What is Margin Trading? – Changelly and Changelly PRO Explain

The Reddit Challenge, Virtual Stock Exchange game

The Reddit Challenge, Virtual Stock Exchange game (Round 3) The Reddit Challenge. Virtual Stock Exchange game, can you out-trade other Redditors?

Altcoins / Alternative Cryptocurrencies • [ANN] Lendroid Protocol:Decentralized Lending, Margin trading and Short Selling

submitted by btcforumbot to BtcForum [link] [comments]

China Clamps Down On Margin Trading And Short-Selling To Stabilize Market

China Clamps Down On Margin Trading And Short-Selling To Stabilize Market submitted by rotoreuters to betternews [link] [comments]

Binance margin trading and short sell feature

Hi All,
With binance 2.0 coming and the margin trading account feature made available, does anyone know whether short trades will be available?

submitted by sophoah to BinanceExchange [link] [comments]

GE Derivatives

I’ve been thinking the past couple days and I don’t think anything like this exists. We should make a website where we middleman derivative trades for items on the GE. We could offer basic call and put options for highly traded commodities like runes and ores. One contract could denote 1,000 of a certain item. We could also do margin trading and short selling on items possibly. I have thought of the logistics and this could work very well. As GE derivatives brokers we could take 1% of all transactions and 5% of all account deposits. We can also make money on interest from margin. I’ve thought a lot about this so if you wanna talk about this idea with me you can PM me. I just joined the discord so I can voicechat on there.
submitted by ShadyTies to GrandExchangeBets [link] [comments]

Help regarding taxes on crypto gains and how to legally use bitfinex and bittrex in US to short sell

Hey crypto fam, was hoping I could receive advice related to taxes on crypto gains. I went to see my cpa a couple months ago regarding gains from bitcoin made from an investment in 2013. He had no knowledge of cryptocurrencies, or blockchain which caused me to become quite distraught due to the growing popularity and many uses that blockchain tech has to offer. I was wondering if anyone knows of a cpa that might be able to help me for next tax season?
Another question I had was regarding the legality of margin trading and short selling in exchanges like bitfinex and bittrex in the US. I received a messaged informing me that their are restrictions regarding trading in the margin and short selling in the US, so therefore asked a forum what I should do, and was told to set up a VPN. This seems like an option for those who don't plan on making a large capital gain and feel as if the IRS might find it fishy if I make a substantial gain through an exchange that doesn't allow certain services in the US. Would it be a better option to move to a place like Canada temporarily in order to trade "legally" or is their a way around this?
Appreciate any insight from those who've come across this issue themselves.
submitted by ajnicola to CryptoCurrency [link] [comments]

Why Coinbase's GDAX and other exchanges may be the ones buying BCH with USD & Bitcoin, affecting the prices

So GDAX and possibly others ended up in a really strange (and unfortunate) situation when the hard fork happened. After hinting they would be ignoring the fork and and after they failed to process the influx of withdrawals requested thereafter, they turned around and said they'd be recognizing the forked altcoin in traders' accounts.
This means that if you had a long (positive) BTC balance in your GDAX trading account at fork time, you'd eventually have a supplemental BCH balance once they added it to the platform. Sounds reasonable, right? Well, it's not so simple for GDAX and other exchanges that offered margin trading and short selling at the time.
To explain, I first have to explain what I mean by short selling for those unfamiliar. When I say short selling, I mean the borrowing of an exchange's bitcoin to sell with the hopes that you can buy back the bitcoin at a lower price before giving the bitcoin back to the exchange. Exchanges offer this to allow their customers to take advantage of price swings, but also to add liquidity to their marketplace, which results in more fees and commissions for them. Plus, they could even charge interest on the lent bitcoin.
With that in mind, imagine this short selling scenario:
At the end of this scenario these are the balances shown in everyone's account:
Customer Balances
B -1 BTC
Exchange Presented Balance 1 BTC
Exchange Real Deposits 1 BTC
But now, let's assume the fork happened and the exchange offers to recognize BCH for long BTC positions at the time. This exchange has not outlined any obligations for a short seller in the event of a hard fork. The balances with recognized altcoin holdings now look like:
Customer Balances
A 1 BTC, 1 BCH
B -1 BTC
C 1 BTC, 1 BCH
Exchange Presented Balance 1 BTC, 2 BCH
Exchange Real Deposits 1 BTC, 1 BCH!!!!
If this hypothetical exchange fulfilled its promise of realizing the long BCH positions, they'd have to find that extra BCH coin somewhere if they didn't want to operate as a fractional reserve. This could mean buying the BCH from other exchanges or in over the counter transactions.
An exchange that operates like this could have to give customers up to twice the number of BCH it actually received in its hot/cold wallets at fork time. Now, if this exchange was based in some countries outside the United States, they might have even been allowed to lend out more BTC than they even had deposited (thus allowing naked short selling). An exchange in this situation that offered to fund BCH balances could be looking at taking on an astronomical loss to purchase BCH for their customers.
I have 0 proof that GDAX or any other exchange is doing the buying of BCH. However, with the amounts that have transacted in the past 24h, I feel like it's more than just an institutional investor or bitcoin millionaire and exchanges that have promised more BCH than they have will have to be making this kind of buy eventually.
For further reading, an in-depth Bloomberg article went into this a bit after Bitfinex traders tried to take advantage of this loophole.
submitted by btcDizzle to Bitcoin [link] [comments]

NEW TOKENS LISTED: March 30th, 2018

J8T Token $J8T by jet8.io
JET8 is a decentralized mobile engagement network connecting influencers, audiences and brands through the value of social currency.
Lendroid Support Token $LST by lendroid.com
Lendroid is a non-rent seeking protocol partnering with 0x Project Relayers that enables Margin Trading and short selling of ERC20 tokens without having to give custody of funds to a centralized service.
Gladius Token $GLA by gladius.io
Gladius is the decentralized solution to protect against DDoS attacks by allowing you to connect to protection pools near you to provide better protection and accelerate your content. With an easy to use interface as well as powerful insight tools, Gladius enables anyone to protect and accelerate their website.
Capital Token $CAPT by capitaltoken.io
Capital Token is an investment token with a mechanism for raising prices and values. In essence, it is an investment fund based on the principles of openness and transparency.
KahnChat Token $KCH by www.kahnchat.com
KahnChat is a completely social networking solution and chatting app through which you can connect with friends and family members, send text messages, files and more, send money online, pay bills, post on user walls, share your story and discuss through comments, create and follow brand pages. The app is suitable for people of all ages. KCH Token is virtual currency that can be purchased and exchanged through KahnChat wallet and can be used for performing online purchases and transactions at supported merchants, same as the bitcoin.
SwissBorg Token $CHSB by swissborg.com
SwissBorg is the first wealth management platform for cryptos based on the blockchain, made in Switzerland by a team of financial experts. CHSB token holders become community members and are rewarded for participating in referendums to decide the future of SwissBorg.
DockToken $DOCK by dock.io
dock.io is a decentralized data exchange protocol that lets people connect their profiles, reputations and experiences across the web with privacy and security.
submitted by freeatnet to ForkDelta [link] [comments]

#Learningmondays Different Style of Crypto Trading 3) Scalping Scalping is also termed as Jobbing. Scalpers normally do high volume trades with minimum margin of profit. Scalpers buy and sell depending upon the market movement for a very short time span.

#Learningmondays Different Style of Crypto Trading 3) Scalping Scalping is also termed as Jobbing. Scalpers normally do high volume trades with minimum margin of profit. Scalpers buy and sell depending upon the market movement for a very short time span. submitted by digitalticks to u/digitalticks [link] [comments]

You can't trade in here

So I have been considering dipping in the stock market for a while. I have taken a lot of courses in finance and I understand that equities return a higher return on average than any other asset class. I wanted to start small, so I called up my bank asking them if I can invest about a thousand dollars in Equities. They told me that they had a minimum requirement of 25,000 dollars. I asked them why. They said that Banque du Liban has a new law in the works where cannot invest in the market with an account less than 10,000 dollars. I told them, ok well in a few months I will have 25,000 dollars, so if they could give me more information.
So I started asking about margin trading and short selling, anyway at some point the guy said "Well to be honest with you most account are not even close to the this minimum. Most are in the hundreds of thousands of dollars".
I don't get it. I can't invest 1000. I can't invest 25,000. So what I need to be a millionaire to buy into the stock market. What a joke.
submitted by shekib82 to lebanon [link] [comments]

Margin Trading on Poloniex. Buying on Margin and Short Selling a lesser amount on Margin [at the same time]

If I buy 30,000 bitshares on margin and decide to short 10,000 BTS on margin, will my position close out automatically if my short sale limit hits? Or will it open two margin positions under my bitshares margin account?
submitted by topher_lim to u/topher_lim [link] [comments]

Is short-selling and Margin Trading possible with bitcoin?

