aws

Been nibbling at JACK JOE NAVI PROSY STNE VALE

I finally decided to do the math, and my returns came out to +26.9% for the year. That’s pretty much in line with the indices and, based on poll responses, seems to be a common result for the forum as well. This makes sense since I’ve put a lot of my investments on autopilot by DCA into the indices. When it comes to picking individual stocks, I’ve stepped back quite a bit. I’ve reached a point where I’m comfortable as long as I avoid doing anything reckless. The potential upside from taking bigger risks wouldn’t significantly improve my quality of life, so I don’t see the point in chasing it. I still dabble a little, but none of my individual positions resulted in a realized gain or loss of more than 0.5% of my total capital for the year.

Did Buffett have connections with him, or just with his father? His father was CEO of GEICO for a period, as well as other insurance companies. If so, hopefully they are long since severed. Seems like an intelligent guy who's life got derailed by conspiracy theories and a Russian honey pot.

Reminds me of Archie Karas who was in the news again since he just died last week. Went to Vegas with $50 and went on a crazy run in craps and poker and turned it into $40 million. Then gambled it all back. Later he tried cheating and was put in the black book barring him from all casinos. The people that make the kind of bets that can win so much so quickly don't suddenly realize they should put some aside for retirement.

You do it after you are assigned on the call, but you need the feature enabled in your account settings as well: https://www.interactivebrokers.com/en/trading/early-settlement.php

If you use IBKR, they allow you to buy new shares to deliver against any assigned calls so you never face the tax hit from getting low basis shares called away. I'm not sure if other brokers offer similar but it's something you might want to look into.

You can't trust most overnight quotes unless you see a bid and ask around that price. Someone might have sold 100 shares and that's the only print. I checked and the bid/ask was 34.00/39.00 on BAC, so you could not buy it down 10%

It would be nice if there were bright lines for what's allowed in trading against your public statements or filings. Both for people with connections to get on TV, as well as just anyone with a big enough following to move markets. Obviously this is a pretty egregious example, where he's covering shorts two minutes after blasting off tweets, but this kind of crap happens all the time. It gets more attention since it's short selling and that's many people's favorite bogeymen, but I imagine the problem is 100x worse with pump and dumps in micro cap stocks and crypto. Apparently it's just straight up legal to pump and dump according to at least one judge as laid out by a recent Patrick Boyle video: https://www.youtube.com/watch?v=UqWHiMBBNGM

Is your objective to create trades that effectively work like straddles, but are not forced to be taxed as such (not being able to use the loss until the corresponding gain is recognized)?

There was almost 100k contracts of the 20c traded today, with huge blocks dumped on the bid near the close. Since DFV was the majority of the open interest it's not a big leap to assume he is dumping.

It's pretty impressive how quickly it they dumped all those shares on the market. 25% dilution in three days and so soon after the last sale. They should have about $10 of cash per share now. The only involvement I've had with GME has been shorting OTM puts, so good to know those will be a lot safer now.

The display bug convinced him to sell at the top. Lucky guy

The reporting indicated he went heavy into call options before returning. The stock went from 10 to almost 80 in a few days, so short term options gains could easily explain his $200 million score. I don't know how reliable the data is, but some reddit sleuths found opening trades worth $8 million that were closed for approximately $208 million. " Plugging all of that into a spreadsheet, I'm looking at these approximate numbers: Our mystery suspect traded at least 95,000 5/17 call contracts. Edit: He also had 25,000 5/24 calls! He bought in for at least $6,000,000 $8,000,000 (including the 5/24 calls). He sold for at least $168,000,000 for a profit of at least $162 million dollars for an average return of 2800% $208,000,000 for a profit of over $200,000,000 with an average return of 2550%. And two weeks later DFV shows up to reddit with a $205M portfolio

Some of them, probably not even jokingly, call the company Gameshire Hathaway, assuming Ryan Cohen will transition it into a conglomerate. I guess there are some similarities on the surface. Buffett did issue a ton of new stock when it was overvalued in the mid to late 90s. Both with the issuance of the B shares and of issuing stock to acquire GenRe. Good luck to them, but they need a miracle to justify paying between 4x-10x tangible book value for a dying retailer.

I think his portfolio peaked at about $950 million yesterday when it hit 68 in after hours trading. Now it's down to 28, so for his 17 million share equivalents that's about a 680 million swing in less than a day. Probably the fastest evaporation of such a large amount of wealth (in percentage terms at least) since Bill Hwang's blowup.

There's no reason for the company to do an unscheduled report except to be able to cash in on the pump yesterday after the DFV hype. It's like a battle between Ryan Cohen and DFV to see who can be fastest to extract the money from their delusional followers.

Some very annoying people will be extra insufferable until this over.

