bizaro86 Posted January 27, 2021 Share Posted January 27, 2021 I have two options positions here. Some now very, very far out of the money puts (that are up meaningfully even though the stock is now a 10X from when I bought them). And a bear call spread that has basically reached its maximum loss position as now both sides are well in the money. If I get assigned the short call I will probably end up needing to exercise the long call to cover. That said, I tried to start a new bear call spread position (with higher strikes) and IB wouldn't let me. Apparently they are now only allowing closing positions on GME calls. I can see a massive increase in margin requirements being appropriate here, but it doesn't make me very happy to eliminate trading entirely. Link to comment Share on other sites More sharing options...
collegeinvestor Posted January 28, 2021 Share Posted January 28, 2021 Bizaro86-what strikes where you looking at? I purchased some 30P closing first week of march for like 5.50 a contract. Im not sure how much these will increase in value if Gamestop goes down significantly in the coming days. Wanted to try it out. Link to comment Share on other sites More sharing options...
aws Posted January 28, 2021 Share Posted January 28, 2021 Those puts seem way overvalued as I doubt this move shakes out quickly enough for those to pay out, and they would be killed if GME used their inflated price to raise capital. I might actually short some of those puts tomorrow. Link to comment Share on other sites More sharing options...
no_free_lunch Posted January 28, 2021 Share Posted January 28, 2021 I actually think they are too long. I don't know how this will be sustained for a month. Don't they need to file some kind of forms in order to raise capital,l? Link to comment Share on other sites More sharing options...
valueinvestor Posted January 28, 2021 Share Posted January 28, 2021 I really don’t think one should underestimate the internet or mob mentality. Looking at Reddit - they are a considerable number just doing it as a huge FU to Unfair Practices and losses from 2008. Some don’t care if they lose money. They want to make sure as many shorts pay as much as possible. Link to comment Share on other sites More sharing options...
aws Posted January 28, 2021 Share Posted January 28, 2021 It won't hold 100 for 5 weeks, but I don't see it likely dropping back under 20 that quickly. I'm sure they are capable of doing the paperwork needed to issue shares though. Link to comment Share on other sites More sharing options...
Fly Posted January 28, 2021 Share Posted January 28, 2021 It has traded over 70m shares today, at prices generally at or above $300. That alone is $21b of purchases. Where are all these funds coming from? This is too much to be WSB. How can people be making large purchases of this knowing the downside is like 90%+. Could there be other non-retailers who want to see Melvin/Citadel suffer? Link to comment Share on other sites More sharing options...
Castanza Posted January 28, 2021 Share Posted January 28, 2021 It has traded over 70m shares today, at prices generally at or above $300. That alone is $21b of purchases. Where are all these funds coming from? This is too much to be WSB. How can people be making large purchases of this knowing the downside is like 90%+. Could there be other non-retailers who want to see Melvin/Citadel suffer? Probably But it’s more likely other non-retailers who just want a slice of the pie. Link to comment Share on other sites More sharing options...
bizaro86 Posted January 28, 2021 Share Posted January 28, 2021 Bizaro86-what strikes where you looking at? I purchased some 30P closing first week of march for like 5.50 a contract. Im not sure how much these will increase in value if Gamestop goes down significantly in the coming days. Wanted to try it out. I have the July strike, as I figure whatever happens will have run its course by then. The puts were at $17. I'm selling them, as I think intrinsic value will go up past that when they do a capital raise. The bear call spreads I already have are 50/60. I'd like to do a new batch of bear call spreads with strikes in the $200-$250 range or so, but IBKR doesn't seem to want to let me. Link to comment Share on other sites More sharing options...
aws Posted January 28, 2021 Share Posted January 28, 2021 I noticed the premium on the July puts is close to 25% of the strike even at really low strikes, like $1.02 on the $4 puts. I might short those instead of the March one previously referenced. That's a 33% return on the $3 risked if the stock doesn't fall over 99% in six months, and that twice as much as they cost two months ago when the stock was at like $15. Link to comment Share on other sites More sharing options...
no_free_lunch Posted January 28, 2021 Share Posted January 28, 2021 It won't hold 100 for 5 weeks, but I don't see it likely dropping back under 20 that quickly. I'm sure they are capable of doing the paperwork needed to issue shares though. The way I understand it, the short squeeze only works due to a limited float. It seems issuing shares would increase the float and then weaken the squeeze. This in addition to signalling to investors that the company thinks the price is high. Don't they have to file notice that they will issue shares before they do so, that is what i usually see and it generally results in a price slide. I have been thinking the same thing with blackberry (which is nowhere close to being as over-valued) and it's the same issue. I don't know if it can be done without breaking the spike. I do agree there is limited upside with the puts. It was trading in the $20 range for much of December, it seems speculative for it to go below that. So with a $30 put you might double your money and thus have to hope that it breaks lower. I think you would need to buy for Feb 5 and hope it crashes almost immediately. Link to comment Share on other sites More sharing options...