Hi guys, Im trying to figure out if shorting and margin trading can work with bitcoin, if so any good exchanges out there?
submitted by MrJC666 to Bitcoin [link] [comments]

Is short-selling and Margin Trading possible with bitcoin? /r/Bitcoin

Is short-selling and Margin Trading possible with bitcoin? /Bitcoin submitted by BitcoinAllBot to BitcoinAll [link] [comments]

Former investment bank FX trader: some thoughts

Former investment bank FX trader: some thoughts
Hi guys,
I have been using reddit for years in my personal life (not trading!) and wanted to give something back in an area where i am an expert.
I worked at an investment bank for seven years and joined them as a graduate FX trader so have lots of professional experience, by which i mean I was trained and paid by a big institution to trade on their behalf. This is very different to being a full-time home trader, although that is not to discredit those guys, who can accumulate a good amount of experience/wisdom through self learning.
When I get time I'm going to write a mid-length posts on each topic for you guys along the lines of how i was trained. I guess there would be 15-20 topics in total so about 50-60 posts. Feel free to comment or ask questions.
The first topic is Risk Management and we'll cover it in three parts
Part I
  • Why it matters
  • Position sizing
  • Kelly
  • Using stops sensibly
  • Picking a clear level

Why it matters

The first rule of making money through trading is to ensure you do not lose money. Look at any serious hedge fund’s website and they’ll talk about their first priority being “preservation of investor capital.”
You have to keep it before you grow it.
Strangely, if you look at retail trading websites, for every one article on risk management there are probably fifty on trade selection. This is completely the wrong way around.
The great news is that this stuff is pretty simple and process-driven. Anyone can learn and follow best practices.
Seriously, avoiding mistakes is one of the most important things: there's not some holy grail system for finding winning trades, rather a routine and fairly boring set of processes that ensure that you are profitable, despite having plenty of losing trades alongside the winners.

Capital and position sizing

The first thing you have to know is how much capital you are working with. Let’s say you have $100,000 deposited. This is your maximum trading capital. Your trading capital is not the leveraged amount. It is the amount of money you have deposited and can withdraw or lose.
Position sizing is what ensures that a losing streak does not take you out of the market.
A rule of thumb is that one should risk no more than 2% of one’s account balance on an individual trade and no more than 8% of one’s account balance on a specific theme. We’ll look at why that’s a rule of thumb later. For now let’s just accept those numbers and look at examples.
So we have $100,000 in our account. And we wish to buy EURUSD. We should therefore not be risking more than 2% which $2,000.
We look at a technical chart and decide to leave a stop below the monthly low, which is 55 pips below market. We’ll come back to this in a bit. So what should our position size be?
We go to the calculator page, select Position Size and enter our details. There are many such calculators online - just google "Pip calculator".

So the appropriate size is a buy position of 363,636 EURUSD. If it reaches our stop level we know we’ll lose precisely $2,000 or 2% of our capital.
You should be using this calculator (or something similar) on every single trade so that you know your risk.
Now imagine that we have similar bets on EURJPY and EURGBP, which have also broken above moving averages. Clearly this EUR-momentum is a theme. If it works all three bets are likely to pay off. But if it goes wrong we are likely to lose on all three at once. We are going to look at this concept of correlation in more detail later.
The total amount of risk in our portfolio - if all of the trades on this EUR-momentum theme were to hit their stops - should not exceed $8,000 or 8% of total capital. This allows us to go big on themes we like without going bust when the theme does not work.
As we’ll see later, many traders only win on 40-60% of trades. So you have to accept losing trades will be common and ensure you size trades so they cannot ruin you.
Similarly, like poker players, we should risk more on trades we feel confident about and less on trades that seem less compelling. However, this should always be subject to overall position sizing constraints.
For example before you put on each trade you might rate the strength of your conviction in the trade and allocate a position size accordingly:

To keep yourself disciplined you should try to ensure that no more than one in twenty trades are graded exceptional and allocated 5% of account balance risk. It really should be a rare moment when all the stars align for you.
Notice that the nice thing about dealing in percentages is that it scales. Say you start out with $100,000 but end the year up 50% at $150,000. Now a 1% bet will risk $1,500 rather than $1,000. That makes sense as your capital has grown.
It is extremely common for retail accounts to blow-up by making only 4-5 losing trades because they are leveraged at 50:1 and have taken on far too large a position, relative to their account balance.
Consider that GBPUSD tends to move 1% each day. If you have an account balance of $10k then it would be crazy to take a position of $500k (50:1 leveraged). A 1% move on $500k is $5k.
Two perfectly regular down days in a row — or a single day’s move of 2% — and you will receive a margin call from the broker, have the account closed out, and have lost all your money.
Do not let this happen to you. Use position sizing discipline to protect yourself.

Kelly Criterion

If you’re wondering - why “about 2%” per trade? - that’s a fair question. Why not 0.5% or 10% or any other number?
The Kelly Criterion is a formula that was adapted for use in casinos. If you know the odds of winning and the expected pay-off, it tells you how much you should bet in each round.
This is harder than it sounds. Let’s say you could bet on a weighted coin flip, where it lands on heads 60% of the time and tails 40% of the time. The payout is $2 per $1 bet.
Well, absolutely you should bet. The odds are in your favour. But if you have, say, $100 it is less obvious how much you should bet to avoid ruin.
Say you bet $50, the odds that it could land on tails twice in a row are 16%. You could easily be out after the first two flips.
Equally, betting $1 is not going to maximise your advantage. The odds are 60/40 in your favour so only betting $1 is likely too conservative. The Kelly Criterion is a formula that produces the long-run optimal bet size, given the odds.
Applying the formula to forex trading looks like this:
Position size % = Winning trade % - ( (1- Winning trade %) / Risk-reward ratio
If you have recorded hundreds of trades in your journal - see next chapter - you can calculate what this outputs for you specifically.
If you don't have hundreds of trades then let’s assume some realistic defaults of Winning trade % being 30% and Risk-reward ratio being 3. The 3 implies your TP is 3x the distance of your stop from entry e.g. 300 pips take profit and 100 pips stop loss.
So that’s 0.3 - (1 - 0.3) / 3 = 6.6%.
Hold on a second. 6.6% of your account probably feels like a LOT to risk per trade.This is the main observation people have on Kelly: whilst it may optimise the long-run results it doesn’t take into account the pain of drawdowns. It is better thought of as the rational maximum limit. You needn’t go right up to the limit!
With a 30% winning trade ratio, the odds of you losing on four trades in a row is nearly one in four. That would result in a drawdown of nearly a quarter of your starting account balance. Could you really stomach that and put on the fifth trade, cool as ice? Most of us could not.
Accordingly people tend to reduce the bet size. For example, let’s say you know you would feel emotionally affected by losing 25% of your account.
Well, the simplest way is to divide the Kelly output by four. You have effectively hidden 75% of your account balance from Kelly and it is now optimised to avoid a total wipeout of just the 25% it can see.
This gives 6.6% / 4 = 1.65%. Of course different trading approaches and different risk appetites will provide different optimal bet sizes but as a rule of thumb something between 1-2% is appropriate for the style and risk appetite of most retail traders.
Incidentally be very wary of systems or traders who claim high winning trade % like 80%. Invariably these don’t pass a basic sense-check:
  • How many live trades have you done? Often they’ll have done only a handful of real trades and the rest are simulated backtests, which are overfitted. The model will soon die.
  • What is your risk-reward ratio on each trade? If you have a take profit $3 away and a stop loss $100 away, of course most trades will be winners. You will not be making money, however! In general most traders should trade smaller position sizes and less frequently than they do. If you are going to bias one way or the other, far better to start off too small.

How to use stop losses sensibly

Stop losses have a bad reputation amongst the retail community but are absolutely essential to risk management. No serious discretionary trader can operate without them.
A stop loss is a resting order, left with the broker, to automatically close your position if it reaches a certain price. For a recap on the various order types visit this chapter.
The valid concern with stop losses is that disreputable brokers look for a concentration of stops and then, when the market is close, whipsaw the price through the stop levels so that the clients ‘stop out’ and sell to the broker at a low rate before the market naturally comes back higher. This is referred to as ‘stop hunting’.
This would be extremely immoral behaviour and the way to guard against it is to use a highly reputable top-tier broker in a well regulated region such as the UK.
Why are stop losses so important? Well, there is no other way to manage risk with certainty.
You should always have a pre-determined stop loss before you put on a trade. Not having one is a recipe for disaster: you will find yourself emotionally attached to the trade as it goes against you and it will be extremely hard to cut the loss. This is a well known behavioural bias that we’ll explore in a later chapter.
Learning to take a loss and move on rationally is a key lesson for new traders.
A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; it doesn’t care whether you make money or not.
Bruce Kovner, founder of the hedge fund Caxton Associates
There is an old saying amongst bank traders which is “losers average losers”.
It is tempting, having bought EURUSD and seeing it go lower, to buy more. Your average price will improve if you keep buying as it goes lower. If it was cheap before it must be a bargain now, right? Wrong.
Where does that end? Always have a pre-determined cut-off point which limits your risk. A level where you know the reason for the trade was proved ‘wrong’ ... and stick to it strictly. If you trade using discretion, use stops.

