GME - Game Stop Corp

[Jurgis]

What move would be *good* for retail investors that they’re not allowed to make today on Robinhood? Buying more stock and calls at 100x intrinsic value?

 

I get the libertarian leanings here but I’m trying to understand who it benefits to allow a message board to keep pumping a stock and drawing in millions of new investors, most of whom will lose their ass.

 

I suppose not allowing them to open put contracts is  harmful. But I see very little interest in that, and no one is complaining about it. They want to keep bulling it up.

 

100x intrinsic value? NOK is trading at 100x intrinsic value according to who? Robinhood?

So it's OK for retail investors on RobinHood to buy a long list of possibly worthless stonks that were not mentioned on WSB or mentioned on some other crappy forum.

But let's prevent them from buying NOK which is real company with real business and possibly undervalued just because it was mentioned by WSB.

 

::)

 

I'm somewhat OK with banning option trades although this also should be codified in actual rules rather than enacted ad hoc with a benefit to large institutions. Are GME options not buyable/sellable today for institutions with access to big broker trading desks?

[StubbleJumper]

What move would be *good* for retail investors that they’re not allowed to make today on Robinhood? Buying more stock and calls at 100x intrinsic value?

 

I get the libertarian leanings here but I’m trying to understand who it benefits to allow a message board to keep pumping a stock and drawing in millions of new investors, most of whom will lose their ass.

 

I suppose not allowing them to open put contracts is  harmful. But I see very little interest in that, and no one is complaining about it. They want to keep bulling it up.

 

There's other avenues they could have went through, including several prompts letting them know they are stupid for buying this stock and they are okay with it, another asking if this is their final decision, and then a last just to make sure, before they buy the stock.

 

If the SEC isn't mandating firms ban the buying of a stock, and the Nasdaq has the market for that stock open, Robinhood is just taking the lazy route of implementing a ban.

 

 

Or maybe a 20 question multiple-choice investor knowledge quiz to see the client's level of sophistication? 

 

On the Personal Finance Canada subreddit, a young guy posted a message a couple of weeks ago stating that he had made a bunch of money on options and was asking how to report the capital gains for income tax.  If you don't know the basics of how capital gains tax works, you have no business trading options.  The brokers have been extending margin accounts and options accounts to people who do not have the basic knowledge and experience to use them.  Maybe it's time for the brokers to reassess their clients.

 

 

SJ

 

True, there's some truth to that need to prevent the little guy from being the pasty. But the sophisticated hedgies also shorted over 100% of the float.

 

 

Yes, the hedgies knew exactly what they were doing, it's just that they were unwise.  Some of these Robinhood guys haven't the faintest clue about how options and margin works, so they don't know enough to even make use of whatever wisdom they have (maybe that would suggest that they too are unwise).

 

 

SJ

[fareastwarriors]

fwiw I sold my NOK at a $200 loss  ;D

 

not a YOLO trade?

booo

 

[Jurgis]

But the meta narrative that what they’re doing is “good for the big guy and bad for the little guy” is, in the end, nonsense.

 

That's not true. Because there is no way for little guys to buy, it is quite likely that institutions can exploit the one sided market today since they are not prohibited to pile on the puts/short side.

 

The equal to all solution would have been to apply the same restrictions to all market participants.

[cameronfen]

But the meta narrative that what they’re doing is “good for the big guy and bad for the little guy” is, in the end, nonsense.

 

That's not true. Because there is no way for little guys to buy, it is quite likely that institutions can exploit the one sided market today since they are not prohibited to pile on the puts/short side.

 

The equal to all solution would have been to apply the same restrictions to all market participants.

 

This is true but, just sepculating, I don't think this is the brokers colluding with hedge funds (except maybe Robin Hood but I don't know obviously).  The far more likely story is brokers are trying to limit legal exposure given that it's obvious some people will lose money on GME and those people may have grounds to sue.  So applying equal restrictions to all market participants is not a trivial task because you have to figure out how to deal with fiduciary like stuff I think, which doesn't apply in the same way to accredited investors.   

