GME / AMC please watch
Comments
-
It’s just basic understanding of leverage and thinking about it from each person’s perspective.HoustonHusky said:
Wasn't there a corollary saying from Trump way back when...owe the bank a little money its a loan. Owe the bank a shit-ton of money and you become an owner? (Not quite the same but similar concept). Not sure what Melvin would be able to pay Citadel back with if they go underwater on the GME short and had to liquidate all of their holdings to help cover...shorting a stock at $10 that then trades at $350 gets expensive real quick. Add too that Citadel's investment in Robinhood and the fact they were likely not liquid...FremontTroll said:
A loan is not a position. I am sure that Citadel, being sophisticated market participants, secured adequate collateral rather than putting themselves needlessly in the difficult position of having to rely on potentially illegal actions to manipulate a random small cap stock in order to ensure payback of a loan they made well after the short squeeze became obvious.HoustonHusky said:
They added risk by buying into the firm that was short and underwater...magically the market shenanigans happened soon after. I'm sure they made out like bandits because they probably exited most of the position Thursday morning when they were tanking the stock. They are free to open their books up and show everyone they weren't, but that will never happen.FremontTroll said:
Which proves they weren’t caught short because if they were they would have been worried about their own skin and not able to add risk by bailing out others.HoustonHusky said:
I wonder what kind of terms they got for that bailout...seems like they likely made out like bandits in this situation. Especially as they benefit when Robinhood volume increases as they take a lot of the order flow.
Bought some more PINS...assuming Melvin was the ones heavy selling it earlier this week.
Your better argument is they needed Melvin not to blow up because Melvin is long a lot of the same stocks as Citadel. But for that all they needed was for Melvin to cover not for the squeeze to fail.
Only thing I'm sure of with Wall Street is that rules are like road markings to the banks and hedge funds...they are a nice guide but they won't keep their car in the lane if they need to swerve to miss something.
The squeeze was already obvious to everyone on Monday and Melvin was already underwater.
Citadel had no skin in the game why would they risk getting involved at that point in a stock they had no position on unless they got a great deal that wasn’t dependent on Melvin not getting squeezed further?
-
No skin in the game? How you figure that?
You realize Robinhood is in deep, deep trouble...wonder how their investors/backers are holding up.
https://www.zerohedge.com/markets/robinhood-caps-maximum-holdings-36-stocks-just-one-share
One day after the company drew down on its bank lines and obtain a $1 billion rescue capital investment, the company found itself in lockdown mode, allowing just a handful of shares to be traded at a time, effectively shutting down in all but name (it couldn't risk another day of furious public outcry and massive client departures).
However, just before the close, things got downright surreal when in a blog post the broker - which should probably change its name from Robinhood to Suit - made a shocking announcement: going forward, customers will be subject to maximum aggregate limits in 50 securities of which 14 are capped at position limits of just 5 shares, while allowing total holdings in 36 securities to be just one share!
-
You are once again misunderstanding the relationships between the different involved players. Its almost like you came up with your conclusion first and then went looking for evidence instead of the reverse.HoustonHusky said:No skin in the game? How you figure that?
You realize Robinhood is in deep, deep trouble...wonder how their investors/backers are holding up.
https://www.zerohedge.com/markets/robinhood-caps-maximum-holdings-36-stocks-just-one-share
One day after the company drew down on its bank lines and obtain a $1 billion rescue capital investment, the company found itself in lockdown mode, allowing just a handful of shares to be traded at a time, effectively shutting down in all but name (it couldn't risk another day of furious public outcry and massive client departures).
However, just before the close, things got downright surreal when in a blog post the broker - which should probably change its name from Robinhood to Suit - made a shocking announcement: going forward, customers will be subject to maximum aggregate limits in 50 securities of which 14 are capped at position limits of just 5 shares, while allowing total holdings in 36 securities to be just one share!
Citadel didn't participate in any of Robinhood's 19 funding rounds. They are not an investor in Robinhood.
Citadel is a customer of Robinhood. They buy a large chunk of Robinhood's order flow.
This gamestop frenzy caused a liquidity issue for Robinhood because they have to post collateral to cover the time period in which their customer's trades settle (t+two business days) and they can't use customer funds to do so.
This is usually not a problem since a brokerage is able to net out the buys/sells of any given security to calculate the risk and hence the collateral needed.
But reportedly 56% of Robinhood's customers were long GME (and probably a negligible amount short or selling.) Robinhood was forced to post a rapidly increasing amount of collateral with the clearing broker hence the liquidity issue.
It is the opposite of a normal liquidity issue stemming from business deteriorating. Instead it was the result of a massive boom in business.
Citadel also benefited from that boom in business but was not subject to the regulatory requirements that Robinhood was. -
This sounds correct to me.FremontTroll said:
You are once again misunderstanding the relationships between the different involved players. Its almost like you came up with your conclusion first and then went looking for evidence instead of the reverse.HoustonHusky said:No skin in the game? How you figure that?