Castanza Posted January 28, 2021 Share Posted January 28, 2021 Looks like Robinhood is restricting trading for GME, BB, AMC, and NOK. That's pretty criminal in my opinion. The SEC has to allow this to play out. It's a bad look to step in to save the big guys and crush the retailers. Link to comment Share on other sites More sharing options...
KJP Posted January 28, 2021 Share Posted January 28, 2021 Looks like Robinhood is restricting trading for GME, BB, AMC, and NOK. That's pretty criminal in my opinion. The SEC has to allow this to play out. It's a bad look to step in to save the big guys and crush the retailers. Is RH preventing people from closing out existing positions, e.g., options that expire tomorrow? Link to comment Share on other sites More sharing options...
AzCactus Posted January 28, 2021 Share Posted January 28, 2021 Looks like Robinhood is restricting trading for GME, BB, AMC, and NOK. That's pretty criminal in my opinion. The SEC has to allow this to play out. It's a bad look to step in to save the big guys and crush the retailers. Is that legal? Link to comment Share on other sites More sharing options...
backtothebeach Posted January 28, 2021 Share Posted January 28, 2021 Looks like Robinhood is restricting trading for GME, BB, AMC, and NOK. That's pretty criminal in my opinion. The SEC has to allow this to play out. It's a bad look to step in to save the big guys and crush the retailers. While I agree, I think they had no other choice. There are only 70 million shares in existence. Probably 50-60 million that are not in index funds or owned by the new CEO. Half of which is probably in large positions, so you only need a million people trying to buy 100 shares or an option, and the system breaks down. With option expiration tomorrow GME could literally have gone to the moon. Big mistake that they added more strikes this week. Right now IB does not allow opening any positions on GME or its options, long or short, not even rolling the short leg of calendar spreads. I wonder if that's legal, certainly could f*k up a lot of option strategies. Link to comment Share on other sites More sharing options...
Jurgis Posted January 28, 2021 Share Posted January 28, 2021 Looks like Robinhood is restricting trading for GME, BB, AMC, and NOK. That's pretty criminal in my opinion. The SEC has to allow this to play out. It's a bad look to step in to save the big guys and crush the retailers. While I agree, I think they had no other choice. There are only 70 million shares in existence. Probably 50-60 million that are not in index funds or owned by the new CEO. Half of which is probably in large positions, so you only need a million people trying to buy 100 shares or an option, and the system breaks down. With option expiration tomorrow GME could literally have gone to the moon. Big mistake that they added more strikes this week. Right now IB does not allow opening any positions on GME or its options, long or short, not even rolling the short leg of calendar spreads. I wonder if that's legal, certainly could f*k up a lot of option strategies. LOL free markets hahahahahahahahahahahahaha. And then people wonder why retail investors think that markets are fixed against them. Link to comment Share on other sites More sharing options...
Castanza Posted January 28, 2021 Share Posted January 28, 2021 Looks like Robinhood is restricting trading for GME, BB, AMC, and NOK. That's pretty criminal in my opinion. The SEC has to allow this to play out. It's a bad look to step in to save the big guys and crush the retailers. While I agree, I think they had no other choice. There are only 70 million shares in existence. Probably 50-60 million that are not in index funds or owned by the new CEO. Half of which is probably in large positions, so you only need a million people trying to buy 100 shares or an option, and the system breaks down. With option expiration tomorrow GME could literally have gone to the moon. Big mistake that they added more strikes this week. Right now IB does not allow opening any positions on GME or its options, long or short, not even rolling the short leg of calendar spreads. I wonder if that's legal, certainly could f*k up a lot of option strategies. It's going to cost retail investors millions while protecting large hedge funds. Options may expire tomorrow, but short positions held by large firms do not. You can't "short" on Robinhood and you can't sell naked puts. I think it's pretty clear as day what's going on. I hope there is a class action lawsuit because of this. Link to comment Share on other sites More sharing options...