It is bizarre that these meme stock communities have made DFV and Ryan Cohen into almost messianic figures, while both have pumped and dumped and cost their fans boatloads of money. Ryan Cohen bought 10% of BBBY and made it seem like he was going to take an activist role, but then when all his fans jumped in and pumped the stock up from like $5 to $30, Cohen dumped his whole stake in a couple of days and cashed in like $70 million. The GME pump last month probably netted DFV almost $200 million, plus allowed the company to issue $1 billion in new stock. A new crop of bagholders were born while they got richer. Given how terrible the economics of the business are and the massive premium to tangible assets, it's hard to see how this ends without more pain for retail. But it's not like anyone is holding a gun to their head and forcing them to buy.

I've always treated gold miners like trading sardines. They can have some great runs but you don't want to hold them, and so I tend to find it ok to use the 3x leveraged ETFs as you won't hold them long enough for the compounding decay to hurt you. Back in 2016 JNUG went up like 1500% in 8 months which was a good time, and a couple of good runs on the inverse ETF JDST.

Yeah it does sound unlikely but, based on how you described the options, the buyers gave up a fair amount of options value by exercising early. You can probably re-enter at a better price on most. Except for things like short calls into a dividend payment or short calls on hard to borrow stocks, it's usually to your benefit to be assigned early.

The broker has no say in who gets assigned on short options. I was going to write up my understanding of how it works, but I decided to be lazy and have ChatGPT do it for me: When a buyer of a stock option exercises the option early, the process of determining which seller is assigned the option is typically handled by the options clearinghouse, such as the Options Clearing Corporation (OCC) in the United States. The clearinghouse uses an automated random assignment process to decide which seller (writer) of the option will be assigned the exercise notice. Here's a step-by-step overview of the process: Exercise Notice: The option holder (buyer) notifies their brokerage firm that they wish to exercise the option. Broker Notification: The brokerage firm forwards the exercise notice to the options clearinghouse. Clearinghouse Assignment: The clearinghouse uses a random assignment process to select a seller who has written (sold) the same option contract. Broker Notification: The clearinghouse notifies the brokerage firm of the seller who has been assigned the exercise notice. Seller Notification: The brokerage firm informs the assigned seller (writer) that they have been assigned and must fulfill the obligations of the contract. This random assignment process ensures fairness and transparency, distributing assignments across all potential option writers who have open positions in that particular option contract.

The only way I see legal troubles for DFV is if he colluded with other parties before starting the scheme. Either financial backers who also jumped in and amplified the effect of his return, or social media stock promoters who hyped the implications of it. If it was just the organic result of his followers, where is the crime? I'm sure it would be a fun case for the lawyers to argue in court.

The trades that were obviously erroneous should be busted. I do wonder about the trades that were within the realm of fair value. Will this guy get bailed out? 648k is just 3% off a reasonable fair value, but that's still 17k instant loss because of entering a market order for 1 share. There were prints up to 742k.

I'm aware of that dynamic and I'm sure some trades will get busted, but it wouldn't be the first time large trade volumes went through at erroneous prices. On the flip side, the snap back to a real value is biting some not so savvy people who placed market orders during the halt. The top trade was 742k when fair value was more like 630k. I have no idea how many are full shares, but I've seen at least one screenshot of a market order fill for 648k a share by a guy who had nowhere near that amount in his account, but his broker allowed the trade.

