Watching billionaires have a meltdown. Especially after causing and profiting from the gfc is poetic.
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This is an odd decision.
So, let’s say theoretically I bought shares yesterday off that platform. I now want to sell them tomorrow (or today) but the number of buyers has completely evaporated because you cannot buy that share any more.
Anyone who got in late, could stand to lose quite a bit of money and be shut out from selling whilst the cost of the share drops substantially.
And also anyone who got in early and has yet to sell, could see their ‘potential profits’ evaporate and have to wait as the price drops to sell them.
Hopefully they are savvy enough to go to a broker and make the trade (even if it means you have to pay the $10 brokerage fee).
And while they are there, they should probably short trade on GameStop. It’ll definitely come crashing down…
I found this thread interesting. The key point is that Reddit guy actually thought that the market was wrong about the Game Stop’s actual financial position.
Without trying to sound arrogant but suspect i still am…there are complexities here you don’t understand and you can be sure most of the GME buyers don’t either. There is a spiral of delta hedging, positive gamma and short stock covering.
Nobody has to hold options to expiry.
Hedge funds are largely out.
The same thing can happen on the way down.
If you got in later…lets say $50 or above…will you be brave enough to hold as you watch it come back from $300+ to $50 in a hurry??? Little chance.
What seems like a liquid market can dry up in an instant.
One key issue. The Robinhood customers are actually the Robinhood product. Like Facebook users.
The funds that have shorted the stock still seem to be holding aren’t they? That’s when you get out when these guys start to cover their positions.
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The Hedge funds sold call options. They have to SELL the stock to Reddit / Robinhood users NOT buy them from them.
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still stand by this ?
seeing 3 brokerages that cater to the average investor/trader etc took the ability to buy the stock offline, and the price dropped what 240 odd dollars at one stage.
How is that not “market manipulation” ?
oh that’s right, when they do it it’s not that, it’s just the way it is. when people do it against them, it’s manipulation.
Best catch cry in the narcissistic/sociopath arsenal. esp in an industry full of them.
No, most of the original guys are out…the move from $50 to $300 was them covering.
Other fresh money came un to short though as well.
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Sure I do.
I am not really sure what the rest of your post means though.
If you go and see an financial advisor / broker you are the customer. The market is the product.
If you trade for free on Robinhood, Citadel is the customer (they pay Robinhood for flow) and you are the product. Don’t expect Robinhood to reflect the name…
any nerds still discussing the “realities” or whatever of all this need to watch this very short video to be reminded of what this is actually about - making fat rich asshols cry like babies and hopefully exacerbate their inevitable heart attacks
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wasn’t just robinhood,IB, ameritrade stopped the ability to buy shares, only sell.
and if you still believe it, you’re either obtuse or naive. and you don’t seem the first one.
Every platform has individual margin limits, portfolio margin limits and platform asset and portfolio capital constraints - which is why they automatically close out trades. IB does it ruthlessly…as they should from a business perspective. I doubt there is much more to it than that. They have drawn down on all their banking facilities so they are obviously struggling with cash flow.
If you are asking me to believe that Robinhood stopped the ability to buy stock so they could get the price down to help ‘the elites’ then yeah… you are on your own there.
It is a simple business decision.
I have a user called “darknightpheonix”. I have done some basic KYC and you have given me an address and put $10k in your account. You now have $500k of Gamestop stock and options and a $300k loan. Well done… you have made 20 times you money (well not until you close it out). And therein lays the risk. If we wake up the next day and the stock is $100… you now owe $300k but you only have $200k of GME and it’s falling fast… are you good for the $$$???
It is risk management, pure and simple.
Obtuse? Naive? No…pragmatic, reasonably infomed, slightly cynical. I am just trying to offer a few thoughts / insights into a very very unusual situation. If you want to run with conspiracy theories then knock yourself out.
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I get that re risk management, and can understand if they limited peoples ability to buy options or is it puts and that.
but as far as i can tell they’ve stopped people using their own money as well to do the simplest of things, EG buy a share.
am I asking you to believe that, I don’t know.
in a round about way i believe it’s the case.
Ironically cos of your last line, it’s a business decision.
moreso in the sense, don’t bite the hand that feeds you (or in this case potentially can bite you).
Then again i see things as a whole and an ecosystem.
no i dont think the hedgefund sooks went to these brokers and said x, y and z so we can make our money back.
Do i believe those brokers, as part of their risk management discussions went, wow we are in the middle of a ■■■■ show here that we could be on the bad end of when the dust settles, as retail investors come and go, and wall street will always be there.
then yes.
I guess I too believe i’m being pragmatic and cynical about it (albeit very conspiracy theory ish).
I’m just doing it moreso in relation to human/humans nature in relation to the situation.
cos in no way do i think anyone on wall st would want to allow this to happen without repercussions for the simple fact ( and it’s littered across every aspect of life across the years) if you allow people to think they can rise up without any consequences once, they think they can do it again, and again.
If Robinhood stopped people buying unlevered shares ie. with users own $ as you suggest…then they should be investigated. Then again…they probably have 100 pages of terms and conditions when you download the app that covers the situation…rightly or wrongly (wrongly in my view).
However, show me the evidence first please.
With regard to retail and brokers…robinhood is not a broker. If you get on the phone (or web) and deal here in Melbourne with a broker that is one thing. Robinhood is an app. SAAS product. They don’t execute any orders. They literally sell your orders (plus all the orders you have ready like stop losses etc) to Citadel and other firms! Citadel who bailed out Melvin Capital is Robinhood’s customer. Robinhood’s users are the product.
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it’ll be interesting to see how it pans out, cos there’s already been a class action law suit put forward in new york against them.
Don’t know how true it is, but seems they are suggesting that robinhood was marketing to people via social influencers (shudder) to use their service and to (this is the part i think would be hard to prove) buy gme shares and that.
Either way the ■■■■■ hit the fan now, now it’s just lets see where it all ends up landing.
I know this will sound harsh … but anyone jumping on later who were just trying to get on the gravy train can’t complain about being hurt. Those people are just trying to get on the trend.
If nobody else tried to make a quickie, jump on the train, then there would have been only 3 types of investors:
- Those who already held shares, who would have had the opportunity to sell high or just keep the stock for when it returns to realistic values.
- The hedge funds, who were forced to buy some stock to hedge their positions.
- Those who participated in this event who would be buying low and driving the price up so if they were wrong would lose money.
Out of those, the only people who would lose money would be the knowledgeable ones (either the hedge fund or the guys driving this). The only way any “little people” or “retail investors” could get hurt is if they saw what was happening, and decided to jump in late. Buying above the true value, which means they can lose money when it recalibrates if they don’t successfully get out.
So anyone buying at $50 deserves to be burnt if that happens to them.
Which may be a very good thing helping stop stupid retail investors who want on the gravy train without realising how it works.
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This all largely makes sense. Most brokers / advisors are there to stop you blowing yourself up…they are a governor on your animal instincts.
If you want to go it alone…well good luck. Imagine you could buy a house off realestate.com.au site unseen, 10% without getting and legal advice, contracts looked at etc…This is a major part of Robinhood - all care no responsibility…