Comments by "" (@jmitterii2) on "FINAiUS"
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Even tens to hundred billion dollar players can screw the market.
What we saw both 2020 (by Softbank) but in 2021 we still don't know which one or many were doing this, but they were following and often fading retail traders.
Typical big money when they're buying or selling... they front run their sells or purchases of the underlying by purchasing options to the direction they think their selling or buying will cause the market price of the underlying.
1) If about to sell a position out or get rid of large amount, they first buy up a bunch of puts... this helps take advantage of the cratering prices they will cause in the underlying making money on the premium of the puts and selling those.
2) If about to buy a position up or increase it, they first buy lots of call contracts... again to take advantage of the pump.
A phenomena that often happens when huge volume of puts or calls happen are the market makers who sell these contracts naked, have to hedge.
Back to the 2020 and 2021 pump and dumps.
So what was happening to small caps, to meme stocks, to latter portion of 2021 the big cap stocks, was buying same week expiration call contracts to pump the price of the stock.
What they would do buy millions of dollars of call contracts slightly out of the money, retail already playing along as they have been yolloing calls on AAPL, and other stocks.
This sudden increase in call contracts bought causes market makers to have short term open interest that has a gamma influx, market makers have to buy underlying to cover some of their new purchases that are about to expire that Friday for potential delivery aka gamma squeeze... to ensure price doesn't retrace, often the big money would buy the underlying shortly after placing all the same week call options. Market makers forced to cover, cause a gamma squeeze... and the big money is looking to only have these options open for the day or two... once in the money or close to the money at least the premium has pumped, the big money dumps their call options they bought for huge profits 100% to 400% with no interest in keeping them open to exercise the options for ownership.
In fact, when they're done pumping using this method, they'll often swap in to buying puts... often that Thursday, especially if they had to buy large shares to help support and even pump the price to trigger the gamma squeeze (market maker of options forced to buy to cover their naked call options).
So now, the big money is holding the bag, they want to sell it all... they buy puts usually the day before. Next day, they start to trickle in selling, then about an hour or so in, they dump the shares on ask... making probably a loss... but their puts will more than provide the profit margins to make out like bandits.
OPAD meme stock watched that one, they pumped and dumped exactly in this manner.
TSLA was an interesting one... they actually spent $1 to $4 million every week to place a put wall in place. Nobody in their right mind would short like this. Particularly not same week expiration contracts... not enough time to get in the money... too obvious for others to take the opposite trade... and this also causes a put wall... where market makers will actively buy the stock not just to cover, but to reduce the chance of the puts being in the money and having to buy the shares of all those put contracts. Particularly as also lots of same week call contracts were being bought and market makers were needing to cover for those anyway.
Just shy of $1,100 price TSLA first achieved, the put wall buyer stopped buying these puts. It ended.
Gamma squeezed to $1,200 then dumped fairly hard. Up and down.
Big money for holiday season that was doing all this chicanery seemed to have gone on vacation in to January.
Retail traders have also stopped buying that many options... probably current pullback rekt too many and their bust now. Lots holding stock are upside down significantly on their 2020 hype stocks and now meme stocks.
So yeah, these super big money like Black Rock... their games are probably more insane.
Almost guarantees winning positions.... almost. And most of the time. They have the ability to hedge and move markets one way or the other.
With that options manipulation there is one key problem that makes it not always work.
1) You need constant fomo into buying the underlying (by retail or other traders) to support the price at least keep it form dipping.
2) You can only pump the chicken a few times over a course of a month as you increase implied volatility of the call options ( or puts of you're looking to do the opposite reveres gamma squeeze) the premium is so expensive that change in price won't give you much profits or any. So you can only do it once or twice or at most 5 times.
More frequently that you do it, and the higher you pump it the less you can make from doing it and riskier another big player or set of big players counter what you're doing rather than helping.
So there are limitations to these manipulative events.
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Greenspan's last comment demonstrates how he thinks even still that "he" was all economists. "What do we economists really know, if we didn't catch this?"
Ummm plenty of fucking economists realized what Greenspan was doing from the time he began after Volcker... the same thing since 1908...
A cycle of higher interest rates... then at peak interest rates to boost the economy these interest rates are lowered... and lowered... and lowered each time providing the short term sugar rush boom. That is always followed by a mountain of debt (that's how money is created into our system)... that cannot be repaid (the bust)... and at times it can lead to inflation... so then there is a tightening period where interest rates are hiked. Leading to a recession in order to maintain price stability.
