I'm going to liquidate my portfolio

[9 Nines]

Edit: I am tagging @OILERMAN since he might find this funny. 

I am reading that Reddit WallStreetBets now. Some know stuff, some maybe a lot, many not so much.  I am not sure this the average quality of posts there or not, but the majority I saw, read like this reply to someone asking how high GME can go:

 

From my understanding of the situation and according to Game Theory, and the particulars of this situation GME is in, infinitely.

But there’s going to be a cap at some point, could be 1k could be 5k. Shits nuts.

Im also retarded and this isn’t financial advice.

Edited January 28, 2021 by 9 Nines

[ManningEnvy]

Poor Touched The Tard, no money no sex no brains no fun just monotony. SAD SAD SAD

[heyitsmeallen]

14 minutes ago, 9 Nines said:

Edit: I am tagging @OILERMAN since he might find this funny. 

I am reading that Reddit WallStreetBets now. Some know stuff, some maybe a lot, many not so much.  I am not sure this the average quality of posts there or not, but the majority I saw, read like this reply to someone asking how high GME can go:

 

From my understanding of the situation and according to Game Theory, and the particulars of this situation GME is in, infinitely.

But there’s going to be a cap at some point, could be 1k could be 5k. Shits nuts.

Im also retarded and this isn’t financial advice.

Everyone there calls each other autistic retards... This is nothing new lol.  The only things that are new are about 1,000,000 people who heard about it because of the news and shill accounts trying to stop the squeeze. 
even Elon was mad that discord shut down the server... 

 

 

[9 Nines]

This is very interesting, and the Redditors could pull it off, but there are known risks, unknown known risks and unknown unknown risks.  This one probably has all three, with the middle category being the the one that bites these people.

 

There could be some rule/law/regulation that leads to the stock being halted - maybe for days.  Could be anything, some often not used rule, using a rule from a different scenario that technically applies, etc. etc..  There will be something.  Some of these people will have bought at $200, or $300 or ???? to see it halted and re-open at $25.   Based on the activity level, many might be on margin, and will get a big margin call locking in their loss, losing everything plus a margin interest charge, and violations locking them out of trading for a period putting them in cash only mode, although they have no more cash.

 

Good law enforcement can be creative and it will probably be an unknown known that gets them. It reminds me of what a law enforcement officer did to someone I knew: charged him with a crime, for which known one had been convicted in 50 years in the whole state of Texas. 

 

The guy was driving poorly, showing off or something in Austin.  He got pulled over and acted as a entitled white suburbanite to the officer.  In return, the officer cited him with the initial infraction plus some other stuff including an unknown known, that absent the officer geekily knowledge of  it, could be considered an unknown unknown. 

 

The driver had a wire cutter, for stripping electrical wires, on the floorboard of his car.  He recently put speakers in his car, and had left the tool there.  The officer knew there was a law, still on Texas books from the 1800s when cattle rustling was a frequent crime, that only licensed fence repairers or ranch owners could have a tool, designed to cut wire, in public.  So that charge was included in the citations.  I cannot remember what happened. If he was convicted but as I recall it was fairly serious, either a high misdemeanor or lower felony and he had to get a fairly expensive attorney to defend him.  He either got a fine and probation or the court dropped it or something between.    I think his attorney researched it, finding  the most recent conviction for the said crime, in the whole state, was 50+ years ago from that time. 

 

It would probably be even easier for the SEC to come up with a known unknown or even an unknown unknown way to shut this down. 

Edited January 28, 2021 by 9 Nines

[heyitsmeallen]

 

 

[9 Nines]

Now a question for you pro-this or who follow it: 

 

Reading through that Reddit, I noticed many make the claim that more shares are short than exist.  At first I thought they were confusing it was the non-institutional float, but that it is not it - many are claiming there are more shorted shares than the entire float.   How is that possible?  As far as I know, you short real shares.  When one buys shares on margin, by default, those shares can be loaned by the brokerage  for other to short - unless you hflag the shares or by in cash account, and that might not even prevent it, your long shares can be loaned and you will not even know it - I think that situation led to some tax reporting problem on a dividend or sold shares or something to some shares I was long.   That is where retail short sellers get their shares they borrow-sell.  Large institutions borrow shares  from other institutions.  They are shorting real outstanding shares - some of these Reddit posters seem to think they are short selling shares that do not exist.

 

Some allude to options, but options have to sides, someone long and some short.  Most are financially settled before expiration and most expire out of the money anyway - brokerage will warn you when in the money to take action.  So that does not make sense in explaining shorting non existing shares. 

 

This seems to be one of the backbones to their strategy.  Anyone here explain - more shares shorted than the entire outstanding shares? 

Edited January 28, 2021 by 9 Nines

[abenjami]

https://www.quora.com/Can-a-stock-have-100-of-its-shares-shorted

 

It has also been very widely reported on several financial websites, tv stations, etc that GME is 140% short. 

Edited January 28, 2021 by abenjami

[9 Nines]

11 minutes ago, abenjami said:

https://www.quora.com/Can-a-stock-have-100-of-its-shares-shorted

 

I looked into some more.  I think they are confusing float with 100% outstanding shares. It would not matter though, as even close to all non-insider controlled stock would be enough to take the price of a heavily short stock to untold height.  But I still do not think its even close to 100% of the float.  Barron's has an article listed GME as been 140% of its float traded.  I think this might be playing lose with insider shares, and if a share is actually shorted at a specific point in time.  Until I see an explanation, I am very hesitant to think any stock's short interest is anywhere near its float, much less all outstanding shares.  Maybe I am missing something or there is something to which I am not knowledgeable, but makes no sense until I can find an explanation.  I seen many times before where someone has made an argument, that for the intent of the premise is valid, but far from technically valid - I suspect this is another case, but it does not matter for the purpose; it just stuck out at me, so  I wondered if perhaps I could learn something. 

