Posted on 01/28/2021 1:50:14 PM PST by Brookhaven
Reports are coming in that Robinhood, the stock broker app, is forcibly selling shares of GameStop on behalf of some of its users. The transactions cannot be canceled and it is being positioned as mitigating “unreasonable risk” on behalf of the company as well as the investor.
Billionaire hedge funds have been taking a huge hit after a Reddit group started buying up GameStop shares in an effort to counter a massive amount of short positions. This prompted a “short squeeze” that sent the stock skyrocketing. As the dominos fell, GameStop reached a high of over $400 dollars per share, more than 10,000% higher than its low point earlier this year.
Now, it appears Robinhood and other brokers are cutting the losses of the billionaires by limiting the gains of small investors.
(Excerpt) Read more at noqreport.com ...
I feel like there is a clue in the term “close your position”.
If you have outright purchased a stock, you don’t have a “position” to close. Position to close suggests they either have options, or the purchased the stock in a margin account.
If it IS a margin account, I can say that they certainly have a right to sell any stock in your margin account to pay off the loan, whenever they feel it is at risk.
ANd if any of these people have a margin account, and margined their GME stock when it hit 300, to buy more, they would definitely have positions to close when it momentarily dropped to 118. That is a real risk of margin calls, that you sell at momentary low points.
I of course do not know that this was a margin call, and I don’t know if they have a right to close option positions.
I hate to say it, but after seeing what just happened with the election, what makes you think that anything will happen to them ?
Robin Hood was given direct orders to do this by the Oligarchs who run the hedge funds and by proxy the Federal Government.
Of course, “using resources to trash the company” is illegal.
Also illegal is buying a stock, and then using resources to encourage others to buy the same stock, by lying, or by using materially false or inaccurate information, and possibly if you use truthful information that is opposed to the concept of valuation.
Yes, I know all about gamma squeezes, but remember a couple of lines from movies:
“People should know when they are conquered.” (Gladiator)
“I gave them every chance to leave. If they just lay down, they’ll be all right. They won’t feel a thing. They should lay down.” (Mosquito Coast)
But they don’t.
The "institutional" guys tried to crush GameStop.
In that process, normally, "retail" individuals who are long and not necessarily day traders, in turn get crushed.
What this group of "retail" traders did is band together to crush the hedge fund guys (to the tune of 5 billion in loses so far).
The hedge fund guys and their allies around Wall Street and in the media screamed bloody heck and got the SEC and many brokers (i.e. robinhood) to prevent individuals from buying any more stock and in some cases causing them to sell their stock.
So 1st - hedge funds in the process of crushing the little guys. Happens all the time. Few in the "professional" class bat an eye.
2nd - little guys fought back and tried to crush the hedge funds. An emerging phenomenon.
3rd - the financial leviathan fought back and is again trying to crush the little guys.
"Wall street" and the "professionals" are now trying to figure out how to prevent the little guys from being able to manipulate a stock...just like the big guys do a ALL THE TIME.
It could be looked at in this way: What has happened here is very similar to what happened with Trump. Politically, Trump was the little guys answer to the fed, whereas Economically, this GameStop episode is the little guys answer to the hedge funds.
What happens next will be interesting...
A simpler explanation.
If you owned 100 shares of gamestop, and thought that it was overvalued, you would sell your shares. Either to move on to another stock, or in the hopes that it would drop and you could buy it back later.
If you do NOT own 100 shares of gamestop, but think it is overvalued, you can borrow your friend’s 100 shares, sell them, and hope it drops so you can buy them back and return them to your friend.
Note you dont’ really borrow from a friend, you borrow from a market maker who has access to millions of shares, so that no individual is really kept from selling their own shares, usually, because if you lent your shares and then decided to sell them, the market maker would simply give you someone else’s shares to sell, and that would be the new “lender”.
Short selling is a rational way to allow people who do not own a stock have a say in the market perception of a stock. So long as nobody lies about the company, a short sale only puts downward pressure of other investers TRUST THE JUDGEMENT of the people doing the short selling — just as a large sale of a stock might only trigger a large sale if people thought it meant something.
Of course, a large sale of stock does tend to depress the value in the short term, so huge short sales can trigger margin sales, driving the stock downward.
You would think the SEC would be on top of this like white
on rice.
How is this legal?
I just invested through Robinhood, and now I’m wondering if
it will soon be insolvent.
You can't collect anything when there are no assets and there will be no assets in Robin Hood.
It was so good, I actually recorded it (something I very rarely, if ever, do for the daytime financial shows).
Unfortunately, NBC is pulling the mirrors just as fast as they are being put out there. https://digg.com/video/chamath-palihapitiya-roasts-cnbc-anchor-gamestop-stocks
The full interview is behind their paywall. They do offer a 7 day free trial that a newly created "extra" email account could be used to view it: https://www.cnbc.com/video/2021/01/27/watch-cnbcs-full-interview-with-chamath-palihapitiya-on-gamestop-and-reddit-fueled-surge.html
The guy is left of center, but he took the financial establishment to the woodshed in that round. 2008 market crash, people loosing their jobs and homes, "too big to fail" people getting bailed out with taxpayer money, to now. Pretty epic.
This is now the financial front in the war between the ruling elites and regular folks.
First Facebook, Twitter, Apple, Google deciding what can or can’t be discussed. Now financial institutions blocking trades from retail traders to protect fat cat hedge funds.
Maybe, but it's a double-edged sword. RH was one fo the pioneers in giving the Average Joe direct access to the market.
Look for "people who know what's best for you" to paper over (no pun intended) the sliminess of the hedge funds and use this (somewhat complicated, easily misunderstood) moment to eliminate the unwashed masses' access to pretty much every lever of the financial system in perpetuity. You know, "never let a good crisis go to waste."
That’s almost antisemitic...almost.
” I just do not see how they could legally do this.”
Obeying the law is for the little people, just ask the FBI...
R. Jarvis ABC just reported Robinhood reportedly to reopen tomorrow limited
Additionally NY Attorney General and some Congress members looking into it.
new message from TD ameritrade:
TD Ameritrade Trading Restrictions on Stocks
Securities with trading restrictions
We have placed some restrictions on the following securities. These restrictions will not prevent clients from making basic buy and sell transactions. This list is as of January 28, 2021, 4:00PM ET.
AMC, CVM, EXPR, FOSL, GME, NOK, BB, BBBY, FIZZ, GSX, IRBT, NCMI, TR, UONE, VIR, NAK, NAKD, DDS, KOSS
The following restrictions are in place:
Stocks - 100% holding requirement (not marginable)
Long calls and puts are allowed
Covered call and short put orders may only be placed with a broker. Please be aware that wait times to speak with a broker may be longer than normal due to current market conditions.
Covered calls only allowed if your account currently has the shares
Short puts only if you have the maintenance/cash to cover the entire exercise amount of the short puts
All other complex options orders will not be accepted
We may also implement additional restrictions on the opening of option trades that expire Friday, January 29th
Please keep in mind that this list is not inclusive of every security restriction and may change at any time.
So there is the short list of the stocks that were so highly manipulated by the Market Makers that they became this type of target vulnerable to a short squeeze. Kind of like a line up. Not the companies, the Market Makers who shorted them. Hey, thanks for the list, now I know which stocks I should buy tomorrow because they are are going to moon.
You should go to Reddit, Wallstreetbets and see for yourself. It’s quite amusing and actually very informative, I’ve learned a great deal about stocks and people in the last couple of days.
100% holding requirement
Who’s holding?
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