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Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

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Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#781

Post by centimeter »

beachwood23 wrote: post #673
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

> You pay pennies more per share

To clarify: you will never pay more than market price (i.e. you will never have to pay more than the best order sitting on the book). Citadel or whoever will only internalize your order if they're willing to offer you a better price than market price. Otherwise RH is obligated to match your order with the best price currently available.

They are willing to do this because they would prefer not to leave orders sitting on the books, and there's a fee for taking orders off the books which they would prefer not to pay.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#782

Post by henrikschroder »

bufferoverflow wrote: post #746
notahacker wrote: post #685

Earlier quoted context omitted.

99.99% of people who buy lotteries know it's a gamble rather than a moneymaking strategy. Nobody is advising people buying lottery tickets that they should borrow money to buy as many of them as possible because they will make a nice easy profit at the expense of the rich. It's often said lotteries are a tax on people that don't understand probability, but at least people playing don't think they're doing arbitrage.…

> Nobody is advising people buying lottery tickets That's demonstrably false. There are literal ads on TV that show how wealthy you can become if you just buy a lottery ticket. > that they should borrow money to buy as many of them as possible because they will make a nice easy profit You clearly haven't read any of the GME threads on WSB. Pretty much everyone is saying to only invest what you can afford to lose. Mos…

> Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it.

I think the funniest part about this is that it is rationally irrational.

It's irrational from a market perspective, Gamestop really isn't fundamentally worth this much, everyone who invests ought to lose the money. Short sellers ought to make bank on it.

And then comes WSB and offers a different reason: Buy a couple of shares and hold just to punish the short sellers. It's irrational in the market sense, but it's completely rational from an internet mob sense. They're not out to make money, which is the normal rational decision-making process that all the big players are accustomed to. This mob is out for blood, and they're doing it for shits and giggles. Of course the big market players are upset, because the mob has money and are wielding it "wrong"!

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#783

Post by jamilbk »

JumpCrisscross wrote: post #725
beachwood23 wrote: post #673

Earlier quoted context omitted.

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

> Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further. Citadel bailed out Melvin Capital. Not its position. Melvin doesn't have a short position anymore. Melvin made a stupid bet. Citadel bailed them out. Private sector bailouts aren't free: Citadel got its pound of flesh. Even if they bought the entire portfolio, that portfolio n…

> Melvin doesn't have a short position anymore.

Source? If I was caught in a short squeeze, this is exactly the kind of announcement I would circulate to prevent the price from going any higher.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#784

Post by anonu »

wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

What's played out over the last week has been an epic battle between David and Goliath. Goliath is winning... per usual.

Translation: big business interests and wall street hedge funds win out. Of course, lots of retail guys and gals and r/wsb folks are losing their shirts today. It would have been next week if it didnt happen today.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#785

Post by cwkoss »

verganileonardo wrote: post #665
ehsankia wrote: post #642

Earlier quoted context omitted.

Were the market shutdowns manual or automatic handbrakes? I know there are breaks when specific thresholds are hit that are pre-determined.

As far as I know, they were automatic handbrakes based on excessive volatility. A feature designed to prevent chaos and people from over buying/selling due to panic.

Brokerages preventing users from buying certain stocks is clearly manual, and fairly unprecedented afaik

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#786

Post by wocram »

geerlingguy wrote: post #14
owenversteeg wrote: post #6

Wow. First the Discord ban and then this - clearly the billionaire hedge fund managers have been busy pulling strings overnight. Limiting it so you can't buy, you can only sell... Very clearly helping the hedge funds here.

The head of NASDAQ even suggested a Tradimg Halt so institutions can adjust to combat retail investors better!

A long halt would be bad for shorts, since they would be stuck paying the 125% annualized borrow for the duration of the halt.

And practically a halt doesn't _really_ affect the prices.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#787

Post by danmg »

MrMan wrote: post #738
danmg wrote: post #478

Earlier quoted context omitted.

It's not a pump and dump. It's a short squeeze. It's nothing new. It's the plot of the 80s movie "Trading Places." A hedge fund bought short position futures contracts for 120% of the available stock on the market. That's the underlying reason the price is going up: because they're forced to somehow buy more than 100% of the available Game Stop stock because they agreed to sell it to the people on the other end of th…

no the pump and dump part means that WSB arguably exists as a kind of ion cannon like Anon used to be, where if you can convince a sizable number of community members to commit to a proposed course of action, you can create a reflexive effect that you can harness to your advantage. creating a stock price event, on purpose, using a community like WSB, and profiting, by exiting the trade is a "pump" and "dump." it is a…

It's disingenuous and factually incorrect to compare WSB with a DDOS takedown crew running a tool against scientology.org.

WSB is legally sharing trading information and making informed investing decisions based on public information. What happened with Game Stop is completely predicated on large investors, who should have known better, buying positions that exposed them to an infinite amount of risk.

The short squeeze is the reason this is happening and not "ancillary." The hedge fund took these positions because they thought they were a form a free money. A better analogy would be "The Producers." The audience just walked out of "Spring Time for Hitler" for intermission and they're humming the songs and laughing.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#788

Post by tenacious_tuna »

chronolitus wrote: post #328
coredog64 wrote: post #108

Earlier quoted context omitted.

Read up on the story of the Piggly Wiggly short/corner.

a link for the lazy (twitter thread): https://twitter.com/dollarsanddata/status/135456107992655053...

unroll: https://threadreaderapp.com/thread/1354561079926550530.html

interestingly, the page I got was cached from Cloudflare. I wonder if the twitter chatter / thread unrolling is up enough during all this nuttiness that it's brought the site down.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#789

Post by cm2187 »

CivBase wrote: post #276
tim333 wrote: post #158

Earlier quoted context omitted.

From Schawb “It is not uncommon for us to place restrictions on some transactions in certain securities in the interest of helping mitigate risk for our clients,” from Massachusetts secretary of the commonwealth “It is very clear to anyone looking at the numbers that the whole marketplace is being manipulated here,” he said. I imagine Robinhood's thinking is similar

> "It is very clear to anyone looking at the numbers that the whole marketplace is being manipulated here" I don't get this. I didn't know anything about short selling a few days ago and maybe now is a bad time to learn... but my understanding is that short selling is only legal because it disincentivizes bubbles caused by artificial overestimation of a company. Investors took it too far and short sold over 100% of t…

People conspiring to push prices in one direction is a clear cut market manipulation and I believe a criminal offence in most jurisdictions.

It's fine to have lots of people buying something, but if they discuss how they can coordinate to hurt short sellers or something like that, particularly on a public forum, despite not being a lawyer I am fairly confident this is prosecutable.

Market trading regulations are full of fine lines where the wrong side can land you in jail. For instance the difference between front-running and pre-hedging / anticipating market liquidity is basically the intent and the information the trader has. The actions are indistinguishable.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#790

Post by wocram »

hntrader wrote: post #686
argonaut wrote: post #614

Earlier quoted context omitted.

There is no evidence to indicate they had naked shorts. They were most likely short, but not naked short.

The short interest was above 100%, so there was naked shorting going on, although no direct evidence linking it to hedge funds (but they would've been most of the short float, so probably yes).

Short interest being above 100% does not require naked shorting.

Edit: A better example @ https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...

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