A society that is dependent on an economic system that is no longer resilient to stress has a shelf life past it’s expiration date. We would be far better off letting many of these weak and outdated business models fail. Monetary support for individuals or businesses that promotes reckless behavior increases the likelihood of a deeper future rebalance.
Ghost of Igloi wrote:
A society that is dependent on an economic system that is no longer resilient to stress has a shelf life past it’s expiration date. We would be far better off letting many of these weak and outdated business models fail. Monetary support for individuals or businesses that promotes reckless behavior increases the likelihood of a deeper future rebalance.
just to be clear, we are talking about hte stress of a once in lifetime pandemic, and they are trying to build a bridge to a more stable time several quarters out so that some of these otherwise healthy businesses may survive, and the people who depend on them for employment may remain gainfully employed.
But the Fed has been building a bridge since 2009. There is no end to low interest and QE, or there is a collapse. That is where the Fed is not telling the truth. It is impossible to grow out of this situation, IMHO.
Dr. Racket wrote:
la gente esta muy loca wrote:
When M.C. bought those puts MMs would delta hedge by shorting these stocks. WSB knew if they could push shares higher by buying calls; 1st MMs will delta hedge by BUYING SHARES. 2nd, hopefully this would push underlying higher and as M.C.'s puts moved further OTM the MM's would reduce hedges by BUYING BACK SHARES, a virtuous cycle. M.C. countered by shorting and trying to pin underlying closer to ITM and making MMs short more shares reversing the cycle. They obviously lost, but in no way were they shorting GME at $4 or where short over 100% of float.
If they bought puts when GME was at $4 then how is that not shorting it at $4? Even if they bought way ITM spreads, it was still dumb, and they clearly over-leveraged. Why would you buy more contracts than available free float? What's the end game, take them to bankruptcy court?
After my morning coffee and some snooping through 13Fs. Their put exposure was 54,000 contracts = to 5,400,000 shares; not 5,400,000 contracts, like I said it was early in the morning. Also, the value they show, $55,080,000 is just the end of Q share price not their cost. So it still looks like in the Q3 they were only paying from a couple of dimes per share to a $1; the cost was around $1,080,000 - $5,400,000. They had added another 20,000 contracts during Q4, probably as the stock was now trading at 10.They've been buying puts on GME since Q4 2015, 4,000 puts, adding or subtracting each Q. Remember, 13F only shows portfolio at quarters end, so some of their activity during that time is undisclosed. This chart shows it was it must have been a good trade going from 40s to less than 4.
https://www.barchart.com/stocks/quotes/GME/technical-chart?plot=BAR&volume=total&data=DO&density=X&pricesOn=1&asPctChange=0&logscale=0&startDate=2015-10-01&endDate=2021-01-15&daterange=specific&sym=GME&grid=1&height=500&studyheight=100So yeah, most people would had stopped at $4, but I guess when M.C. saw the price rising they smelled blood in the water, not realizing that it was their blood. It appears as GME's price rose through Dec to Jan they became more aggressive. I have found 2 trades that were probably M.C. with losses of $13 - $25 million and another $25 - $30 million. So it really wasn't WSB that brought down Melvin Capital, it was their hubris. I can't wait for the Michael Lewis book and subsequent movie.
Started writing this over 12 hours ago but got sidetracked. There's a big difference between delta hedging 5,400,000 shares and my mistake of 540,00,000 shares. An initial delta hedge of say a 30 delta put for all of M.C.'s shares would be shorting 1,620,000 shares of GME. Looking at all major holdings of GME for Q3 2020 ( you can easily spot the market makers ), there are 19,498,157 puts and 6,878 ,037 calls; again, doing the math - 30 delta put - MMs would short 5,849,447 shares in total. 13 Fs obscure more than they reveal, they don't reveal short positions or written options and you won't find strike prices or option value. Ironically, Melvin Capital by buying puts was supplying the tinder for the Great Gamma Squeeze of 2021.
GME starting the day at $420 in pre-market trading, up 117%. Here we go again... :-)
BTC made a big jump today, back up close to $38k. Here we go again...?
It seems like a lot of the recent market shenanigans are a result of Elon Musk's social media activity:
Yesterday he also tweeted something that made dogecoin jump, and he helped fan the GME flames.
VS-SJW-IR-TS idiot wrote:
It seems like a lot of the recent market shenanigans are a result of Elon Musk's social media activity:
https://www.cnbc.com/2021/01/29/bitcoin-spikes-20percent-after-elon-musk-adds-bitcoin-to-his-twitter-bio.htmlYesterday he also tweeted something that made dogecoin jump, and he helped fan the GME flames.
Good job Elon.
Now get Telsa on the move upward again
la gente esta muy loca wrote:
Dr. Racket wrote:
If they bought puts when GME was at $4 then how is that not shorting it at $4? Even if they bought way ITM spreads, it was still dumb, and they clearly over-leveraged. Why would you buy more contracts than available free float? What's the end game, take them to bankruptcy court?