[Jurgis]

But the meta narrative that what they’re doing is “good for the big guy and bad for the little guy” is, in the end, nonsense.

 

That's not true. Because there is no way for little guys to buy, it is quite likely that institutions can exploit the one sided market today since they are not prohibited to pile on the puts/short side.

 

The equal to all solution would have been to apply the same restrictions to all market participants.

 

This is true but, just sepculating, I don't think this is the brokers colluding with hedge funds (except maybe Robin Hood but I don't know obviously).  The far more likely story is brokers are trying to limit legal exposure given that it's obvious some people will lose money on GME and those people may have grounds to sue.  So applying equal restrictions to all market participants is not a trivial task because you have to figure out how to deal with fiduciary like stuff I think, which doesn't apply in the same way to accredited investors. 

 

Sure, I agree with what you wrote.

[SharperDingaan]

The average account in these places is maybe 6-10K at best. If junior blows up it's just not a big deal. If thousands of juniors blow up at the same time it still isn't a big deal - it's really just the generational equivalent of a Woodstock concert ('badge' of honor, if you were there). But if junior wins, and wins big? Lenny, ... it's media fame for life!

 

Junior couldn't play unless a brokerage let him.

The fact that he/she can, and at such leverage, is hard evidence as to just how out of date the current securities acts (around the world) really are, and just how obsolete many of the major players are. Sadly this doesn't happen on CME BTC options/futures - simply because you can't access them without an enhanced KYC account.

 

By forcing change - junior has little to lose, and everything to gain.

A little pedal-to-the-metal anarchy every now and then, is not a bad thing! It's also self-correcting; kids, car and mortgage payments are a wonderful equalizer  ;)

 

SD

 

 

 

 

 

 

 

 

 

 

[coc]

That's not true. Because there is no way for little guys to buy, it is quite likely that institutions can exploit the one sided market today since they are not prohibited to pile on the puts/short side.

 

The equal to all solution would have been to apply the same restrictions to all market participants.

 

Again, I’m not for the restrictions per se, at least not the way they’ve been done.

 

What I’m trying to understand is why bringing MORE speculative retail money going long GME or anything else up 5,10,100x in the past week would be a good thing, or somehow in favor of the little guy. It will all be lost when this goes away.

 

Maybe I’m missing something here.

[ShaiDardashti]

Unfortunately, very few short sellers came forward to pay Saunders what he wanted. Then, the Governing Committee delivered the death blow to Saunders. They restricted trading of Piggly Wiggly and gave the short sellers until the next Monday to deliver the shares.[https://twitter.com/dollarsanddata/status/1354562282215387136]

 

While the exchange was legally allowed to halt trading of Piggly Wiggly, scholars still debate whether the extension of the short seller deadline was within their rights.

 

[https://twitter.com/dollarsanddata/status/1354562589209067538]

 

1923.

It would appear Robinhood is no longer cool

 

Restricting options, upping margin,  I can understand.

 

But wholesale ban of buying stocks with straight cash is too a bridge too far for me.

[SouthernYankee]

"What I’m trying to understand is why bringing MORE speculative retail money going long GME or anything else up 5,10,100x in the past week would be a good thing, or somehow in favor of the little guy. It will all be lost when this goes away."

 

-Is there a need to understand it? Unless there are rules/laws being broken, why wouldn't you allow the speculation to play out?

 

 

[coc]

"What I’m trying to understand is why bringing MORE speculative retail money going long GME or anything else up 5,10,100x in the past week would be a good thing, or somehow in favor of the little guy. It will all be lost when this goes away."

 

-Is there a need to understand it? Unless there are rules/laws being broken, why wouldn't you allow the speculation to play out?

 

Some serious reading comprehension problems going on. I'm trying to understand the NARRATIVE around this.

