I suppose I could make a case that 'profiling' leads to better law enforcement. I could make a case that vigalanties prevent crime. I could make a case that Euthanisation promotes a healthy culture. But I just wouldn't, because I don't believe it, and it's wrong.
Maverick is 100% right, you don't understand the business from this end of it. We were in on a phone meeting with Merrill Lynch on this. The situation has been "eased" for us, but I don't like the ramifications of it at all. We have to actually commit to a number of shares that we are going to locate/borrow when we make the phone call to locate the stock. Otherwise, if we risk not being able to take order flow. That means we have to guess how much stock we are going to need in order to hedge our option delta exposure order flow, and are fucked if we don't get the option order flow that we committed to. You don't understand what market making is all about, and even insinuation that retail traders are second class citizens and that this is an example of preferential treatment is simply false. MARKET MAKERS ARE ESSENTIALLY VOLATILITY TRADERS, AND USE STOCK TO HEDGE THEIR DELTA EXPOSURE. WE DON'T WANT DIRECTIONAL EXPOSURE!!! YOU CAN'T EVEN EXERCISE DEEP PUTS TO GET SHORT STOCK UNLESS YOU CAN LOCATE STOCK!!!! nitro
Then what you need to do is shut down your hedgefund buddies. You know, the guys who, when Overstock is down 10, buy 3000 puts. Because they are going to bring the heat of the world down upon you, just like they did to us and everybody else. I understand what you do, and the only way to stop this Armeggedon - I guess you're going t o take it in the ass. Everybody gets a turn in the barrel. You know, this is getting interesting. Because by putting the option market makers' business in risk, it draws them in to helping us solve this problem. All fingers will point at the dirty players, and then maybe business can operate. Btw, saw an ad in the Palm Beach Post, a West Palm Beach newspaper (sort of a newspaper) for Bank United, hdqtered in Coral Gables, I believe, an hour away. There are sixteen local branches with employees who buy groceries, pay the mortage, send their kids to school, save for their college. But I guess Wall St. illicit profits are more important to Wall St. 110 days on the Sho list.
Hedge funds in general are legit and go by the book. However, a very small albeit powerful percentage of this breed is causing all the mischief. They essentially control order flow in the stock markets and dictate direction. They engage in corruption and bribery to achieve their desired results. If the SEC can locate this group and clamp down on them then they would have done the rest of us a world of good. The other segment that has been quietly flying under the radar and has managed to escape scurtiny is the Clearing House industry. It is mired in turpitude and deceitful practices. The hedge funds in question and investment banks rely heavily on this group to integrate,synchronize and bring to fruition their fraudulent schemes. If only the SEC concentrates on the hedge fund sector and as a corollary, the investment banking community and delves into minute detail in determining thier short selling procedures and activities? Has the SEC ever taken the time to analyze real time trades in the marketplace? Who actually buys and sells these shares.? If they do they would have uncovered vital information that reveals the mayhem and foul play that comprises the US equity markets. Has anybody given thought to the reverse scenario? When traders short a stock through their brokerages? I would wager that those shares are coming from these venal hedge funds and/or investment banks and the devastation that ensues.
If they analyse the stock data, it would point the finger at the wrong person. CBOE and other MMs around the country are the #1 volume providers of stock. A hedge fund could "hide" by buying large number of puts or bear spreads and that would only show up in the underlying when MMs hedge their delta exposure. It is a tangled web, and you have to look at not just the trades, but the entire position of the hedge fund to see if there was "manipulation." MMs in ETFs also hedge with stock. Pair traders short one stock against another. Index arbitrage uses stock... nitro
I can tell you is that there is a great deal of uncertainty on the CBOE floor because this is uncharted territory, and it is potentially very dangerous for option market makers, who are essentially innocent bystanders in a drive by shooting. nitro
Agreed. However by picking its spots, I believe the SEC can still uncover important information. As an example when Leh's price crashed from 22.27 on July 8 to 12.40 on July 14.
