BIG PUFFY NIPS posted:Didnt the clearing house that handles thier transfers make the call? Maybe im wrong but I'd imagine there was some discussion within both companies before the decision, so plenty of time for information to get around. Im not saying the ceo of rh was buying gamestop at the dip or something. Just seems like thats going to be an issue.
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Jan 31, 2021 20:18
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Baddog posted:You think the per unit borrow cost (and the ability to find the shares to short) is the same for 10 shares as for a million? The share lend, unlike the trade, is not generally a public transaction, so this is a bit different to the original question. But transfering a stock loan vs returning then lending the same amount of shares shouldn't materially affect the borrow cost. I'm not saying that they didn't (functionally) exit their position in an off market venue, just that doing so vs doing it on market wouldn't directly change the price impact. They may well have written a swap with a broker or similar (their original position might have been a swap!) or done some trade on a dark pool, but the expected price the trade would clear at is the same.
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Jan 31, 2021 20:23
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Martman posted:My question for a while has been, even if the clearing house made the call, did they have to keep allowing retail investors to sell GME like they did? 'Cause that's the single most shady part of the whole thing; just halting trading entirely would be way more understandable. To be fair to them the retail investors are their customers not the hedge funds, the stock was going to fall with that decision either way and if RH locked 10000 redditors out of selling when it did theyd be screaming fraud even louder imo
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Jan 31, 2021 20:24
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not to interrupt all the $GME chat, but, I've been doing some ETF research this weekend (of course!) and have a couple interesting things to share: #1. A newer ETF that benefits from wealth inequality and a K-shaped recovery. A luxury goods ETF! I've never seen one of these beyond general consumer discretionary sorts of ETFs. https://www.emles.com/etf/emles-luxury-goods/ Emles Luxury Goods ETF, ticker LUXE quote:Top 10 Holdings Second-class website (the full holdings link 403's) and tiny AUM, so not investable in my opinion. But, kinda dystopian so you guys know it's my jam! Bookmark'd but not watchlisted. #2. More relevant is a different kind of spin on growth factor ETFs; this ETF is kinda new (less than 2 years) but I never really looked at it until today: SoFi Select 500 ETF, ticker SFY https://www.sofi.com/invest/etfs/sfy/ https://d32ijn7u0aqfv4.cloudfront.net/wp/wp-content/uploads/raw/SFY-Fact-Sheet_12-31-20.pdf fact sheet https://www.solactive.com/wp-content/uploads/2019/03/Solactive-SoFi-US-500-Growth-Index-Guideline.pdf index methodology including weighting This ETF is ... HIGHLY intriguing. It has a 0.0% expense ratio, yes, free, waived until at least end of June 2021 (at which point it might go up to 0.19%). They're waiving the fee to draw in AUM. Its performance over the past trading year is +20%, so it beats the S&P 500 (easily). What they do is take the top 500 US stocks by market cap, then weight them according to a set of equations based on net income and sales growth as per the methodology. Not market-cap weighted. The ETF ends up with more weighted overlap with the S&P 500 than other large-cap growth ETFs such as VUG, IWZ, JKE, etc. Because the "value" companies are still in there -- they're just not weighted as highly as they are in SPY or VOO. It's only rebalanced annually, not quarterly, so you end up with some odd stuff like ZM being at #16 overall in the holdings (not a S&P 500 component but top 500 by market cap, and high growth metrics). But the usual suspects are still in the top 10: AAPL, AMZN, MSFT, TSLA, GOOGL, FB. SQ comes in at #15, which is very nice. code:Of course, if SFY's ER goes up to 0.19% I'd probably just use a mix of VUG and VOO instead (there are lots of good heavy-growth ETFs). But SoFi is about to IPO and rolling in cash from other sources... they don't really have an incentive to raise the ER on this thing to something where funds would flow out. What do you guys think of SFY?
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Jan 31, 2021 21:10
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AHH F/UGH posted:If you want my opinion, and you should, sell options once the end times happen for the meme stocks. The fallout when this whole thing does collapse and everyone is scurrying for the lifeboats with burning suitcases of cash is going to be incredible and a sight to see. Once DeepFuckingValue has sold, you’ll see the stock price crash and premiums for GME puts explode and you’ll be able to sell the weekly $10p for like 6.00 in premium or something crazy. And yes, the party will end sooner or later, when we find the Greatest Fool in the worlds longest line of Greater Fools Than I. I know this is going back a few days, but I wanted to say thank you for posting this. I've never pursued options since I'm usually focused on longer term positions, so this was helpful for me to consider.
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Jan 31, 2021 21:16
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seance snacks posted:I know this is going back a few days, but I wanted to say thank you for posting this. I've never pursued options since I'm usually focused on longer term positions, so this was helpful for me to consider. Just wait for the GME crash to come, and when it does, sell those $10 put strike options. The IV whiplash to the downside will be unbelievably juicy, about as close to ~free money~ as you'll ever see. Ever see the Orange Juice futures scene in Trading Places?
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Jan 31, 2021 21:27
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pointsofdata posted:The share lend, unlike the trade, is not generally a public transaction, so this is a bit different to the original question. But transfering a stock loan vs returning then lending the same amount of shares shouldn't materially affect the borrow cost. In this case transferring the short shares vs returning and then lending again would be drastically different outcomes for both parties. Take melvin at their word, they are out of their shorts or at least most of them. The positions are owned by someone else at a higher basis who will be much harder to squeeze (because of the higher basis and also they are probably a much bigger fish, or group of fishes).
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Jan 31, 2021 21:27
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Anyone have any thoughts on BA? Have to admit that I’m a bit tempted to try to scoop up a few shares while it is sub 200 and try to hold for a few years.
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Jan 31, 2021 21:33
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So why doesn't Gamestop make any money from this? What the point of a stock market if these companies don't make any money from selling their own power?
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Jan 31, 2021 21:42
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Baddog posted:In this case transferring the short shares vs returning and then lending again would be drastically different outcomes for both parties. Those two transactions are almost the same. Lots of share transactions happen like that to cut costs. Big investment firms with sub funds will try to match trades internally when possible to reduce trading costs and information leakage - but not because they think it's a fundamentally different transaction which will result in a significantly different price or outcome.
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Jan 31, 2021 21:43
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punk rebel ecks posted:So why doesn't Gamestop make any money from this? Stock represents ownership of the company. The company makes money for owners, not vice versa.
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Jan 31, 2021 21:48
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DoomTrainPhD posted:Ahahaha doge hasn’t crashed yet and it’s making another run for .1. Legit chance doge surges again when all that RH money clears. Also it seems like a lot of people who missed out on the gme stuff or don't have a lot of cash, or just want to meme, keep getting in on it. There's a lot of potential to play swings here.
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Jan 31, 2021 21:50
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punk rebel ecks posted:So why doesn't Gamestop make any money from this? The company made money from the sale of it's stock. After that they don't own it, so they don't make money. If you buy a car from BMW, BMW made money, if you sell the car, whatever money you get from it is yours.
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Jan 31, 2021 21:51
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JosefStalinator posted:Legit chance doge surges again when all that RH money clears. Also it seems like a lot of people who missed out on the gme stuff or don't have a lot of cash, or just want to meme, keep getting in on it. The fact that it dumps every .05 and then recovers and goes further up makes me really think that at .07 it will surge big time.
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Jan 31, 2021 21:51
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DoomTrainPhD posted:The fact that it dumps every .05 and then recovers and goes further up makes me really think that at .07 it will surge big time. I got stuck with a few thousand doge after playing swings when it crashed last time, so I hope so!
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Jan 31, 2021 21:54
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