https://www.reddit.com/r/wallstreet...important_melvin_and_citadel_manipulated_and/ This is what I was basically saying happened earlier today when the stock was just churning in the 220-240 range for most of the day. It goes into much greater detail, but this is without a doubt exactly what happened in GME today. With that said, there still is a giant short position out there that's going to come to a head at some point. You can work your way out of super risky positions with the manipulation that happened today, but you can't completely get out of the positions without the stock moving in the opposite direction. I'm fairly confident we see GME hit above 4-500 tomorrow and then the actual crash comes Monday when the momentum lost over the weekend hits and people lose interest and money. The absolutely sickening part of this, the hedge funds who rode the stock down to get out of their short positions, also had to buy into the stock to be able to drive it down and keep it down. That means they are going to leg out of their new bought positions all the way up and then dump the bag on the retail traders who don't really know how the game works. I know a lot of people are extremely upset and raging at wall street right now, but they've been manipulating stocks for years, they are pros at it and will always back their own. There is no way they were going to let a bunch of retail investors ruin a hedge without bringing out every dirty shady trick in the book. Make no mistake as well, they already got away with it and there's little anyone can do to stop them. Remember the outrage and utter lack of control Democrats had when RBG died and Republicans shoved a new justice into a seat in record time without any repercussions? Same thing is going to happen here. Someone might get a slap on the wrist, someone might get fired, but nothing is going to change for the positive. It may in fact get even worse for regular people if the government decides to side with wall street and enact new regulations on retail investing.
So many people are trying to view the Robinhood class action suit that it crashed the SDNY case file site.
Some n00b questions: How does short-selling work? I understand the “buy low sell high” mantra, but how does short selling make “wait for it to go lower, then sell, and make money” work? What exactly is meant by “after hours” and how does that affect opening price? Won’t it open at the price where it closed?
Imagine you own 10 shares of TheIdiotBoard Inc, which is currently trading at $420.69 on the open market. I think that TheIdiotBoard is overvalued, because it's got weak fundamentals and shit moderators. I borrow one of your shares, with the promise that I'll return it in a few months. I then sell that share immediately, for $420.69. I wait a few months, hoping for the share price to drop to $69.420, at which point I will buy a share and return it to you, as promised. The $351.27 the price dropped is my profit, that I pocket. So unlike "buy low, sell high" it's more "sell high, buy low". The biggest risk in shorting is that while a stock can't go lower in value than $0, thus capping your losses in an ordinary stock purchase, it can go as high as the market wants it to go, meaning your exposure in a short is unlimited.
Short selling = borrowing shares, selling them and then buying them later. If I borrow and sell shares at $100/share and the price goes down to $50, I buy them at that price and make a $50 profit. If I’m wrong and it goes to up $150, I just lost money because I have to buy them for more than I sold them. Edit: Aetius explained it better. Some brokerages allow after hours trading. It’s more volatile because there are no guarantees when your order is filled.
Email I got from RH: "An update on market conditions Hi Dnd It’s been a tough day, and we’re grateful to you for being a Robinhood customer. In light of the extraordinary market conditions this week, we temporarily limited buying for certain securities this morning. Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed. This was a temporary decision made to best continue serving you, and was not an easy one to make. We know it’s led to frustration and confusion, and wanted to provide some clarity. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today. To be clear, this decision was not made on the direction of any market maker we route to or other market participants. The past year in particular has shown us that the financial markets are for everyone—not just institutional investors and hedge funds. We’ve seen a new generation enter the market, and they’re sparking conversations about what it means to be an investor. We stand in support of you, our customers. Democratizing finance for all means giving more people access, not less. We’ll keep monitoring market conditions and will update this Help Center article with the latest changes. We also published a blog post regarding today’s events. Thank you again for being a Robinhood customer. We’re so grateful for your support. Sincerely, The Robinhood Team" I'm selling everything that's in the green I have with them and moving it to TD Ameritrade, and the last few trades they made me put in as limits, which of course got cancelled. Fuck these spineless fucks.
https://www.fool.com/investing/how-to-invest/stocks/how-to-short-stock/ https://www.fool.com/knowledge-center/how-does-after-hours-trading-work.aspx Motley Fool and Investopedia are good resources, imo.