Picking a clear level

Where you leave your stop loss is key.
Typically traders will leave them at big technical levels such as recent highs or lows. For example if EURUSD is trading at 1.1250 and the recent month’s low is 1.1205 then leaving it just below at 1.1200 seems sensible.

If you were going long, just below the double bottom support zone seems like a sensible area to leave a stop
You want to give it a bit of breathing room as we know support zones often get challenged before the price rallies. This is because lots of traders identify the same zones. You won’t be the only one selling around 1.1200.
The “weak hands” who leave their sell stop order at exactly the level are likely to get taken out as the market tests the support. Those who leave it ten or fifteen pips below the level have more breathing room and will survive a quick test of the level before a resumed run-up.
Your timeframe and trading style clearly play a part. Here’s a candlestick chart (one candle is one day) for GBPUSD.

If you are putting on a trend-following trade you expect to hold for weeks then you need to have a stop loss that can withstand the daily noise. Look at the downtrend on the chart. There were plenty of days in which the price rallied 60 pips or more during the wider downtrend.
So having a really tight stop of, say, 25 pips that gets chopped up in noisy short-term moves is not going to work for this kind of trade. You need to use a wider stop and take a smaller position size, determined by the stop level.
There are several tools you can use to help you estimate what is a safe distance and we’ll look at those in the next section.
There are of course exceptions. For example, if you are doing range-break style trading you might have a really tight stop, set just below the previous range high.

Clearly then where you set stops will depend on your trading style as well as your holding horizons and the volatility of each instrument.
Here are some guidelines that can help:
  1. Use technical analysis to pick important levels (support, resistance, previous high/lows, moving averages etc.) as these provide clear exit and entry points on a trade.
  2. Ensure that the stop gives your trade enough room to breathe and reflects your timeframe and typical volatility of each pair. See next section.
  3. Always pick your stop level first. Then use a calculator to determine the appropriate lot size for the position, based on the % of your account balance you wish to risk on the trade.
So far we have talked about price-based stops. There is another sort which is more of a fundamental stop, used alongside - not instead of - price stops. If either breaks you’re out.
For example if you stop understanding why a product is going up or down and your fundamental thesis has been confirmed wrong, get out. For example, if you are long because you think the central bank is turning hawkish and AUDUSD is going to play catch up with rates … then you hear dovish noises from the central bank and the bond yields retrace lower and back in line with the currency - close your AUDUSD position. You already know your thesis was wrong. No need to give away more money to the market.

Coming up in part II

EDIT: part II here
Letting stops breathe
When to change a stop
Entering and exiting winning positions
Risk:reward ratios
Risk-adjusted returns

Coming up in part III

Squeezes and other risks
Market positioning
Bet correlation
Crap trades, timeouts and monthly limits

Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
submitted by getmrmarket to Forex [link] [comments]

Hershey: The quintessential Buy-And-Hold stock

When it comes to building a portfolio of SWAN (sleep well at night) stocks for the long term, HSY is a layup. In the world of stock investing, HSY is an ideal stock for beginners and seasoned investors alike because of its relatively simple business model and its ability to generate consistent returns. The business itself is very straightforward. HSY owns some very recognizable brands such as Reese's and KitKat (HSY owns the rights to KitKat in the US). On average they manage to sell more candy than the year before and with it also raise prices at a rate higher than inflation. As the bulk of their profits are earned in the US, their income statements (reported in USD) are an accurate reflection of what they actually earned. Compare that to other excellent companies like CL, KO etc which are a little harder to evaluate as they earn most of their profits overseas and you have to factor in currency fluctuations to get the real picture (their annual reports usually do a good job of it though). As Peter Lynch said, "Invest in what you know" and it's safe to say most Americans have consumed a Hershey's product at some point in their lives. Heck, you can even use the excuse of "market research" to buy some Reese's peanut butter cups the next time you go to the store.
Morningstar does a great job putting together the financials. Check with your local library to see if you can get access to Morningstar or Value Line. It's very useful to anyone looking to research individual stocks. While paying for a subscription yourself can cost several hundreds of dollars annually, most public libraries in the US give you access to one or both of those services for free. I'll try to sum up the key metrics shared in the link above (anyone can view that page even without a subscription)
Over the last 10 years
Net sales growth of ~4% (What's even more impressive is that most of it was achieved with volume increases and pricing power alone. Acquisitions had little to do with it)
EPS growth 8-10%
Div yield 2-3% (The payout ratio stays around 50% which means you also see dividend growth that's 8-10%)
They buy back roughly 1% of outstanding shares each year.
Just like that you get 11-13% CAGR (excluding PE compression/expansion). ROIC consistently in the high teens to 20+ (consumer staples usually average in the mid teens)
Operating margin has increased from 17.4% to 21% (PEP for example was around 15% last year)
To check the quality of the balance sheet, we look at the interest coverage ratio and Net Debt w.r.t Operating Profits. With capital light businesses like HSY, their ability to grow profits/free cash flow is a better indicator of financial strength than shareholder equity.
Interest coverage ratio (Interest expense/EBIT) ~ 10 (A double digit value for a consumer staples company is considered very safe)
Net Debt/EBIT ~ 2.5 (Anything less than 3 for a consumer staples company is considered very safe)

Stock Performance
HSY has historically fluctuated between a PE of 30 (overpriced) to a PE of 20 (a bargain). Every once in a blue moon the PE dips below 20 and the div yield approaches 3% at which point it becomes a screaming bargain. Barring a total economic collapse or horrendous mismanagement, it's very unlikely you'll see HSY trading at a PE of 15. I would say a PE of 23-25 is a fair price for a wonderful company.
As with any investment, the price you pay affects future returns. To get the real picture of returns generated by HSY, one needs to look at a full business cycle as consumer staples generally tend to outperform during a recession.
The absolute worst time to buy HSY in the last 15 years would have been in early 2005 when the PE was over 30 and the dividend yield was below 1.5%. A $10,000 investment with dividends reinvested in April 2005 would result in a present value of $34,863 with a CAGR of 8.49% (underperformed the SPY which returned $37,404 at 8.98%).
Buying it at its lows in early 2008 when the PE was under 20 and the dividend yield was over 3%, A $10,000 investment with dividends reinvested in January 2008 would result in a present value of $50,619 with a CAGR of 13.76% (outperformed the SPY which returned $28,659 at 8.73%).
Realistically speaking, for an investor who DCAs into this stock, their returns would've been somewhere between 8.5% - 13.8%. HSY is not a stock that you can expect 20%+ CAGR from, but with some luck compounding at 11-12% can build significant wealth (and potentially even outperform SPY).
As far as stocks go, HSY has to be one of the safest investments out there. The company is very conservatively run as the Hershey Trust owns roughly 40% of the company (but over 80% voting rights) and uses the dividends to fund a school for underprivileged children. The dividend is sacrosanct and HSY management is less likely to jeopardize the dividend in search of growth. Consumer staples as a business also face less disruption than other industries. Profits are consistent and the business requires fairly little reinvestment. Candy, alcohol and tobacco are centuries old and consumer tastes change fairly slowly which gives companies plenty of time to adapt. MSFT would go out of business if they were still selling the same OS they made in the 90s. HSY on the other hand is more or less still selling the same candy it was 30-40 years ago. That being said, past performance is no guarantee of future results. So let's address some realistic risks
- Ruining the quality of the product due to cost cuts in search of short term profits. Irene Rosenfeld at Mondelez did this to the Cadbury Creme Egg, which didn't bode well for the stock. A big part of the reason why I'm willing to pay a premium for a Reese's Peanut Butter Cup (over some generic brand candy) is because of the taste. HSY would lose their hard earned market share and goodwill in search of short term gains.
- Compromising the balance sheet for a bad acquisition. KHC is a good example of this. The 3G method involves slashing costs and levering up the balance sheet to acquire more businesses. Of course, if the acquisition doesn't pan out the stock gets punished accordingly. HSY has tried to build their international presence through acquisitions and it hasn't panned out well so far. Lately they've started diversifying into savory snacks. However, these tend to be pretty small in nature.
- A sugar tax to combat obesity. I don't think it'll hurt the underlying business too much, but HSY might start trading at a lower earnings multiple.
- E-commerce might affect HSY a bit. Outside of a few holidays the bulk of candy sales come from impulse purchases a consumer makes at the checkout counter at the store. It usually isn't something a person puts on their shopping list. I think with some proactive management, HSY can get around that by working with vendors to advertise their products while checking out online (much like how pizza joints upsell soda/breadsticks etc at checkout time).
If you've made it this far, I thank you for reading this post. I mostly wrote this for people who might be looking into buying individual stocks. I think HSY is an excellent stock for those looking for an above average dividend yield and dividend growth. Buffet often speaks fondly of his See's Candies investment. Much like his own investment, with some luck HSY's dividends alone can pay you back your initial investment and then some over an investing lifetime. As always, sticking with a low cost index fund is a sound strategy. Even a stock like HSY requires a few hours of work each year.
TLDR: HSY good. VTSAX good.
submitted by vipnasty to investing [link] [comments]

The TSLA 2K Play - A Trade Retrospective on Taking a $.21 Credit to Make $8.34 More

There are different ways to play TSLA to $2000 this past week. Here’s my thought process on how I approached trading the move up, without paying a debit (but uses margin).

