Am I missing something in the Gamestop news that isn't "hedge fund gambles billions on naked shorts and loses"? That seems like a real blunder on their part. In other contexts we would just call this gambling, I think. Shorts have infinite liability, not hedging them is not something I can get behind.
GameStop Is Rage Against the Financial Machine
101–110 of 1001 posts
Re: GameStop Is Rage Against the Financial Machine
#102Earlier quoted context omitted.
In the short term, the market is a popularity contest. In the long term, the market is a weighing machine. If you look at the option chains, it is clear that traders value GameStop in the long run far below the current trading price. https://www.nasdaq.com/market-activity/stocks/gme/option-cha... A November 2021 "put" at the present market price of ~$360, the right to sell GameStop stock in November at $360, is selli…
You don’t actually understand option prices. Put-call parity. The reason why options are so expensive is because of high implied volatility. Both calls AND puts are expensive; as they always will be, because if they’re not balanced, a risk free arbitrage ensures. Here’s an article on why calls and puts must be the same price: https://robotwealth.com/why-arent-call-options-more-expensiv...
No, they are only the same price under very strict assumptions. The put-call parity says that buying a call and selling a put creates the same payoff structure as being long the stock itself. Depending on the strike, the put or the call could be ~100% of the value of the position. Only when you get near the price of the underlying do the put and call equal each other.
Re: GameStop Is Rage Against the Financial Machine
#103I am loving every minute of this. The "professionals" gamble on the market all the time, front run, high frequency trade, and relentless tactics to get rich at the expense of the "retail" investors. Now they are upset that apps like Robinhood has provided unprecedented access to the markets. Their exclusive access to insane gambling nonsense is being torn down in real time. If Wall St can gamble and cause a global fi…
I'm also really loving that there are a whole bunch of Redditors donating part of their gains to charity, something that those hedge funds would never do.
In my eyes those hedge funds never did anything good for humanity, and I too am loving every minute of this and how some of the big money is being siphoned into the hands of people that actually need it more.
Re: GameStop Is Rage Against the Financial Machine
#104One of main points I've seen from people angry about a perceived deliberate manipulation to reduce Gamestop's stock price is that this will directly impact retail workers in the form of job loss.
Could anyone explain how this might happen? My naive assumption is that the relationship between a company and it's stock is (mostly) one-way. If a company cuts jobs, this along with all other signals from that company will be perceived by the market in some way and potentially impact the price of stock in that company. Would the opposite ("Our stock price is going down, lets fire people") be at all likely to happen?
Re: GameStop Is Rage Against the Financial Machine
#105There's a mantra among these people of "I just wanted to play video games, why couldn't you leave me alone?" The culture of a lot of redditors and internet trolls in general seems to be that they feel like they are the eternal punching bag of society. They were the punching bag in high school, they didn't get into a good school (or go to college at all), and now they're the punching bag of society as "incels" or "whi…
I'm not sure there's much of an overlap. Incels are a rather small group, and I think most wallstreetbets users are surprisingly... normal. You can't bet on stocks if you're poor. So you'll have lots of mid/late 20s educated guys with decent incomes. This to me really feels like a classic "for the lulz" (and some personal profit), avalanche-style event.
Re: GameStop Is Rage Against the Financial Machine
#106Earlier quoted context omitted.
I think I do understand them, from a value-investor's perspective. If I buy an option, I actually intend to exercise it or hold it until expiration, not hedge with it. If I bought a GameStop put today, for the pricing in my post above, it would be because I was willing to make a strong bet that GameStop's intrinsic value in November would remain below $60/share and that I was fairly sure the market would return to it…
What I mean is you cannot make directional predictions of a stock from option prices. The information just isn’t there. The same way you can’t use long dated futures. Because S&P 500 futures (during regular trading hours) will always be the current price, modified by the financing cost. There can never be a directional prediction, because all directional predictions get arbitraged away into the current price.
Ah. Understood. Thank you.
Re: GameStop Is Rage Against the Financial Machine
#107> These points doubtless make me appear to be a complacent shill for the financial industry, talking down to the rubes. For the record, I’m still angry about the way workers were ripped off in Britain more than three decades ago, and about the way the little guy ended up bearing the brunt for the financial implosions of 2000 and 2008. But it looks horribly to me as though the same thing is going to happen again — and…
If there is a reversion to mean it will slaughter the retail investors.
Re: GameStop Is Rage Against the Financial Machine
#108Maybe Robinhood's mission of democratizing finance is succeeding. The locus of power is being sucked out of Wall Street into a lumbering giant in the hills. My question is: how isn't this the most useful outcome for the most people?
Meanwhile a handful of families still own and control 70% of all stocks which aren't traded, that is they aren't buying or selling and will likely transfer the ownership to family in decades time. The only way that will change is by changes in taxation. What we are looking at with WSB and GME is a very, very tiny perspective of the entire machine. It is interesting but a very small influence on the entirety. Nonetheless, all these instruments, such as short selling and options, are designed to create liquidity and stability. It's working by design. This isn't a bug, it is a feature.
Re: GameStop Is Rage Against the Financial Machine
#109I am loving every minute of this. The "professionals" gamble on the market all the time, front run, high frequency trade, and relentless tactics to get rich at the expense of the "retail" investors. Now they are upset that apps like Robinhood has provided unprecedented access to the markets. Their exclusive access to insane gambling nonsense is being torn down in real time. If Wall St can gamble and cause a global fi…
> I see no reason why "retail" traders can't fuck around on Robinhood and cause some meme stocks to explode. It's called 15USC78i "Manipulation of security prices" [1]. It is unlawful to transact just for the purpose of forcing others to transact. Going through a fund's 13F filings, and deliberately driving up the prices of put options they sold should fall squarely into that area. And there are more than enough post…
Steve Cohen and Gabe Plotkin both traded on inside information at SAC (Gabe was cc'ed on several of the communications). Why are they not in jail? Ohhhh because the justice system only impacts the 99%.
Re: GameStop Is Rage Against the Financial Machine
#110I am loving every minute of this. The "professionals" gamble on the market all the time, front run, high frequency trade, and relentless tactics to get rich at the expense of the "retail" investors. Now they are upset that apps like Robinhood has provided unprecedented access to the markets. Their exclusive access to insane gambling nonsense is being torn down in real time. If Wall St can gamble and cause a global fi…
This kind of market folly also has an effect on long-term investments, e.g. retirement funds. What is there to love? I hate that unshowered basement-dwellers are coordinating to screw around with the market and potentially my retirement money. Get an honest job, guys.
As if the guys at hedge funds shorting stocks to drive companies out of business have more "honest" jobs.