 

I will ask a third time. Why do people think that what's going on today is bad for the little guy? Because Robinhood is not allowing them to lose a few more billion dollars of fresh inflows, in the name of liberty?

 

If that is the answer, then that is the answer. Fine. We can discuss whether that's good or bad separately.

 

I'm trying to understand if there is financial harm or help being done by not allowing more money to flow into a massive speculative bubble. Some aspect of the relationship between the underlying trades and the option trades for example.

 

Because what I see is Robinhood saying "We're not going to let you continue a coordinated manipulation of the stock which will draw in a lot more retail money, which will then be lost when it all goes poof."

 

Of course it is a problem if other brokers are not doing it as well, then it seems selective. I agree. But in the end, perhaps Robinhood will accidentally save a lot of people from themselves. It's a frenzy out there.

 

And to answer the question in advance, I think the same way about institutional stock manipulation. Just because too much of that goes on doesn't mean this should go on, too.

[Jurgis]

That's not true. Because there is no way for little guys to buy, it is quite likely that institutions can exploit the one sided market today since they are not prohibited to pile on the puts/short side.

 

The equal to all solution would have been to apply the same restrictions to all market participants.

 

Again, I’m not for the restrictions per se, at least not the way they’ve been done.

 

What I’m trying to understand is why bringing MORE speculative retail money going long GME or anything else up 5,10,100x in the past week would be a good thing, or somehow in favor of the little guy. It will all be lost when this goes away.

 

Maybe I’m missing something here.

 

I am not saying to bring more speculative retail money.

 

But let's take NOK or BB now or TSLA last year. Let's say there was a price runup and brokers stop retail investors from buying more while institutions are allowed to trade.

 

Let's say NOK or BB or TSLA last year then delivers a big deal or blockbuster quarter and stock goes up 2x, 5x or whatever.

 

Brokers just screwed anyone who wanted to invest long and hodl for great business results.

 

So we may be close to being on same page. But there is quite an issue of preventing market participants from buying stocks in companies with legit businesses and possibly not even overvalued just because their price went up 2x or whatever.

 

Without taking options into account, I'd say halt the stock for 3-5 days. Although that does not resolve the issue where this might cost the potential buyers, but at least that would treat everyone equally.

 

Edit: another example. Let's look at BYDDF. Last year stock went from $5 to $15 - 3x. Is it OK for brokers to stop people from buying it at this price irrespective whether it was mentioned on WSB or not? Well, the stock then went from $15 to $30. So stopping people from buying it "speculatively" would have prevented them from getting another 2x of gains. I'd say this would not have been a good solution. What's the difference from NOK right now? What if NOK business does well and its stock goes to $15 or $20 this year? How preventing people from buying at $7 is a good idea? (Well, yes, NOK business could be crappy and stock may languish at $4. BYDDF stock could have crashed from $15 to $5.  ::) )

[SouthernYankee]

"Some serious reading comprehension problems going on. I'm trying to understand the NARRATIVE around this."

 

-My question still applies.

 

Is there a need to understand the NARRATIVE around this? Unless there are rules/laws being broken, why wouldn't you allow the speculation to play out?

 

I know of one friend who jumped in on this trade, last I heard he was up a good amount of money for a week (~20K). I advised getting out and enjoying the winning gamble, not sure what he did.

 

Other than that, I have no dog in this fight, BUT I don't like the fact that some who may incur YUGE losses will benefit from the actions taken today, thereby setting the stage for the same types of irresponsible leverage-taking in the future, by them or others.

 

[aws]

Luckily I had at least one brokerage that let me short GME options.  Shorted some deep ITM puts, although I didn't get as many as I wanted before the price dropped a lot (the puts I was selling dropped by 50% when the stock lost 50% of its value, pretty funny).  Ended up shorting 50 July $4 puts for about 1.01 each.  Also shorted some June AMC 0.50 puts for like .11.  Both seem like free money given likely stock offerings protecting the companies from any risk of immediate bankruptcy.  Now I have some skin in the game with the WSB folks, although my risk profile is just a bit different.