Okay, so follow-up: do these short-selling options (or whatever the correct termination is) have specific time frames? Or is it “I’ll pay you when I pay you” type shit? Meaning, couldn’t the bigwigs in the GME thing just ride it out, wait for the fad to pass?
There are usually time frames, and in some situations a “borrower’s fee” is also charged. So right now the hedge funds can’t buy the stock to return, or if they do, at way higher prices than what they initially sold them for, and they are being charged a fee in the meantime. My understanding is that this Friday is the “give us back our stock” day.
They are usually timed. There's a specific set of use cases for these trades, but for the most part it just allows for speculation and profit on stocks falling, with some laughable predictability: these assholes bet on retail stocks falling in a pandemic when the major gaming platforms announced no need for discs, to such an extent they put short sales for more stocks than actually existed.
When you originally borrow the stock, part of the agreement is that you return it on a specific date. You can obviously exit your short early by buying a share and holding it until the return date, but you can't extend past the return date without the loaner agreeing to extend. That enables one of the ways to "squeeze" a short: push the price high and keep it there long enough that the price is high when they're forced to exit their position by buying. The other way to squeeze is to force the price so high that it triggers the risk-mitigation mechanisms in the original borrowing agreement. Basically at a certain point the loaner will say "I'm worried if this goes any higher you won't be able to afford to meet your end of the deal, so you have to close it now."
Cool, I understand. Thanks all. I’m definitely gonna start getting into this, soon. Not GME specifically, but day trading. Like @downndirty said, sounds like a fun thing to do while taking a shit at work.
So Im confused on the 140% number on shorts being talked about with gamestop. The percentage of shorts is based on the float, all publicly available shares, and the percentage of those being shorted. So 100 shares and there are 20 shares that are shorted that'd be 20%. How do short sellers borrow/sell more shares to short than there are on the market? Edit: Should have read the extra post while I was typing.
I don't know exactly what's going on here but there is such a thing as a "naked short" where I sell you a share I don't actually possess, and just hope I can acquire it by the time you come knocking.
Here's a few things missed with the shorting part which is what made this situation happen in the first place. To be able to short a stock, someone has to lend it to you in the first place. In the case of GME, the short interest on the stock was above and beyond actual shares available to short. Although this is technically illegal, as you've seen today, legality is a very large grey area in the finance world. What happened was, companies "borrowed" shares that didn't exist to further drive down the price of the GME. When this whole thing started to go south for them, they were basically screwed because they had to pay back money on shares that didn't actually exist in the first place. They do this mostly through options trading which allows you to buy and sell contracts against long or short actual stock positions. If you remember back to the housing crash, the reason banks lost so much money is they bet on something happening, then bet on the bet of something happening, and the bet on the bet of the bet of something happening. In this case, it didn't get quite that far, but the idea is still basically the same. Why this caused them to pull out all the stops and do what they did today is, if you have to pay back shares that technically don't exist, you need to be able to get your hands on actual shares that do exist. However, if you just go into the open market and try and buy 30 million shares of a stock at once, you will drive the price to the moon and kill yourself in the process. The only way to get out of a trade like this is to "buy" the market lower by basically trading shares with yourself or a couple other groups. You basically buy and sell shares back and forth between one another to drive the price down and then when it gets to a level you are "comfortable" with, you start buying up all the available shares you can in a price range, while continuing the game of buying and selling shares to yourself. This is called churning. This allows the company to control the price of the stock long enough to exit their really risky short positions which don't have any actual backing and be able to take a minimized loss without going bankrupt. What this strategy also does, it allows the company who is churning the stock to re-open short positions because they know the stock no longer needs to be propped up because they have exited their riskiest positions. If I open a short position at $20 and the stock goes to $400, I"m fucked. If I am able to close my short position at $200, but I reopen another large short position at $200 because I know the stock can't maintain it's $200 level for the amount of time I have to pay it back, I can make money when the stock falls again. I can also take all those shares I had to buy to cover my original short position and start selling them to people who are going to be buying into the stock thinking I'm still underwater on my original trade which is going to drive the price WAY up before it inevitably crashes again.
I had typed in an earlier response around naked shorts... to the best of my naive newb understanding, as I figured that is what was going on. But then I went looking for a better explanation and found that naked shorting was made illegal, which made me go, "how the fuck do they get to 140% without naked shorting?" I'm still confused on that... Or, is it a case that it's naked shorting but they call it something else so it's not illegal?