 

I am just coming from when you thought of the metric as short interest as a multiple of day's normal volume as stock should not approach these level of shorts, which is good on the kids for making money on the obvious that others were ignoring. 

Edited January 28, 2021 by 9 Nines

[abenjami]

Did you click the link?  It provided an explanation.  But here, I will explain it by example.

 

Say @heyitsmeallen wants to sell 10 shares short.  He borrows them from me and sells them to @OILERMAN.

 

You also want to sell 10 shares short.  So you borrow them from @OILERMAN and sell them to @oldschool.

 

Now @oldschool has my 10 shares.  But you and @heyitsmeallen owe me and @OILERMAN 20 shares total (10 each).

[9 Nines]

Something else I noticed.  Many of the posters are making comments like, "I never bought stock before, is it okay to buy 1 shares because that is all the money I have" or similar comments indicating they are not buying much.    Also, some people, sympathetic to what is happening, have stated that they do not think these posters are using much money.  Also, I know volume volume volume, but I doubt there are more than a few thousands of the people, and I doubt many are buying many shares.......my point, what is happening is probably not being caused by these posters.   

 

It is probably a normal short squeeze by other real traders and/ hedge funds that have size behind them, and if so, when they exit, the stock will fall just as fast back down, with these poster who are buying now losing.   I am leaning to that being the case more than Redditors corning a market. 

Edited January 28, 2021 by 9 Nines

[abenjami]

20 minutes ago, 9 Nines said:

Something else I noticed.  Many of the posters are making comments like, "I never bought stock before, is it okay to buy 1 shares because that is all the money I have" or similar comments indicating they are not buying much.    Also, some people, sympathetic to what is happening, have stated that they do not think these posters are using much money.  Also, I know volume volume volume, but I doubt there are more than a few thousands of the people, and I doubt many are buying many shares.......my point, what is happening is probably not being caused by these posters.   

 

It is probably a normal short squeeze by other real traders and/ hedge funds that have size behind them, and if so, when they exit, the stock will fall just as fast back down, with these poster who are buying now losing.   I am leaning to that being the case more than Redditors corning a market. 

Will you be shorting GME tomorrow yourself?

[9 Nines]

Okay.  Thinking about it,  at least theoretically, I think there can be more short shares than the outstanding shares.  There might be regulations, and questions to who legally owns the stock, the "investor" or the brokerage, and if it digital certificate track real share, that makes the following not correct but here is my theoretically jab at it. 

 

Let' say company XYZ has 1 share outstanding - that it is it, only 1 share.  I buy that one share in my margin account - throw out insider rules etc. I just used 1 share to make the math simple, for a real stock just multiple by 100000000000000sssssssssss that apply.

 

Since that share is in my margin account, my brokerage can loan it to a short seller without my consent or knowledge.  Mr. Redditor borrows it from my brokerage and sells it to Benjamin. I do not know that happened, and I think I still own the only one share, as does Benjamin.  So Benjamin and I each own a share of a only one share company, while Mr. Redditor is short one share.  So now 100% of the outstanding shares are short.   Benjamin also owns his share on margin, and Mrs. Redditor borrows it and sells it short to Mrs. Benjamin.   Now that one share is owned by three different people, and there are two short sellers and now 200% of the outstanding shares are short.

 

So unless there is some regulation or report or certificate tracking  preventing what I hypothesized above from happening, it is possible. 

Edited January 28, 2021 by 9 Nines

[abenjami]

Yes that is basically what I explained.  Single shares could be loaned and sold short multiple times.

 

That's a big reason why the GME thing might actually make the price skyrocket even more as opposed to the spin offs like BB and AMC.  It's over 100% shorted.  There aren't enough shares to cover, so lots of those shares are going to have to be purchased twice for everyone to cover.  The added demand to purchase shares to cover will drive the price up even more.  At the current volume rate, it will take ~6 days for the shorts to cover.

 

Add to that all the options that expire this Friday.  There are millions of shares of in the money calls right now.  There are 2.1 million shares at just the $200 strike price.  All those contracts will get exercised and that means the sellers of those calls are going to need to buy shares at market price to close their transactions.

 

There are going to be tons of margin calls for both shorts and expiring options.

 

Theoretically it won't peak and crash in a short amount of time.  It should take a week or so and the price should go through the roof tomorrow and early Friday.

[abenjami]

The question at this point is fairly simple.  Do you think it goes significantly higher and buy in now at such a high price?  Or do you sell puts?

 

I think back to the crazy oil futures thing and this reminds me of it.  A couple days before expiration the price was crashing like mad.  There were people thinking they were buying the dip only to wake up the day before expiration and find out they were seriously in the negative.  Then when it hit rock bottom, a bunch of people with seriously huge balls made a ton of money getting paid to accept the investment and profiting when it rose back to positive.

[9 Nines]

14 minutes ago, abenjami said:

The question at this point is fairly simple.  Do you think it goes significantly higher and buy in now at such a high price?  Or do you sell puts?

 

I think back to the crazy oil futures thing and this reminds me of it.  A couple days before expiration the price was crashing like mad.  There were people thinking they were buying the dip only to wake up the day before expiration and find out they were seriously in the negative.  Then when it hit rock bottom, a bunch of people with seriously huge balls made a ton of money getting paid to accept the investment and profiting when it rose back to positive.

 

Depends on the contract, I think what you are citing was physically settled, and a lot of the longs were people who had no capacity to take oil physically, so they were forced to pay someone, who could take the oil, to take their positions before settlement, and there were so many that the price went negative - basically they were being charged for storage = their contract plus a fee.