The Entry

On Monday, August 17, besides TOS being absolutely atrocious, TSLA was lurching higher, and at around 11am PST or so, when it broke out to new highs, my thought was that there’s probably going to be a short squeeze again that takes us to $2000, the target that basically everyone was looking at. So, I looked to put on a play that captured something to that $2000 price level by Friday, Aug 21 expiration.
I began by looking at the 1980/2000 long call vertical. At the time, that spread cost $2.28 debit. So if I were to just put on that vertical, I would be paying $2.28 to make potentially $17.72. But I don’t really like paying large debits (large is anything above $.25 per spread), especially for these types of short-term directional bets.
So I looked for other ways to reduce the debit. Alongside the purchase of the long call vertical, I also sold the 1650/1625 put vertical, for $2.05 credit. The reason for placing the short strike of the put vertical at 1650 is that it was under Monday’s low, and the reason for the long strike at 1625 was that it made the put vertical wide enough to collect a decent credit. Now, the total debit on the trade became $2.28 (debit of 1980/2000 call vertical) - $2.05 (credit from 1650/1625 put vertical), or $.23.
$.23 was pretty cheap, and honestly I could’ve stopped there. But as I was thinking about the trade, I realized I didn’t really like how the short put verticals actually added more downside risk to the trade. So I was thinking that as early as I could, I would buy back that short put vertical once it drained in value, as TSLA continued running up with the momentum it had. And given the huge upside momentum that day, I thought that TSLA would probably gap and continue higher the following day, or at the very least just move sideways, which would drain the value of the short put vertical and allow me to buy it back for a low debit.
However, if I bought back the put vertical before it fully drained to 0, then my overall debit on the trade wouldn’t just cost $.23 anymore - it would cost more. So in the spirit of keeping the debit as low as possible, I needed to actually collect more credit from somewhere else, if I really didn’t want to pay for this trade. So, I decided that I was going to sell a call vertical above the 1980/2000 long call vertical. And a safe enough distance above the long call vertical, would be up at 2200, which gives me 200 points of runway above 2000. So I sold to open the 2200/2250 call vertical, for $1.27 credit.
I felt safe about selling the 2200/2250 call vertical, because for it to really be at risk, TSLA would first need to move above 2000, the psychological level, and by the time it starts to get near 2200, the 1980/2000 call vertical will be 20 points deep ITM, so I have 20 points of coverage. Of course there’s still 30 points of risk (given that the 2200/2250 short call vertical is 50 points wide), but time is on my side. Assuming that TSLA even gets near 2200 on the last day, given how little time left there is, that short call vertical would probably be trading for maybe $10 or so, and the 1980/2000 long call vertical in front of that short call vertical, would be deep ITM and worth $20, so I can just close the entire spread at a profit anyway.
So after selling that 2200/2250 call vertical, the trade went from $.23 debit to $1.04 credit (because $.23 - $1.27 = -$1.04, or $1.04 credit). Now I’m getting paid to play the breakout to TSLA 2K.

The Adjustment

On Tuesday, TSLA gapped up higher, and right off the bat, the short put verticals basically drained from $2.05 to $.83. I closed that out to remove any downside risk, so that if TSLA decides to reverse and tank, or hang out sideways and never make it to 2000, no harm no foul, I have the upside play on for a credit. Recall that $.23 (the debit of the initial entry) - $1.27 (the credit collected from the sale of the 2200/2250 call vertical) + $.83 (the debit of buying back the short put vertical) is -$0.21, which is a $.21 credit, after adjustments. And now, I just have to manage TSLA to the upside.
The result of this adjustment left me with a 4 legged spread where I’m long the 1980/2000 call vertical and short the 2200/2250 call vertical (this 4-legged spread is also called a condor, specifically a Call condor).
Throughout Tuesday and all of Wednesday, TSLA just moved sideways, and I was fine with that. Others who purchased naked long calls far OOM were worried about the premium drain, but I was fine knowing that I got paid to play the move to 2K, whether it happened or not. It completely did not matter if TSLA moved sideways or tanked, because it wouldn’t negatively impact the equity curve. Another reason why I actually liked TSLA hanging sideways is that it gives TSLA less of a chance to surge higher and run over that 2200/2250 short call vertical with the time left before expiry.

The Exit

Thursday was where the magic happened (for pretty much everyone). As we know at around 7:45 am PST, TSLA rallied from around $1900 to almost $2000, and the Call condor really started to expand in value. When TSLA was at $1990, the call condor spread expanded to $8.34.
Recall that the cost on this trade (after the closing the short put vertical) put my cost at a $.21 credit. Now, I can sell this condor out and pocket another $8.34. That’s pretty sweet. Getting paid $.21 to make another $8.34.
(At this moment, I noted what the legs were trading for. The long vertical of the condor was trading for $9.27, and the short vertical was actually trading for $.93. Recall that when I entered the short vertical on Monday, I actually collected a $1.27 credit on it. Now, even after the 150 point move up in TSLA, even after volatility expansion, that short vertical was still worth $.34 LESS - that’s the power of theta decay).
So at that point, I pretty much just closed out the entire position. I was pretty happy with essentially getting paid $.21 to make another $8.34 (in hindsight, I could’ve milked another $11.66 per spread, but that’s besides the point).


TL;DR - I collected a $.21 credit to make an additional $8.34, netting $8.55 profit per spread.
submitted by OptionsBrewers to options [link] [comments]