Matt Levine weighs in: I have, over the past few years, had surprisingly many occasions to ponder the following question: If you had a magic lamp that allowed you to move up the price of a liquid publicly traded stock arbitrarily, by a large amount, a handful of times, what would you do with it? There’s some stock that trades at $20, and you could rub the lamp and it would go to $30 for like a day or two: What do you do? I think there is a theoretically correct answer, though it is neither investing nor legal nor magical advice. It goes like this: Spend all of your money on somewhat out-of-the-money short-dated call options on the stock. Rub the lamp. Sell the options. This maximizes your leverage in the trade: Instead of paying $20 to buy the stock, you pay (say) $1 to buy out-of-the-money options struck at say $25. You rub the lamp, the stock jumps to $30, the options jump to (say) $6, and you sell them all. You’ve made a 500% return using options instead of a 50% return by buying stock. There is a legal nuance here, though I stress that nothing here is legal advice. The legal nuance is that, in the real world, there are no magic lamps. In the real world, the way to actually move publicly traded stocks is mostly by making public statements to people who care about what you have to say (and who buy stock). What you do not want to do, in this scenario, is make public statements to the effect of “this company has discovered a cure for cancer and I’m bullish for the long term.” Because Step 3 is selling your options, and if you say stuff like that then you are lying and could get in trouble. What you want to do is make a somewhat inscrutable public statement. Ideally the public statement can be read to mean “I have bought a ton of options on this stock, I am not giving you any advice about anything, and I’m gonna go sell them at a profit right now,” but can also be read in other, more bullish ways. Ideally other people read your statement and go out and buy the stock, so you can sell. The modern US equity market has two main guys with lamps, Elon Musk and Keith Gill. Here’s Gill: GameStop Corp. shares surged after the Reddit account that drove the meme-stock mania of 2021 posted what appeared to be a $116 million position in the video-game retailer. The June 2 screenshot posted by Keith Gill, who goes by a profane handle involving the phrase Deep Value on Reddit, shows a stake of 5 million shares with an average cost basis of $21.27 apiece. A position that large would make Gill one of the company’s five biggest investors and is more than six times the number of shares his account showed in an April 2021 post, the last time it was active on Reddit, when accounting for a four-for-one stock split. The screenshot, which also included 120,000 call options worth $65.7 million due to expire on June 21, couldn’t be verified. The options would allow him to buy the stock at $20 a share, but would cost him some $240 million to exercise. Here’s the Reddit post, disclosing 5 million shares bought at an average cost of $21.274 per share ($106.4 million total) and 120,000 options contracts (on 12 million shares), all June 21 calls struck at $20, at an average cost of $5.6754 per share ($68.1 million total). As Bloomberg News reports, the numbers are not verified, but they seem to match actual market activity: Individual trades over the past two weeks show there are several block trades for 5,000 contracts each, according to data compiled by Bloomberg. Applying a so-called volume weighted average price, the price of $5.67 per contract — a total cost of around $68 million — gets very close to what Gill posted on Reddit. Those trades were not exactly what my strategy suggests — the short-dated options were somewhat in-the-money when he bought them, and he bought shares too — but close enough. He paid about $174.5 million for the position. This morning, GameStop’s stock got as high as $40.50, and those calls got as high as $21.10. At those prices, Gill had a paper gain of about $281 million. Also: On X, Gill also posted an image of a reverse card from the game UNO that indicates a player is changing the card-pickup direction. The post had attracted 6.5 million views in the 12 hours since its publication at about 8 p.m. Sunday New York time. I don’t know what the Uno card means! If I bought a giant pile of GameStop options and then magically made the price double, I would promptly sell those options. If the method I used to magically double the price was by publicly posting my giant position on Reddit, I might, in an extremely not-legal-advice sort of way, want to also publicly post a disclaimer to the effect of “I make no representations about how long I will hold this position, and for all you know I’m selling right now.” Would posting a green Uno reverse card accomplish that goal? I would want to ask a very specialized sort of lawyer that question. To be clear, this is just what I would do. I have no idea what Gill is doing. Probably he likes the stock and is in it for the long term. As of 1 p.m. today, only about 6,000 June 21 $20 call options contracts had changed hands, so it doesn’t seem like there’s a lot of options selling. Really I don’t know what to think beyond, like, “isn’t this weird” and “maybe nobody should have a magic lamp that can arbitrarily move stock prices.” A few questions, though: Where did he get the $174.5 million? That’s a lot of money! As far as I can tell his wealth peaked in the eight figures in the 2021 GameStop mania, so … did he find more? Is someone financing this trade? Why is he not making the case for GameStop on YouTube? Gill seems to be back on Twitter/X (as Roaring Kitty) and on Reddit (as “a profane handle involving the phrase Deep Value”), but his YouTube channel (also Roaring Kitty), where he did most of his advocacy for GameStop in long detailed videos in 2021, is still dormant. You see where I’m going with Questions 1 and 2, right? If you had a lot of money and a taste for danger, how much would Keith Gill’s X account be worth to you? How much would his Reddit account be worth to you? How much would his YouTube account be worth to you? (Do you look and sound like him?) If you had the X and Reddit accounts, would those constitute a magic lamp in your hands? How would you most efficiently monetize it? If you were Gill, how would you most efficiently monetize your accounts? Is the answer “sell them to a whale”? Those $20 calls are now very in-the-money. Is Gill going to exercise them, by coming up with another $240 million? You can hold GameStop stock forever, but you can only hold GameStop June 21 calls until June 21. After that, you need the $240 million, unless you sell the options first.1 This is not a diamond-hands position; this is, by its nature, a sell-while-the-selling-is-good position. Of course if Gill did exercise the options — finding another $240 million wherever he found the previous $174.5 million — he would own 17 million shares of GameStop, or roughly 5% of the outstanding stock. It would be funny if he went activist and demanded a board seat on a platform of “more chaos.” If you were an options market maker, and last week a retail account came to you to buy multiple 5,000-contract chunks of one-month at-the-money GameStop options, how would you have thought about pricing? How wide would your bid-ask spread be? How would you hedge? Would you have carried any gamma risk into the weekend? Who would you guess the buyer was?