You realize Robinhood is in deep, deep trouble...wonder how their investors/backers are holding up.
https://www.zerohedge.com/markets/robinhood-caps-maximum-holdings-36-stocks-just-one-share
One day after the company drew down on its bank lines and obtain a $1 billion rescue capital investment, the company found itself in lockdown mode, allowing just a handful of shares to be traded at a time, effectively shutting down in all but name (it couldn't risk another day of furious public outcry and massive client departures).
However, just before the close, things got downright surreal when in a blog post the broker - which should probably change its name from Robinhood to Suit - made a shocking announcement: going forward, customers will be subject to maximum aggregate limits in 50 securities of which 14 are capped at position limits of just 5 shares, while allowing total holdings in 36 securities to be just one share!
Citadel didn't participate in any of Robinhood's 19 funding rounds. They are not an investor in Robinhood.
Citadel is a customer of Robinhood. They buy a large chunk of Robinhood's order flow.
This gamestop frenzy caused a liquidity issue for Robinhood because they have to post collateral to cover the time period in which their customer's trades settle (t+two business days) and they can't use customer funds to do so.
This is usually not a problem since a brokerage is able to net out the buys/sells of any given security to calculate the risk and hence the collateral needed.
But reportedly 56% of Robinhood's customers were long GME (and probably a negligible amount short or selling.) Robinhood was forced to post a rapidly increasing amount of collateral with the clearing broker hence the liquidity issue.
It is the opposite of a normal liquidity issue stemming from business deteriorating. Instead it was the result of a massive boom in business.
Citadel also benefited from that boom in business but was not subject to the regulatory requirements that Robinhood was.
I'm going to get baked later and read this thread again to see if I still agree. -
No time like the presentdflea said:
This sounds correct to me.FremontTroll said:
You are once again misunderstanding the relationships between the different involved players. Its almost like you came up with your conclusion first and then went looking for evidence instead of the reverse.HoustonHusky said:No skin in the game? How you figure that?
You realize Robinhood is in deep, deep trouble...wonder how their investors/backers are holding up.
https://www.zerohedge.com/markets/robinhood-caps-maximum-holdings-36-stocks-just-one-share
One day after the company drew down on its bank lines and obtain a $1 billion rescue capital investment, the company found itself in lockdown mode, allowing just a handful of shares to be traded at a time, effectively shutting down in all but name (it couldn't risk another day of furious public outcry and massive client departures).
However, just before the close, things got downright surreal when in a blog post the broker - which should probably change its name from Robinhood to Suit - made a shocking announcement: going forward, customers will be subject to maximum aggregate limits in 50 securities of which 14 are capped at position limits of just 5 shares, while allowing total holdings in 36 securities to be just one share!
Citadel didn't participate in any of Robinhood's 19 funding rounds. They are not an investor in Robinhood.
Citadel is a customer of Robinhood. They buy a large chunk of Robinhood's order flow.
This gamestop frenzy caused a liquidity issue for Robinhood because they have to post collateral to cover the time period in which their customer's trades settle (t+two business days) and they can't use customer funds to do so.
This is usually not a problem since a brokerage is able to net out the buys/sells of any given security to calculate the risk and hence the collateral needed.
But reportedly 56% of Robinhood's customers were long GME (and probably a negligible amount short or selling.) Robinhood was forced to post a rapidly increasing amount of collateral with the clearing broker hence the liquidity issue.
It is the opposite of a normal liquidity issue stemming from business deteriorating. Instead it was the result of a massive boom in business.
Citadel also benefited from that boom in business but was not subject to the regulatory requirements that Robinhood was.
I'm going to get baked later and read this thread again to see if I still agree. -
It’s insane to think that Citadel has no skin in the game...one of the FINTWIT blue checks said they were direct investors...I’ll try and go back and look. Either way though, Robinhood has the largest number of transactions of individual investors in the industry and Citadel routes the most trades. Those two are connected at the hip, and now RH is on the brink of insolvency.
You can argue about Melvin, but do you think any of the three would be better off if the market hadn’t been tampered with and GME went to $1,000 like many expected? -
I don't even understand this thread but it's fun nodding my head in agreement with most of the posts.
-
Robinhood ceo doesn’t come off so good here. What are the financial obligations he says they’re required to meet that led them to shut down GME trading? -
Well, you bring a good sig. gif ... just my type. You are welcome here.Swaye said:I don't even understand this thread but it's fun nodding my head in agreement with most of the posts.
-
Hey @FremontTroll...question for you. I’m anything but an options guy.
A bunch of wildly out of the money GME call options are now in the money...let’s say as an example 1 $300 call option (100 shares) in the money with GME closing at $350. A bunch of RH investors hold it though time because they probably don’t know what to do, which means they now have to put up funds to buy the shares ($30,000).
They have, what 2 business days to fund it? Who is responsible for the $30,000 between now and then, especially assuming RH doesn’t have the funds?
Now say the next day GME crashes to $50 and RH reddit guy says FU...I’m not paying you $30,000 for 100 shares that are now worth $5,000...try and get your money. Who’s left holding the $30,000 bag on a stock that is now worth a bunch less, especially if RH is already broke.
I’m assuming the Clearinghouse (ie Citadel being the primary one), but I don’t know for sure.