OSTK massive collapse coming… here’s the proof

OSTK massive collapse coming… here’s the proof

This is the highest probability short I've seen in years, aside from KODK at $50.
I can tell you with glass-eye autist accuracy where OSTK's sales growth is headed for the current (3Q) quarter and beyond.
Above is the simple quarterly sales growth (yoy) in yellow. Climbing quarterly sales growth equals climbing EV/Sales multiple (blue). Open and shut case, nothing to see here, right? Well, OSTK doesn’t report monthly sales, or we could more clearly see what’s happening with sales relative to this apparent sales growth hockey stick…. But, through combining a couple different sources of information, we can actually calculate monthly sales.
I did this, because I suspected I might find something interesting… and did I ever.
Step 1: Using available monthly industry data overlayed with monthly interpolation of OSTK quarterly sales data, we can calculate a very accurate picture of all pre-COVID monthly OSTK sales data. Of course, through the Apr-Jun COVID period things get wonky.
But that’s also where things get interesting… We can combine the aforementioned calculations with very helpful recent clues that mgmt unwittingly dropped for us to see what’s coming for OSTK sales.
Overstock.com mgmt:
April 30th (Q1 call): "April retail sales up over 120% YoY"
May 12th (Annual Stockholders Meeting): "QTD (4/1 - 5/12) retail sales up over 130% YoY"
June 10th (Investor Day): "Overstock Retail sales in April and May up over 120% YoY"
Side note: Did you catch that? Giving “April retail sales” on Apr 30th was a QTD update; and again, on May 12th, we got the same QTD update… But then for some reason, a full ten days into June, mgmt dropped the QTD and focused back only on April and May. Hmmm, I wonder why they dropped June off…
July 30th (Q2 call): ...\crickets* [no more updates on sales]*
Side note #2: Hmmm, now not only is a detailed QTD update missing, for some reason mgmt isn't telling us at all how sales are doing through the first month of the new qtr (July), as they did on the prior qtr call. Just wait, we’ll see why.
Aug 11th (press release): Just 12 days later, mgmt quickly pushes through a sale of 2 million shares of OSTK to the public for the generic “general corporate purposes”.
Side note #3: Hmmm again- it’s almost as if they know the current levels being speculated into their stock (then ~$95) are unsustainable, and they want to take advantage quick while they still can…
So, in those first incidents, OSTK's amateur-hour mgmt got so giddy when their declining, shithole business had a one-off dried turd bounce to brag about at the beginning of the pandemic lockdown that they lept with joy and let the kimono slip open.
Step 2: With pre-COVID monthly sales now at our disposal, as calculated in Step 1, and knowing for a fact that Apr'20 and May'20 sales growth was in the range of ~121-139%, we can now easily solve for Jun'20 sales, giving us an incredibly accurate picture of the real story and look-ahead for Overstock (not to mention the blatant drop-off in excitement via mgmt communication right around June, which you’ll understand in a moment). What does this reveal?
Mgmt’s short-sighted elation for those dizzy couple of months blinded them from seeing what was coming right around the corner, such that they should have kept their mouths shut to avoid embarrassment. It would have been nicely concealed in the consolidated quarterly sales figure, but with their comments above, we now know the truth: sales are dropping off HARD. Overstock’s market share is plummeting back to its steadily-declining ways.
Solid yellow line is actual, and to help with visualization, I included my estimates with the dashed yellow line:
A different picture starts to emerge… That hockey stick quarterly growth line in the first chart no longer matches with the EV/Sales chart’s initial hockey stick move when we look at it monthly. June is coming down hard- it looks more like the little dipper. And wait till you see OSTK’s industry market share trend using this new-found info (along with the publicly available industry-wide monthly sales data):
Look at that trend, which until now was concealed from public view due to the company’s consolidated quarterly reporting (top chart), and guess what that EV/Sales multiple chart (and stock chart) is going to look like once people realize this over the next 3-9 months?
I used a conservative 125% for Apr and May; if I’d assumed the more likely higher figure (~130%), combined with knowing the consolidated quarterly sales were up 109%, the June drop-off would look even more dramatic. As for my fwd estimates, keep in mind I gave them a typical Christmas bump for winter 2020 (see monthly sales chart), even though it's likely a lot of would-be Christmas home furnishings sales were pulled way forward because of spring lockdown temporary-work-from-homers. And note the gray ghost line in the mkt share chart- that's an extrapolation of the trend from the prior three years, pre-COVID anomaly. I even gave them a 25% long-term boost in market share (e.g. 1.20% vs. 0.95%) above the three-year trend, assuming they get a big "eyeballs" benefit from having had this temporary blip of lockdown sales. The estimates show, even with those generous assumptions, they're still going to see 2Q21 qtrly yoy sales of -50% or worse. Ouch.
The dashed line in the first chart shows that monthly projection in the form of quarterly (yoy) sales growth. Look at it again and think about matching that trajectory to the coming EV/Sales line, and hence, the stock chart.
Skip to the bottom for the rec, but if you want some honey mustard dipping sauce to go along with your short/put OSTK tendies, here it is:
Even on top of what you just saw above, this is an excellent short: Overstock is a market-share-losing company within the shitty industry of selling and delivering home furnishings. The industry deals with expensive shipping, logistics/returned/damaged-merch challenges, thin margins, and no barriers to entry. Remember how anytime AMZN announces it’s entering an industry, all the existing industry players get killed? Yeah, AMZN is competing here. Also some little guys named Walmart, Target, Wayfair, Houzz, and hundreds of others.
It gets better: they're also still distracted by and wasting scarce resources on a tech fad/bubble from a couple years ago that is unmentionable here. They even tried to sell the main retail business (98% of their sales!) to focus on the aforementioned fad; there were no buyers. Profitability has been non-existent since this company started… more than 20 years ago.
Even including last quarter’s COVID anomaly, if I’d plotted OSTK’s market share against just the e-commerce portion of the Home Furnishings industry, which is outgrowing the rest, not only would OSTK’s lockdown market share spike be flatter or non-existent, the long-term declining trend in its market share would be even more pronounced vs. its e-commerce peers.

The bottom line:

They report 3Q20 on ~Oct 29th; sales will def still be up yoy (the tail of the aforementioned pull-forward in home furnishing sales), but up way less than the +109% anomaly for 2Q20, and def down QoQ (this is for the LF-degens, see below). Hard to predict exactly how the market will react to just that qtr, and certainly depends on whether it’s trading at/above the highs of last week.
I'm short shares, because at the very least, the dried turd hits the fan when they put up the big negative yoy numbers in 2Q21. If the stock stays elevated for long enough and/or climbs higher in the meantime, I'm also backing up the truck on spring+ 2021 far-OTM Puts.
TLDR; OSTK sales and mkt share collapsing- long-term price target $15 (that's being generous).
High-functioning degenerates: Short shares, keep some powder dry for margin/DCA in case it shoots higher in the interim.
Common degenerates: far-OTM Puts, Mar '21 or later, as they come available.
Low-functioning degenerates: you know

submitted by dazer8200 to wallstreetbets [link] [comments]

Beware of etoro

I have a post that I explained how in etoro you don’t own the stock what so ever but u just own a cfd contract even if you don’t use margin
In this post I’ll explain a little bit about how etoro pays dividends on your stocks even tho you don’t own them and the dangers of trading on this kind of brokers
As I said in one of my replay , the underlying asset is a cfd contract (cfd contracts are decaying assets ) , a cfd contract doesn’t grant you any ownership over the real stock. Let me explain again .
In one of the legit brokers I use , they have this program that if you subscribe in , you give the broker the permission to lend the stocks in your portfolio to other traders who want to short sell the stock , like I have 5 apple stocks in my portfolio, if I’m signed up to the lending programme in this legit broker , then they can take my 5 apple stocks and lend them to someone who wants to short sell them .
1 - by law I’m not paid dividends on those stocks that they borrowed from me , but the borrower is paid the dividend cause he is the owner now as long as he is borrowing my stocks .
2- said broker will pay me 50% of the interest that he charges the short seller
3- the broker will still give me my dividends equivalent but in a form of capital gain ( etoro does pay u dividends equivalent from the commission that he charges on his platform , but not real dividends, )
This might sound complicated but again this is way a broker like etoro can tell their clients that they are buying the asset which in-fact they are not , it is legal but it is a form of word play , the real danger is if etoro goes bankrupt or for any reason doesn’t wna does his part of cfd contract deal then they tottaly can , they don’t do it upfront , but they can halt trading on a certain stock , just an example , a real legit broker will never halt trading on a stock unless the exchange itself halt trading and no one in the world can buy the stock , in etoro you will find that you can’t sell a certain position or open one , while at the same time other traders on other platforms are happily buying the same stock and selling it , this is one form of etoro saying “ I don’t want to keep up to my words that and exercise the cfd contract “
Somethings I said are a bit complicated but etoro banks on the low experience and innocency of their clients .
They actually blocked a popular investor called “harshsmith” because he was allegedly scalping stocks , and he have 2k copiers , so every 1000$ he made is 2 million $ that etoro had to pay to all his copiers , they might not allow scalping and that’s their law but keep in mind , if they are a legit broker they would be happily letting him scalp cause he and his 2k copiers are paying commission, and commission is how they make their profit as they say (big lie , they make it from your losses ) , then why block and profitable popular investor with a lot of copiers paying commission? Cause they are paying him his profit from their pocket and not the real market , I don’t mind them having their own non scalping law , but why have it if your legit ?! More scalping is more commission for the broker right ? Unless it is not a legit broker such as etoro
Hope this helps
submitted by noratooo to stocks [link] [comments]


