Are We in a Reddit Trading Bubble?
medium.com
Are We in a Reddit Trading Bubble?
1–6 of 6 posts
Re: Are We in a Reddit Trading Bubble?
#2What's the data on total assets or cash at risk from WSB/RobinHood users vs the rest of the market? What would that ratio need to be for this to be a meaningful bubble?
Re: Are We in a Reddit Trading Bubble?
#3I might very well be speaking from ignorance, but here's what bothers me about this article: it seems to assume that the rules for me, the individual investor, are the same for market makers. For instance, selling naked calls for me is lunacy. But do large institutions (the market makers) have hedges or mitigations for naked calls? The reason I ask is because the article assumes, "blah, blah, blah, so the MMs have to use 'delta hedging'...". I dunno, do they? Or because they trade umpteen-jillion contracts a month, the "rules" don't necessarily apply?
OTOH, the last AAPL call contract I bought seemed like it had an awfully pricey premium for deep ITM options (says the guy trading AAPL contract for going on 20 years).
Re: Are We in a Reddit Trading Bubble?
#4I might very well be speaking from ignorance, but here's what bothers me about this article: it seems to assume that the rules for me, the individual investor, are the same for market makers. For instance, selling naked calls for me is lunacy. But do large institutions (the market makers) have hedges or mitigations for naked calls? The reason I ask is because the article assumes, "blah, blah, blah, so the MMs have to…
They might or might not hedge a call, depending on whether they like the risk and their (usually relatively strict) risk limits allow it. Typically they are not in the business to take outright directional bets on stocks though - so yes they would delta hedge. But part of trading upteen-jillion contracts a month also means that among those trades there will be some that at least partially offsetting, meaning they might not need to delta hedge as much.
Re: Are We in a Reddit Trading Bubble?
#5What's the data on total assets or cash at risk from WSB/RobinHood users vs the rest of the market? What would that ratio need to be for this to be a meaningful bubble?
I doubt the data exists, or at least it's hard to even approximate as many trades have technically infinite upside or downside.
For example, there are plenty of users selling naked calls or shorting stocks, how do you calculate cash at risk for those?
Re: Are We in a Reddit Trading Bubble?
#6Uh this is just wrong, institutions use algorithms to trade, <10 contracts isn't confirmation that it's retail money. The algorithms purpose is to hide the flow, and they mimic order size at the very least.