Reddit and GameStop

no1g8r

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Robinhood and most of these up-and-coming brokerages that target the Gen Z and Millenials crowd use Apex clearing for processing their transactions. While Robinhood limited transactions in a handful of equities, including GME, AMC, and others, by mid-morning today Apex had shut down all buys and sells of these stocks/options, except closing transactions, through any of the brokers that clear through them. I received a notice from TastyWorks (where I have a small account that I was using to see if I wanted to recommend them to my daughter and friends) sent out an email around 11am that specifically placed the blame on Apex. A follow-up email just before 3pm notified that Apex had lifted the restriction.

Here's the list of brokerages and the clearing firms they use (as of Dec 8, 2020):

upload_2021-1-28_16-2-30.png
 

GatorCatsi

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The one thing I do not agree with is the restricting of establishing a new position in some of these stocks by firms. I think if a customer can fund 100% of a new long position they should be able too. If they want to initiate a new short position and since they could have an unlimited loss, if the firm wants 1000% margin or whatever, so be it. But if fully funded I see no reason to bar establishing a new position.
:exactly:
 

Detroitgator

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The one thing I do not agree with is the restricting of establishing a new position in some of these stocks by firms. I think if a customer can fund 100% of a new long position they should be able too. If they want to initiate a new short position and since they could have an unlimited loss, if the firm wants 1000% margin or whatever, so be it. But if fully funded I see no reason to bar establishing a new position.
The CEO of IB was on with Neil Cavuto when I was getting my haircut and he explained IB's actions today. He said they moved to "you can only liquidate positions you hold" because yes, if you trade on margin, you are responsible to cover, but if you DON'T cover, IB is then obligated to cover... I think he said there were was upwards of $15B in GME shorts sitting out there, and they weren't going to be on the hook for everything.
 

alcoholica

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Moving on from GameStop, I’m curious how many short positions were closed on AMC, BlackBerry and Nokia before the market could catch fire
 

Detroitgator

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Update: DFV/Yolo is still 100% in his positions. He was down to $33M at the close today, but it's already back up 35% in after hours so far.

This dude has balls of steel and I think he knows exactly what he is doing... like Christian Bale in The Big Short. His biggest problem with whatever it is he's thinking/seeing is likely to come from an intervention that's never been used before, and that's schitty.
 

soflagator

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According to Robinhood's terms of service:

When you sign up for a new account, you’ll automatically start with a Robinhood Instant account, which is a margin account. This means you’ll have access to instant deposits and extended-hours trading. You also won’t have to wait for your funds to process when you sell stocks or make a deposit (up to $1,000).

I don't care which side of this argument you're aligned with, that statement above is beyond scary. As has been mentioned, the firms are going to act in what they see as their own best interest and have the right to do so in these situations. But not being a Robinhood guy, I wasn't aware that many of these people walking around day-trading were doing so on margin, almost incentivized to do so. That is late-'99/early-'00 level bad. And I don't believe it was nearly as widespread as what we're witnessing right now.
 

Detroitgator

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I don't care which side of this argument you're aligned with, that statement above is beyond scary. As has been mentioned, the firms are going to act in what they see as their own best interest and have the right to do so in these situations. But not being a Robinhood guy, I wasn't aware that many of these people walking around day-trading were doing so on margin, almost incentivized to do so. That is late-'99/early-'00 level bad. And I don't believe it was nearly as widespread as what we're witnessing right now.
Honestly, and I'm over generalizing, but NOTHING, not a SINGLE thing, has been done with GME that hasn't been happening since the inception of stock markets... nothing. The only difference this time is who did what to whom, and they don't like it.
 

GatorCatsi

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Honestly, and I'm over generalizing, but NOTHING, not a SINGLE thing, has been done with GME that hasn't been happening since the inception of stock markets... nothing. The only difference this time is who did what to whom, and they don't like it.
It's all one big bucket shop now.
 

GatorCatsi

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I don't care which side of this argument you're aligned with, that statement above is beyond scary. As has been mentioned, the firms are going to act in what they see as their own best interest and have the right to do so in these situations. But not being a Robinhood guy, I wasn't aware that many of these people walking around day-trading were doing so on margin, almost incentivized to do so. That is late-'99/early-'00 level bad. And I don't believe it was nearly as widespread as what we're witnessing right now.
They're absolutely incentivized to do so.
 

GatorCatsi

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Update: DFV/Yolo is still 100% in his positions. He was down to $33M at the close today, but it's already back up 35% in after hours so far.

This dude has balls of steel and I think he knows exactly what he is doing... like Christian Bale in The Big Short. His biggest problem with whatever it is he's thinking/seeing is likely to come from an intervention that's never been used before, and that's schitty.
Michael Burry, the guy played by Christian Bale made 1,500% on GME during the Reddit run-up.

He then tagged the SEC in this tweet, which he subsequently deleted a short time later:

burry-gme.jpg
 

FireFoley

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The CEO of IB was on with Neil Cavuto when I was getting my haircut and he explained IB's actions today. He said they moved to "you can only liquidate positions you hold" because yes, if you trade on margin, you are responsible to cover, but if you DON'T cover, IB is then obligated to cover... I think he said there were was upwards of $15B in GME shorts sitting out there, and they weren't going to be on the hook for everything.


Good info. I just saw on the blower that Robinhood is drawing down hundreds of millions of dollars of their credit lines to "shore up" their balance sheet. Like Mr. Peterffy I wonder how much of that is to replenish margin call losses from account holders who they know will never be able to pay up?
 

FireFoley

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It's all one big bucket shop now.


Jesse Livermore would be having a field day like a pig in slop.

718gkZCnleL._AC_UL115_.jpg
A great read!
 

Detroitgator

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Good info. I just saw on the blower that Robinhood is drawing down hundreds of millions of dollars of their credit lines to "shore up" their balance sheet. Like Mr. Peterffy I wonder how much of that is to replenish margin call losses from account holders who they know will never be able to pay up?
That seemed to be exactly what he was implying.
 

Detroitgator

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Michael Burry, the guy played by Christian Bale made 1,500% on GME during the Reddit run-up.

He then tagged the SEC in this tweet, which he subsequently deleted a short time later:

29814
I said this earlier in the chat box. Son #1 has been a member of wsb for over two years and was in very early on (and many other trades). This had NOTHING to do with "busting a hedge fund" or "sticking it to wall street" when it started. It was VERY smart guys like DFV/Yolo and Burry that looked at public information and saw an opportunity, and they took it. It's only this week that every moron on the planet jumped in. I wonder what Burry's name was on wsb?
 

GatorCatsi

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I said this earlier in the chat box. Son #1 has been a member of wsb for over two years and was in very early on (and many other trades). This had NOTHING to do with "busting a hedge fund" or "sticking it to wall street" when it started. It was VERY smart guys like DFV/Yolo and Burry that looked at public information and saw an opportunity, and they took it. It's only this week that every moron on the planet jumped in. I wonder what Burry's name was on wbs?
Agreed. And it likely wouldn't have escalated to sticking it to wall street, if wall street wasn't so ham-handed about how they reacted.
 

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