This is actually my first DD I've ever posted so fuck you and forgive me if this doesn't work out for you.I've been looking at $PSTG for a while now and if my buying power didn't get so fucked from my decision to buy 8/7 UBER puts, I would have been already all over this play.
What had got me looking into Pure Storage was an unusual options activity alert. I've looked into this company before but didn't entirely understand what they do. Now after looking at them again, I'm still not exactly sure wtf they do....BUT I've gotten a better clue. Basically what I got from my research is that these guys fuck with "all-FLASH data storage solutions (enabling cloud solutions and other low-latency applications where tape/disk storage does not meet the needs)."......and ultimately what this all means to me is that these are the motherfuckers making those stupid fast laser money printers with the rocket ships attached. And that's something I'm interested in.
Now, here is the DailyDick you all degenerates have all been fiending for:
Fundamentally: PureStorage remains one of the few hardware companies in tech that is consistently growing double motherfucking digits, yet remains constantly cucked and neglected by investors (trading at 1.9x EV/Sales).
The 36 Months beta value for PSTG stock is at 1.62. 74% Buy Rating on RH. PSTG has a short float of 7.28% and public float of 243.36M with average trading volume of 3.16M shares. This was trading at around $18 on Wednesday 8/5 when I started writing this and as of right now, it's about $17.33 💸
The company has a market capitalization of ~$4.6 billion. In the last quarter, PSTG reported a ballin'-ass profit of $256.82 million. Pure Storage also saw revenues increase to $367.12 million. IMO, they should rename themselves PURE PROFIT. As of 04-2020, they got the cash monies flowing at $11.32 million . The company’s EBITDA came in at -$62.81 million which compares very fucking well among its dinosaur ass peers like HPE, Dell, IBM and NetApp. Pure Storage keeps taking market share from them old farts while growing the chad-like revenue #s of 33% in F2019, 21% in F2020, and 12% in F1Q21.
Chart of their financial growth since IPO in 2015:
At the end of last quarter, Pure Storage had cash, cash equivalents and marketable securities of $1.274B, compared with $1.299B as of Feb 2, 2020. The total Debt to Equity ratio for PSTG is recording at 0.64 and as of 8/6, Long term Debt to Equity ratio is at 0.64.Earning highlights from last quarter:
  • Revenue $367.1 million, up 12% year-over-year
  • Subscription Services revenue $120.2 million, up 37% year-over-year
  • GAAP gross margin 70.0%; non-GAAP gross margin 71.9%
  • GAAP operating loss $(84.9) million; non-GAAP operating loss $(5.4) million
  • Operating cash flow was $35.1 million, up $28.5 million year-over-year
  • Free cash flow was $11.3 million, up $29.0 million year-over-year
  • Total cash and investments of $1.3 billion
I bolded the Subscription Services Revenue bullet because to me that's a big deal. Pure Storage keeps them coming back with products such as Pure-as-a-service and Cloud Block Store and everybody knows that the recurring revenue model is best model. Big ass enterprises buy storage from vendors such as Pure Storage in the cloud to prevent vendor lock-in by the cloud providers. $$$ >!💰<
What are Pure Storage's other revenue drivers? Well these motherfuckers also have the products to address the growth of Cloud storage as well as the products to drive the growth of on-prem storage. For on-prem data center, Pure sells Flash Array to address block storage workloads (for databases and other mission-critical workloads) and FlashBlade for unstructured or file data workloads. On-prem storage revenue is mainly driven by legacy storage array replacement cycle.
So far, it seems like Pure Storage's obviously passionate and smart as fuck CEO has been spot on with his prediction of the flash storage sector's direction. Also seems like he's not camera shy either. Pure Storage's "Pure-as-a-Service and Cloud Block Store" unified subscription offerings is fo sho gaining momentum it. This shit is catching on with enterprises, both big and small. COVID-19 increased the acceleration of our digital transformation and the subsequent shift to the cloud. This increased demand in data-centers is going to drastically help Pure Storage's future top and bottom line. To top it off, NAND prices are recovering! (inferred from MU earnings). I expect Pure Storage to get some relief on the pricing front because of this which obviously in turn should improve revenues.
PSTG's numbers look pretty good to me so far but are they a good company overall? Even when scalping and trading, I don't like to fuck with overall shitty companies so I always check for basic things like customer satisfaction, analyst ratings/targets, broad-view industry trends, and hedge fund positioning.. that sort of thing.Pure Storage stands out in all of these fields for me.
Customers like Dominos Pizza and many others all seem to be happy AF with no issues. I can hardly even find a negative review online. Their products seems to be universally applauded. Gartner and other third party independent analysts also consider Pure Storage's product line-up some of the best in the industry.
The industry average for this sector is a piss poor 65.Pure Storage has a 2020 Net Promoter Score of 86
Enterprises are upgrading their existing storage infrastructure with newer and more modern data arrays, based on NAND flash. They do this because they're forced to keep up with the increasing speed of business inter-connectivity. This shit is the 5g revolution sort to speak of the corporate business world. Storage demands and needs aren't changing because of the pandemic and isn't changing in the future. The newer storage arrays are smaller, consume less power, are less noisy and do not generate excess heat in the data center and hence do not need to be cooled like the fat fucks at IBM need to be. Flash storage arrays in general are cheaper to operate and are extremely fast, speeding up applications. Pure Storage by all accounts makes the best storage arrays in the industry and continues to grow faster than the old school storage vendors like bitchass NetApp, Dell, HPE and IBM.
Pure Storage’s market share was 12.7% in C1Q20 and was up from 10.1% in the prior year - LIKE A PROPER HIGH GROWTH COMPANY.HPE, NetApp and IBM, like the losers they are, lost market share.According to blocksandfiles.com, AFA vendor market share sizes and shifts are paraphrased below:
  • “Dell EMC – 34.8% (calculated $766m) vs. 33.7% a year ago
  • NetApp – 19.3% at $425m vs. 26.7% a year ago
  • Pure Storage – 12.7% at calculated $279.7m vs. 10.1% a year ago
  • HPE – 8.4% – $185m vs. 10% a year ago"
Pure has been gaining marketshare almost every year since it began selling storage arrays in 2011. Pure Storage is consistently rated the highest for the completeness of vision as this chart shows:
Hedge Funds are on this like flies on shit.
Alliancebernstein L.P. grew its position in Pure Storage by 0.5% in the 4th quarter. Alliancebernstein L.P. now owns 104,390 shares of the technology company’s stock worth $1,786,000 after purchasing an additional 560 shares during the last quarter.
Legal & General Group Plc grew its position in Pure Storage by 0.3% in the 1st quarter. Legal & General Group Plc now owns 258,791 shares of the technology company’s stock worth $3,213,000 after purchasing an additional 753 shares during the last quarter.
Sunbelt Securities Inc. acquired a new stake in Pure Storage in the 4th quarter worth $4,106,000.
CENTRAL TRUST Co grew its position in Pure Storage by 79.8% in the 2nd quarter. CENTRAL TRUST Co now owns 3,226 shares of the technology company’s stock worth $56,000 after purchasing an additional 1,432 shares during the last quarter.
Northwestern Mutual Wealth Management Co. grew its position in Pure Storage by 203.0% in the 1st quarter. Northwestern Mutual Wealth Management Co. now owns 2,312 shares of the technology company’s stock worth $28,000 after purchasing an additional 1,549 shares during the last quarter.
Also, everybody's favorite wall street TSLA bull, Cathie Wood has been busy steadily purchasing big lots of PSTG for her ARK ETF funds for a while now...Even going as far as selling TSLA in order to re-balance!
Hedge funds and other institutional investors own 78.93% of the company’s stock and it seems like more are piling in every day.
Tons of active options, too -Pretty good volume lately with the spreads looking decent.
Over 5,000 September $20 Calls added just on 8/3 alone 🤔
Order flow helps my thesis here, showing a recent influx of big dick money moving into PSTG.
Google Search Trends showing uptick in interest: SPY420 baby
Robinhood Trends showing the YOLO is trending up
Increased job postings on LinkedIn all across the globe, further supporting the idea that Pure Cloud Adoption is looking strong.
Technically: This broke out through down-trend line a couple of days ago and as of right now looks to be pretty oversold. Looks like its found support at the 50 DMA and zooming out , the chart just looks like to me that it's coiling up for a big breakout.
These fucking shorts are going to get squeezed out hard. Potential short squeeze coming?
**So what's the play?**I'd like to see RSI break out of the downtrend and the divergence between price & momentum ends at some point. If/when RSI breaks out, I want to play this thing aggressively with bullish call calendar spreads....THAT IS IF I HAD SOME FUCKING BUYING POWER (FUCK YOU UBER)....Soooo really what I'll be doing is asking my wife's boyfriend sometime this weekend for a loan. That way on Monday I can buy some $PSTG 9/18 $17.5 & $20 calls at open and YOLO my saddness away for a week.God forbid, I might even buy of those things called "shares" I heard about from /investing if at all possible because in all honesty, I really do feel like this is a good company to hold in a long term growth portfolio.Pure Storage is NOT looking like your average KODK prostitute to flip or scalp and actually more like someone you'd bring home to your dads.
Pure Storage has a history of beating estimates and rocketing up. Over the last 20 quarters, the company beat revenue 17 quarters by an average of $4.9 million or about 3%. Out of the three times that the company missed on revenues, once was due to supply fuck-ups at one of its distributors and the other two times were due to Average Selling Prices declining faster than the company forecasted. Higher-than-expected ASP declines (due to NAND oversupply) is one of the risks of the storage business...but then again NAND prices look to be recovering now if MU's earning isn't fucking with us and telling us fibs. Big money is forecasting revenue to be around $396 million, essentially flat year-over-year, and EPS of a disrespectful ass penny....Fuck that conservative ass guidance! I think PSTG is going to blow that shit out the water. This chart shows Pure Storage’s past performance and we all know for sure that past performance = future results.....right?
My Prediction: After ER8/25, Pure Storage will hit new 52 week highs.$20.50 - $23.50 is my guess. Bold prediction, $27.50+ by the EOY and $50 by December 2021.
tldr: PSTG 9/18 $17.5 & $20 calls

edit: for those that bought into this, I'm in this with you!
Let's pray for a rebound next week. also, Fuck Cisco!
submitted by OnYourSide to wallstreetbets [link] [comments]

The comedy how I lost all my money in two hours

I'm trading for 11 months with pretty good success.
I never traded metals and forex before, just stocks. Today when gold started to consolidate at the last hour, I decided to scalp short it with a large amount, so I opened 100 lots. I haven't realised, in forex 100 (lots) doesn't mean "100 pcs", because I used to stocks and I went full retard without knowledge.
Seconds later, I realised it means 10 million dollars (1 lot = 100.000, and I had 500x leverage).
It moved up a bit and immediately I was down £4000. I scared as fuck and rather than closing the position quickly I hoped maybe I could close break even.
The market closed, and I waited for the Asian session. The gold popped like never before, and I lost all my life savings (£55000) in less than two hours. (including the 1-hour break between sessions).
If I count that I lost all my earnings as well, I lost around £85000.
Here is the margin call
IC Markets closed my position partially in every 1-2 minutes until I shut it myself at £35.
You know the rest of the story. I'm depressed, crying and shouting with myself.
Yes, I know I was stupid, thanks. I just wanted to share this with you.