After my morning coffee and some snooping through 13Fs. Their put exposure was 54,000 contracts = to 5,400,000 shares; not 5,400,000 contracts, like I said it was early in the morning. Also, the value they show, $55,080,000 is just the end of Q share price not their cost. So it still looks like in the Q3 they were only paying from a couple of dimes per share to a $1; the cost was around $1,080,000 - $5,400,000. They had added another 20,000 contracts during Q4, probably as the stock was now trading at 10.They've been buying puts on GME since Q4 2015, 4,000 puts, adding or subtracting each Q. Remember, 13F only shows portfolio at quarters end, so some of their activity during that time is undisclosed. This chart shows it was it must have been a good trade going from 40s to less than 4.
https://www.barchart.com/stocks/quotes/GME/technical-chart?plot=BAR&volume=total&data=DO&density=X&pricesOn=1&asPctChange=0&logscale=0&startDate=2015-10-01&endDate=2021-01-15&daterange=specific&sym=GME&grid=1&height=500&studyheight=100So yeah, most people would had stopped at $4, but I guess when M.C. saw the price rising they smelled blood in the water, not realizing that it was their blood. It appears as GME's price rose through Dec to Jan they became more aggressive. I have found 2 trades that were probably M.C. with losses of $13 - $25 million and another $25 - $30 million. So it really wasn't WSB that brought down Melvin Capital, it was their hubris. I can't wait for the Michael Lewis book and subsequent movie.
Started writing this over 12 hours ago but got sidetracked. There's a big difference between delta hedging 5,400,000 shares and my mistake of 540,00,000 shares. An initial delta hedge of say a 30 delta put for all of M.C.'s shares would be shorting 1,620,000 shares of GME. Looking at all major holdings of GME for Q3 2020 ( you can easily spot the market makers ), there are 19,498,157 puts and 6,878 ,037 calls; again, doing the math - 30 delta put - MMs would short 5,849,447 shares in total. 13 Fs obscure more than they reveal, they don't reveal short positions or written options and you won't find strike prices or option value. Ironically, Melvin Capital by buying puts was supplying the tinder for the Great Gamma Squeeze of 2021.
high quality stuff, thank you!
Ghost of Igloi wrote:
A society that is dependent on an economic system that is no longer resilient to stress has a shelf life past it’s expiration date.
?
VIX at 35. Good time to buy?
(I frittered away a bit of free cash on some Qs a couple of hours ago)
VS-SJW-IR-TS idiot wrote:
VIX at 35. Good time to buy?
(I frittered away a bit of free cash on some Qs a couple of hours ago)
Yes, literally nothing important has changed. Stimulus will still get passed and vaccines will continue to roll out
La Calle is talking possible scenarios leading to 8% GDP growth
that's juice your discount models!
https://twitter.com/JimPethokoukis/status/1355162945471344642?s=20
Dr. Racket wrote:
VS-SJW-IR-TS idiot wrote:
VIX at 35. Good time to buy?
(I frittered away a bit of free cash on some Qs a couple of hours ago)
Yes, literally nothing important has changed. Stimulus will still get passed and vaccines will continue to roll out
Tough to tell. On the one hand, i've seen so many years where the market sells off after a waning boost in early January, and one might reasonably expect some of that after such an epic run-up. And on the other hand, Racket is right and a little pull-back might be expected since we haven't had one in a while.
I'm about even on the day holdings wise, but there's been quite a lot of moving things in and out.
Remember, Fridays often witness a move towards safety (selling) and Mondays often spike up strongly.
Dr. Racket wrote:
VS-SJW-IR-TS idiot wrote:
VIX at 35. Good time to buy?
(I frittered away a bit of free cash on some Qs a couple of hours ago)
Yes, literally nothing important has changed. Stimulus will still get passed and vaccines will continue to roll out
Why are those important, but the lack of a real economy backing stock prices is not?
Confidence in those prices has been shaken, and they're currently mostly overvalued, and that means they're going down for a while.
Bad Wigins wrote:
Dr. Racket wrote:
Yes, literally nothing important has changed. Stimulus will still get passed and vaccines will continue to roll out
Why are those important, but the lack of a real economy backing stock prices is not?
Confidence in those prices has been shaken, and they're currently mostly overvalued, and that means they're going down for a while.
What's your price target for SPX?
Would you say it's no more than 2600?
Earnings Scorecard: For Q4 2020 (with 37% of the companies in the S&P 500 reporting actual results), 82% of S&P 500 companies have reported a positive EPS surprise and 76% have reported a positive revenue surprise. If 82% is the final percentage, it will mark the second-highest percentage of S&P 500 companies reporting a positive EPS surprise since FactSet began tracking this metric in 2008.
Got in on some Volkswagen.
Figure their car sales in Norway show them neck and neck with Tesla. They are gonna do fine in EV in the future.
Share limits at Robinhood imply some serious issues at this brokerage firm:
https://robinhood.com/us/en/support/articles/changes-due-to-recent-market-volatility/
Ghost of Igloi wrote:
Share limits at Robinhood imply some serious issues at this brokerage firm:
https://robinhood.com/us/en/support/articles/changes-due-to-recent-market-volatility/
someone said today that stock trading has become a video game and I think there's something to that...the entertainment factor, the team factor, bleeps and blurps and satisfying kills.
we'll see what it does. the textbook suggests it sparks a mania and then crashes.
Igy would say the mania is already here...I'd probably say it's not here yet.