[RadMan24]

I like that Piggly Wiggly story. I should have finished the book years ago lol.

[bizaro86]

I like that Piggly Wiggly story. I should have finished the book years ago lol.

 

Yeah, that's a good one. It's funny how basically exactly the same thing is happening now, except instead of one lone maverick tilting at windmills its a group of self-organized small fry tilting at windmills. Seems like the end result (the establishment changing the rules to ensure vested interests survive) is the same.

 

I'm also amused that I can start a legitimate investment related sentence with the words, "When Saunders squeezed the Piggly-Wiggly..."

[treasurehunt]

I was able to sell cash-secured puts on GME and AMC today in my Fidelity account. Got $2.10 for the July $10 strike GME puts and $.53 for the June $2.50 AMC puts. Didn't sell too much because I couldn't figure out who would want to be on the other side of this trade. Any idea who is buying these put options?

[widenthemoat]

I'm not sure this can be controlled in a politically correct way anymore. Dogecoin is up 220% right now. There is clearly way too much cheap money available and people are buying anything in sight that is trending up. Is this what finally causes the Fed to raise rates or increase margin requirements? I know Jay Powell dismissed the idea yesterday, but this is really getting out of hand. At some point enough is enough and people need to understand that risk does exist and losses do happen. The Fed can't keep bailing everyone out constantly, otherwise this nonsense spreads like wildfire.

[Castanza]

People will understand the risk and reality of losses when it’s reflected in their bank accounts. Let it alone and let the market work.

[Castanza]

fwiw I sold my NOK at a $200 loss  ;D

 

not a YOLO trade?

booo

 

I was all for it until the halt. Not interested in having stuff locked up for who knows how long. I think that list of unreadable stocks will continue to grow the next few weeks as WSB continues to pick new targets.

[AzCactus]

People will understand the risk and reality of losses when it’s reflected in their bank accounts. Let it alone and let the market work.

 

This ^ So many times throughout history we see easy money lead to irrational behavior and as Twain says history doesn't repeat itself but it rhymes.  We had the dotcom bubble and the housing bubble--maybe this is the fed bubble. 

[collegeinvestor]

Those 4 puts on GME look interesting for a dollar. Do you know how they will change in price as the stock falls (If it does hypothetically at this point :)?

[LC]

fwiw I sold my NOK at a $200 loss  ;D

 

not a YOLO trade?

booo

 

I was all for it until the halt. Not interested in having stuff locked up for who knows how long. I think that list of unreadable stocks will continue to grow the next few weeks as WSB continues to pick new targets.

Perhaps but the draw with GME was the >100% float short, right? Not sure there are any other such targets.

[aws]

Those 4 puts on GME look interesting for a dollar. Do you know how they will change in price as the stock falls (If it does hypothetically at this point :)?

 

Well they were like 20 cents when the stock was $20 last month, then over $1 a month closer to expiration when the stock was $400.  They are going down no matter what once the volatility drops.  The current price is just an artifact of the insane IV across the curve.  It's like the math says because it can go up 100% in a day it must also be able to go down 100% in a day.  I'll definitely take the other side of that bet.

[alpha]

I'm not sure this can be controlled in a politically correct way anymore. Dogecoin is up 220% right now. There is clearly way too much cheap money available and people are buying anything in sight that is trending up. Is this what finally causes the Fed to raise rates or increase margin requirements? I know Jay Powell dismissed the idea yesterday, but this is really getting out of hand. At some point enough is enough and people need to understand that risk does exist and losses do happen. The Fed can't keep bailing everyone out constantly, otherwise this nonsense spreads like wildfire.

 

I don't see the relevance, what is the trade volume in dogecoin?