Edit: WOW THANK YOU, GUYS! I haven't expected this, but you help me.
Many of you asked the same questions, I answer it here:
- I live in Europe, and we usually trade CFD's, not futures.
- Currency in GBP.
- As you can see, this account made on IC Markets. They not just allowing you a 500x leverage, it's the default.
- You can ask me why I went against the market. Because gold is way oversold? Because I expected institutions would sell their shares before gold is hitting £2000, leaving retails hanging there. Also, as I said, I wanted to scalp, not riding the gold all the way down. If I had a loss of £100, I would close the position immediately. But when I saw the £4000, my heart is stopped, and my brain just freezes.
- I went for a revenge trade with my last £2k, and I don't have to say what happened. I uninstalled the app, and I give up trading for a while.
- Again, in the past months, I was cautious, I lost a significant sum in March, but I managed to recover. Made consistent gains, always with SL. This is just an example of how easy is to fuck up everything you did.
- I didn't come here for some shiny digital medals. I can't tell about my losses to anyone who I know in real life. I would make a fool of myself.
- Anyone who attacking me that it is a scam. Well, think what you want. I feel terrible and the last thing is to answer all the messages saying "You fucking karma whore". I don't give a shit about karma.

submitted by fail0verflowf9 to wallstreetbets [link] [comments]

DDDD - Retail Investors, Bankruptcies, Dark Pools and Beauty Contests

DDDD - Retail Investors, Bankruptcies, Dark Pools and Beauty Contests
For this week's edition of DDDD (Data-Driven DD), we're going to look in-depth at some of the interesting things that have been doing on in the market over the past few weeks; I've had a lot more free time this week to write something new up, so you'll want to sit down and grab a cup of coffee for this because it will be a long one. We'll be looking into bankruptcies, how they work, and what some companies currently going through bankruptcies are doing. We'll also be looking at some data on retail and institutional investors, and take a closer look at how retail investors in particular are affecting the markets. Finally, we'll look at some data and magic markers to figure out what the market sentiment, the thing that's currently driving the market, looks like to help figure out if you should be buying calls or puts, as well as my personal strategy.
Disclaimer - This is not financial advice, and a lot of the content below is my personal opinion. In fact, the numbers, facts, or explanations presented below could be wrong and be made up. Don't buy random options because some person on the internet says so; look at what happened to all the SPY 220p 4/17 bag holders. Do your own research and come to your own conclusions on what you should do with your own money, and how levered you want to be based on your personal risk tolerance.

How Bankruptcies Work

First, what is a bankruptcy? In a broad sense, a bankruptcy is a legal process an individual or corporation (debtor) who owes money to some other entity (creditor) can use to seek relief from the debt owed to their creditors if they’re unable to pay back this debt. In the United States, they are defined by Title 11 of the United States Code, with 9 different Chapters that govern different processes of bankruptcies depending on the circumstances, and the entity declaring bankruptcy.
For most publicly traded companies, they have two options - Chapter 11 (Reorganization), and Chapter 7 (Liquidation). Let’s start with Chapter 11 since it’s the most common form of bankruptcy for them.
A Chapter 11 case begins with a petition to the local Bankruptcy court, usually voluntarily by the debtor, although sometimes it can also be initiated by the creditors involuntarily. Once the process has been initiated, the corporation may continue their regular operations, overseen by a trustee, but with certain restrictions on what can be done with their assets during the process without court approval. Once a company has declared bankruptcy, an automatic stay is invoked to all creditors to stop any attempts for them to collect on their debt.
The trustee would then appoint a Creditor’s Committee, consisting of the largest unsecured creditors to the company, which would represent the interests creditors in the bankruptcy case. The debtor will then have a 120 day exclusive right after the petition date to file a Plan of Reorganization, which details how the corporation’s assets will be reorganized after the bankruptcy which they think the creditors may agree to; this is usually some sort of restructuring of the capital structure such that the creditors will forgive the corporation’s debt in exchange for some or all of the re-organized entity’s equity, wiping out the existing stockholders. In general, there’s a capital structure pecking order on who gets first dibs on a company’s assets - secured creditors, unsecured senior bond holders, unsecured general bond holders, priority / preferred equity holders, and then finally common equity holders - these are the classes of claims on the company’s assets. After the exclusive period expires, the Creditor’s Committee or an individual creditor can themselves propose their own, possibly competing, Restructuring Plan, to the court.
A Restructuring Plan will also be accompanied by a Disclosure Statement, which will contain all the financial information about the bankrupt company’s state of affairs needed for creditors and equity holders to make an informed decision about how to proceed. The court will then hold a hearing to approve the Restructuring Plan and Disclosure Statement before the plan can be voted on by creditors and equity holders. In some cases, these are prepared and negotiated with creditors before bankruptcy is even declared to speed things up and have more favorable terms - a prepackaged bankruptcy.
Once the Restructuring Plan and Disclosure Statement receives court approval, the plan is voted on by the classes of impaired (i.e. debt will not be paid back) creditors to be confirmed. The legal requirement for a bankruptcy court to confirm a Restructuring Plan is to have at least one entire class of impaired creditors vote to accept the plan. A class of creditors is deemed to have accepted a Restructuring Plan when creditors that hold at least 2/3 of the dollar amount and at least half of the number of creditors vote to accept the plan. After another hearing, and listening to any potential objections to the proposed Restructuring Plan, such as other impaired classes that don't like the plan, the court may then confirm the plan, putting it to effect.
This is one potential ending to a Chapter 11 case. A case can also end with a conversion to a Chapter 7 (Liquidation) case, if one of the parties involved file a motion to do so for a cause that is deemed by the courts to be in the best interest of the creditors. In Chapter 7, the company ceases operating and a trustee is appointed to begin liquidating (i.e. selling) the company’s assets. The proceeds from the liquidation process are then paid out to creditors, with the most senior levels of the capital structure being paid out first, and the equity holders are usually left with nothing. Finally, a party can file a motion to dismiss the case for some cause deemed to be in the best interest of the creditors.