He got the golden goose of super high interest rates to end the 1970's Arthur Burn's induced stupidity stagflation. Something that should have been discussed, including Burns (then Fed Reserve Chairman under Nixon) CPI that Burns gutted and started excluding over 72% of what was in the CPI out of it... giving false nonsensical data that would show no inflation. Then he had to backtrack and r-add various items back into the CPI formulation.
Volcker had interest rates higher than 20%... Greenspan's boom was simply reducing that to 1% over a period of 20 years...
To add, doing what everyone else had learned and protected against with the Glass-Steagall Act... having that removed allowing monopolies to become a thing again, no more trust busting and we damn sure no Amazon to Microsoft to Google to Walmart, etc. etc. many other companies are outright monopolies and shouldn't exist as such both vertical and horizontal.
Allowing stock buy backs to become a thing when prior they were mostly banned as they add absolutely no value to anyone workers or investors other than a short term buying frenzy to lift stocks for a short period so short term equity holders and options holders can cash out quickly while the short term buying frenzy of the company buying back shares happens. A complete scam... hence why they were very rarely allowed unless the company was literally buying itself into a private partnership, buying out all the public float and ending trade-able shares.
The commercial banking and deposit banking having a firewall so deposit bank money was not utilized to speculate in securities of any kind, only to produce loans both signature and collateral loans for business and individuals. Commercial banking generally with those willing to risk their deposits on speculative potential pyramid and ponzi scheme like junk could do so at their own risk keeping everyone else from suffering the ill consequences of such scams.
All this was undone during Greenspan's era and with his support.
He lived thru the lowering of interest rates from 20% to 1%... no kidding equities went to the moon... that's debt binging money creation like never seen in US history. Japan did the same during the late 70's and thru the 80's culminating in their still continuing malaise that started in 1989 their stock market peak still even today 2022 has never achieved to break even.
Everything he thought he "knew", rather thought, was wrong.
Dead wrong.
Ayn Rand lunatics with delusions of being some Morgoth of Arda or Sauron the swine robber baron like fat nosed JP Morgan or other of the ilk... no wonder he endorsed monopolies... the very thing that contradicts competitive market principles that is at the heart of the only good that so called "free" markets perform at all well... competition.
Only reason a competitive market principles work is to have competition.
Greenspan was a horrible egotistical lunatic who still thinks he was the economists economist. It escapes him completely to realize that many economists were warning his stupidity has already been done several times all thru the 1600's 1700's 1800's (1800's is cute because half that century the USA was in a recession, depression, long depression, or a panic). And complete culminated in the 1929 crash... hence all the reforms that included FDIC deposit insurance on money at the bank so we don't lose our money should a bank go bust... The National Labor Relations Act of 1935 which fully legalized unionization collective bargaining for all sectors of the economy.... the social security program to ensure elderly aren't left as bag women wondering until they die in the streets in parks and in ally ways... initially the Housing Act of 1937 updated several times during FDR's administration and into the 1960's into the HUD Act ensured affordable modern housing complete with actual foundations and floor boards, utilities including water, sewer, and electricity... even during the so called boom 1920's the vast majority of Americans lived in what we today would called hovels or slums apartments lacking water, sewer, electricity many of them dirt floors... shacks.
All these things were either mostly or completely abandoned or undone.
And we stand in amazement wondering why inflation is now sky high... why even prior to the pandemic millions of families live in their cars, tents, or an RV... KOA campsites of all small towns and larger cities get flooded with tenants the moment they're made as the vast majority of people cannot afford to borrow for a home, nor pay the rent prices despite working full time or even double or triple employment.
We stand in amazement on how younger people die as they cannot afford critical medical supplies like insulin as they ration the amount... despite every other nation on this earth that has a form of universal healthcare and a pricing allowance knowing exactly the margin and costs to produce such medicines... not surprisingly the US medical supplies and services exceed these profit margins by 100's of times. Yet we have fewer clinics, hospitals, staffing levels, lag in test results, etc. etc. the worst care possible at the highest price possible. Any foreigner first told the price of our ambulance for one ride to the hospital... are surprised that a taxi cab (a luxury service) is cheaper... but it's emergency?
So do you pay a lot of fire service too? Which fortunately the robber baron's have not privatized that.... yet.
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