stahleyp Posted January 28, 2021 Share Posted January 28, 2021 Looks like Robinhood is restricting trading for GME, BB, AMC, and NOK. That's pretty criminal in my opinion. The SEC has to allow this to play out. It's a bad look to step in to save the big guys and crush the retailers. While I agree, I think they had no other choice. There are only 70 million shares in existence. Probably 50-60 million that are not in index funds or owned by the new CEO. Half of which is probably in large positions, so you only need a million people trying to buy 100 shares or an option, and the system breaks down. With option expiration tomorrow GME could literally have gone to the moon. Big mistake that they added more strikes this week. Right now IB does not allow opening any positions on GME or its options, long or short, not even rolling the short leg of calendar spreads. I wonder if that's legal, certainly could f*k up a lot of option strategies. LOL free markets hahahahahahahahahahahahaha. And then people wonder why retail investors think that markets are fixed against them. If the common person loses their home or buys a bad investment, the markets are free. If the higher ups do it, well, then can the tax payers help out so the economy doesn't crash???? Link to comment Share on other sites More sharing options...
Castanza Posted January 28, 2021 Share Posted January 28, 2021 fwiw I sold my NOK at a $200 loss ;D Link to comment Share on other sites More sharing options...
bizaro86 Posted January 28, 2021 Share Posted January 28, 2021 Looks like Robinhood is restricting trading for GME, BB, AMC, and NOK. That's pretty criminal in my opinion. The SEC has to allow this to play out. It's a bad look to step in to save the big guys and crush the retailers. Right now IB does not allow opening any positions on GME or its options, long or short, not even rolling the short leg of calendar spreads. I wonder if that's legal, certainly could f*k up a lot of option strategies. My general bias is to let the markets function. At some point the company will issue shares, or enough wsb types will take their indecenctly large gains off the table that the squeeze will end. That said, IB appears to be back up for GME. I was able to open some more bear call spreads. Link to comment Share on other sites More sharing options...
turar Posted January 28, 2021 Share Posted January 28, 2021 IB errors out for me on GME option trade attempt: "Transactions in this instrument are limited to closing-only trades". Unbelievable. Link to comment Share on other sites More sharing options...
shamelesscloner Posted January 28, 2021 Share Posted January 28, 2021 Short interest still very high on GME. Was Melvin tweeting "We are so fucked" just a smokescreen? I'd love to know how much of this decision by Robinhood was necessary action because high option volume was breaking the system VS bailing out their hedge fund buddies Link to comment Share on other sites More sharing options...
Read the Footnotes Posted January 28, 2021 Share Posted January 28, 2021 So conspiracy theories are always fun, but the flip side of the argument is that brokers and others face litigation and reputational risk if they allow anyone to buy or open contracts when the market is clearly irrational or manipulated. Either way prices are clearly detached from value. So you can say they are intentionally hurting retail investors, which may have some truth, but it is also true that there is a reasonable argument that brokers are protecting the really stupid retail investor from doing something really stupid at this point. Of course, anyone who loses money at this point might try to claim they had no idea what they were doing, and in many cases it would be consistent with their previous statements. It also wouldn't surprise me if the SEC is either in favor of or willing to look the other way regarding actions that have the effect of increasing the sense of risk and uncertainty for people who want to mob individual securities in the future. Link to comment Share on other sites More sharing options...
bizaro86 Posted January 28, 2021 Share Posted January 28, 2021 IB errors out for me on GME option trade attempt: "Transactions in this instrument are limited to closing-only trades". Unbelievable. I was getting that yesterday. I just tried again and was able to do a new July bear call spreads. Link to comment Share on other sites More sharing options...
Castanza Posted January 28, 2021 Share Posted January 28, 2021 but it is also true that there is a reasonable argument that brokers are protecting the really stupid retail investor from doing something really stupid at this point. Sorry but that simply isn't a rational argument unless you consider brokerage platforms as financial advisors. People are ok with ARK pumping companies with terrible fundamentals the past four years and allowing retail investors to buy in. But all of a sudden it's about protecting free individuals from making conscious decisions with their own money. You're picking winners and losers if you intervene. I mean the head of NASDAQ said that trading should be halted so firms can reposition accordingly. That is absurd as it gets and she should immediately be removed for suggesting something like that. Link to comment Share on other sites More sharing options...
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