First of all, thank you for some intelligent discussion. May I address several posts, and at the end, Iâll stimulate you (not that way) and make you think some more. a very small albeit powerful percentage of this breed is causing all the mischief AGREED. AND EVERYONE KNOWS WHO THEY ARE. ASK YOURSELF WHY NOTHING IS BEING DONE, AND AFTER AROUND FOUR YEARS, THE SEC IS ASKING FOR MORE COMMENTS ON REGSHO? SIMPLE. THE MORE COMPANIES THAT DISAPPEAR, THE LOWER THE LIABILITY FOR WALL ST. quietly flying under the radar and has managed to escape scurtiny is the Clearing House industry ABSOLUTELY. DTCC, CEDE AND COMPANY ANYONE. If they analyse the stock data,â¦â¦ EVERYTHING IS ALREADY KNOWN. THERE ARE NO SECRETS. BECKY QUICK WAS CRAMERâS PRODUCER. GASPARINO KNOWS EVERYBODY. COX WAS A SECURITIES ATTNY UP AGAINST IT BEFORE HE BECAME A CONGRESSMAN. MORE ON THAT AT A LATER DATE. AND THE SEC UPPER ECHELON IS CROOKED. OTHERWISE, WHY WOULD THE ONLY IG IN THEIR HISTORY QUIT AFTER THE AGUIRRE HEARING, AND WHY WOULD THE NEW ONE COME TO ASK TO INVESTIGATE HOW THE SEC HAS HANDLED NAKED SHORTING?? Agreed. However by picking its spots, I believe the SEC can still uncover important information. THEY SIMPLY DONâT WANT TO. JUST LOOK AT THE FACTS. SOMEONE FORCED THEM TO DO THE RESTRICTION OF NAKED SHORTING, AND WHAT DO THEY DO FRIDAY AT THREE PM? SHIT THE BED, OF COURSE. I WAS HOPING THAT THERE WAS A JP MORGAN. I WAS HOPING A BUFFETT OR A WILBUR ROSS WOULD COME FORWARD AND SAY, âLOOK. IF WE DONâT PULL TOGETHER, IF WE DONâT GET TO A SOLUTION, PROTECT THE OPTION MMâS BUT STOP THESE BEAR RAIDS, ALL IS LOST. UNFORTUNATELY, THEY ARE ONLY INTERESTED IN PICKING UP THE PIECES AND MAKING MONEY, WHICH I THINK IS WHAT IS UP THE HFâS SLEEVES. AFTER ALL, ELGINDY PUMPED STUFF HUGE BEFORE HE DUMPED IT. IT IS DOCUMENTED IN HIS LOGS THAT LOCKED UP HIS SORRY ASS FOR OVER A DECADE. AFTER ALL, WITH THAT KIND OF POWER, KNOWING SOMETHING WAS GOING TO ZERO, WHY NOT GET THE SUCKERS IN ON A MOVE FROM 10 TO 20? 20 TO 0 IS MORE PROFITABLE THAN 10 TO 0, AND YOU MAKE A FEW SCHEKLES ON THE UPSIDE. NOW, THE BAD NEWS. I ASKED PATRICK BRYNE POINT BLANK, IS THERE A JOHN PIERPOINT MORGAN. HE SAID, âJUST YOU AND ME, BUB.â BAD NEWS? NO ONE GIVES A HOOT ABOUT THE COUNTRY, ONLY THEIR OWN ASSES. GOOD NEWS, THE FEW WE HAVE HAVE MADE A BIG DIFFERENCE. MAKE YOURSELF KNOWN. MAKE A DIFFERENCE. CONTACT YOUR CONGRESSMAN AND SENATORS. CONTACT THE SEC. IF YOU HAVE INFORMATION OF ILLEGAL ACTIVITY, CONTACT THE FBI. BELIEVE ME, THEY KNOW ALL ABOUT THIS. DO THE RIGHT THING, WHILE THEREâS HOPE. AND AT THIS WRITING, THERE IS VERY LITTLE HOPE.
If a daytrader sees a spread trade opportunity, he needs to be able to sell 5k shares of stock to get off the short leg. I don't understand what the SEC's beef is. You think any daytrader will spread two stocks if he can't put on one leg of his position? Are you insane? Repeat the same argument for any short seller who sees an overvalued stock. What makes option market maker's profits and liquidity provision any more sacrosanct than any other market participants? Daytraders and short sellers provide just as much liquidity as anyone else trading the same size. ANYONE who buys and sells is a de factor market maker.
And normal short sellers (either intraday or overnight) are not? If naked short selling is a fraud, then it is a fraud regardless of who does it. The nature of the action does not change just because the participant's motivation or style of profit-making is different.