The Tale of Two Bankruptcies - WLL and HTZ

Hertz (HTZ) has come into news recently, with the stock surging up to $6, or 1500% off its lows, for no apparent fundamental reason, despite the fact that they’re currently in bankruptcy and their stock is likely worthless. We’ll get around to what might have caused this later, for now, we’ll go over what’s going on with Hertz in its bankruptcy proceedings. To get a clearer picture, let’s start with a stock that I’ve been following since April - Whiting Petroleum (WLL).
WLL is a stock I’ve covered pretty extensively, especially with it’s complete price dislocation between the implied value of the restructured company by their old, currently trading, stock being over 10x the implied value of the bonds, which are entitled to 97% of the new equity. Usually, capital structure arbitrage, a strategy to profit off this spread by going long on bonds and shorting the equity, prevents this, but retail investors have started pumping the stock a few days after WLL’s bankruptcy to “buy the dip” and make a quick buck. Institutions, seeing this irrational behavior, are probably avoiding touching at risk of being blown out by some unpredictable and irrational retail investor pump for no apparent reason. We’re now seeing this exact thing play out a few months later, but at a much larger scale with Hertz.
So, how is WLL's bankruptcy process going? For anyone curious, you can follow the court case in Stretto. Luckily for Whiting, they’ve entered into a prepackaged bankruptcy process and filed their case with a Restructuring Plan already in mind to be able to have existing equity holders receive a mere 3% of new equity to be distributed among them, with creditors receiving 97% of new equity. For the past few months, they’ve quickly gone through all the hearings and motions and now have a hearing to receive approval of the Disclosure Statement scheduled for June 22nd. This hearing has been pushed back a few times, so this may not be the actual date. Another pretty significant document was just filed by the Committee of Creditors on Friday - an objection to the Disclosure Statement’s approval. Among other arguments about omissions and errors the creditor’s found in the Disclosure Statement, the most significant thing here is that Litigation and Rejection Damage claims holders were treated in the same class as a bond holders, and hence would be receiving part of their class’ share of the 97% of new equity. The creditors claim that this was misleading as the Restructuring Plan originally led them to believe that the 97% would be distributed exclusively to bond holders, and the claims for Litigation and Rejection Damage would be paid in full and hence be unimpaired. This objection argues that the debtors did this gerrymandering to prevent the Litigation and Rejection Damage claims be represented as their own class and able to reject the Restructuring Plan, requiring either payment in full of the claims or existing equity holders not receiving 3% of new equity, and be completely wiped out to respect the capital structure. I’d recommend people read this document if they have time because whoever wrote this sounds legitimately salty on behalf of the bond holders; here’s some interesting excerpts:
Moreover, despite the holders of Litigation and Rejection Damage Claims being impaired, existing equity holders will still receive 3% of the reorganized company’s new equity, without having to contribute any new value. The only way for the Debtors to achieve this remarkable outcome was to engage in blatant classification gerrymandering. If the Debtors had classified the Litigation and Rejection Damage Claims separately from the Noteholder claims and the go-forward Trade Claims – as they should have – then presumably that class would reject a plan that provides Litigation and Rejection Damage Claims with a pro rata share of minority equity.
The Debtors have placed the Rejection Damage and Litigation Claims in the same class as Noteholder Claims to achieve a particular result, namely the disenfranchisement of the Rejection Damage and Litigation Claimants who, if separately classified, may likely vote to reject the Plan. In that event, the Debtor would be required to comply with the cramdown requirements, including compliance with the absolute priority rule, which in turn would require payment of those claims in full, or else old equity would not be entitled to receive 3% of the new equity. Without their inclusion in a consenting impaired class, the Debtors cannot give 3% of the reorganized equity to existing equity holders without such holders having to contribute any new value or without paying the holders of Litigation and Rejection Damage Claims in full.
The Committee submits that the Plan was not proposed in good faith. As discussed herein, the Debtors have proposed an unconfirmable Plan – flawed in various important respects. Under the circumstances discussed above, in the Committee’s view, the Debtors will not be able to demonstrate that they acted with “honesty and good intentions” and that the Plan’s results will not be consistent with the Bankruptcy Code’s goal of ratable distribution to creditors.
They’re even trying to have the court stop the debtor from paying the lawyers who wrote the restructuring agreement.
However, as discussed herein, the value and benefit of the Consenting Creditors’ agreements with the Debtors –set forth in the RSA– to the Estates is illusory, and authorizing the payment of the Consenting Creditor Professionals would be tantamount to approving the RSA, something this Court has stated that it refuses to do.20 The RSA -- which has not been approved by the Court, and indeed no such approval has been sought -- is the predicate for a defective Plan that was not proposed in good faith, and that gives existing equity holders an equity stake in the reorganized enterprise even though Litigation and Rejection Damage Creditors will (presumably) not be made whole under the Plan and the existing interest holders will not be contributing requisite new value.
As a disclaimer, I have absolutely zero knowledge nor experience in law, let alone bankruptcy law. However, from reading this document, if what the objection indicates to be true, could mean that we end up having the court force the Restructuring agreement to completely wipe out the current equity holders. Even worse, entering a prepackaged bankruptcy in bad faith, which the objection argues, might be grounds to convert the bankruptcy to Chapter 7; again, I’m no lawyer so I’m not sure if this is true, but this is my best understanding from my research.
So what’s going on with Hertz? Most analysts expect that based on Hertz’s current balance sheet, existing equity holders will most likely be completely wiped out in the restructuring. You can keep track of Hertz’s bankruptcy process here, but it looks like this is going to take a few months, with the first meeting of creditors scheduled for July 1. An interesting 8-K got filed today for HTZ, and it looks like they’re trying to throw a hail Mary for their case by taking advantage of dumb retail investors pumping up their stock. They’ve just been approved by the bankruptcy court to issue and sell up to $1B (double their current market cap) of new shares in the stock market. If they somehow pull this off, they might have enough money raised to dismiss the bankruptcy case and remain in business, or at very least pay off their creditors even more at the expense of Robinhood users.

The Rise of Retail Investors - An Update

A few weeks ago, I talked about data that suggested a sudden surge in retail investor money flooding the market, based on Google Trends and broker data. Although this wasn’t a big topic back when I wrote about it, it’s now one of the most popular topics in mainstream finance news, like CNBC, since it’s now the only rational explanation for the stock market to have pumped this far, and for bankrupt stocks like HTZ and WLL to have surges far above their pre-bankruptcy prices. Let’s look at some interesting Google Trends that I found that illustrates what retail investors are doing.

Google Trends - Margin Calls
Google Trends - Robinhood
Google Trends - What stock should I buy
Google Trends - How to day trade
Google Trends - Pattern Day Trader
Google Trends - Penny Stock
The conclusion that can be drawn from this data is that in the past two weeks, we are seeing a second wave of new retail investor interest, similar to the first influx we saw in March. In particular, these new retail investors seem to be particularly interested in day trading penny stocks, including bankrupt stocks. In fact, data from Citadel shows that penny stocks have surged on average 80% in the previous week.
Why Retail Investors Matter
A common question that’s usually brought up when retail investors are brought up is how much they really matter. The portfolio size of retail investors are extremely small compared to institutional investors. Anecdotally and historically, retail investors don’t move the market, outside of some select stocks like TSLA and cannabis stocks in the past few years. However when they do, shit gets crazy; the last time retail investors drove the stock market was in the dot com bubble. There’s a few papers that look into this with similar conclusions, I’ll go briefly into this one, which looks at almost 20 years of data to look for correlations between retail investor behavior and stock market movements. The conclusion was that behaviors of individual retail investors tend to be correlated and are not random and independent of each other. The aggregate effect of retail investors can then drive prices of equities far away from fundamentals (bubbles), which risk-averse smart money will then stay away from rather than try taking advantage of the mispricing (i.e. never short a bubble). The movement in the prices are typically short-term, and usually see some sort of reversal back to fundamentals in the long-term, for small (i.e. < $5000) trades. Apparently, the opposite is true for large trades; here’s an excerpt from the paper to explain.
Stocks recently sold by small traders perform poorly (−64 bps per month, t = −5.16), while stocks recently bought by small traders perform well (73 bps per month, t = 5.22). Note this return predictability represents a short-run continuation rather than reversal of returns; stocks with a high weekly proportion of buys perform well both in the week of strong buying and the subsequent week. This runs counter to the well-documented presence of short-term reversals in weekly returns.14,15 Portfolios based on the proportion of buys using large trades yield precisely the opposite result. Stocks bought by large traders perform poorly in the subsequent week (−36 bps per month, t = −3.96), while those sold perform well (42 bps per month, t = 3.57). We find a positive relationship between the weekly proportion of buyers initiated small trades in a stock and contemporaneous returns. Kaniel, Saar, and Titman (forthcoming) find retail investors to be contrarians over one-week horizons, tending to sell more than buy stocks with strong performance. Like us, they find that stocks bought by individual investors one week outperform the subsequent week. They suggest that individual investors profit in the short run by supplying liquidity to institutional investors whose aggressive trades drive prices away from fundamental value and benefiting when prices bounce back. Barber et al. (2005) document that individual investors can earn short term profits by supplying liquidity. This story is consistent with the one-week reversals we see in stocks bought and sold with large trades. Aggressive large purchases may drive prices temporarily too high while aggressive large sells drive them too low both leading to reversals the subsequent week.
Thus, using a one-week time horizon, following the trend can make you tendies for a few days, as long as you don’t play the game for too long, and end up being the bag holder when the music stops.

The Keynesian Beauty Contest

The economic basis for what’s going on in the stock market recently - retail investors driving up stocks, especially bankrupt stocks, past fundamental levels can be explained by the Keynesian Beauty Contest, a concept developed by Keynes himself to help rationalize price movements in the stock market, especially during the 1920s stock market bubble. A quote by him on the topic of this concept, that “the market can remain irrational longer than you can remain solvent”, is possibly the most famous finance quote of all time.
The idea is to imagine a fictional newspaper beauty contest that asks the reader to pick the six most attractive faces of 100 photos, and you win if you pick the most popular face. The naive strategy would be to pick the faces that you think are the most attractive. A smarter strategy is to figure out what the most common public perception of attractiveness would be, and to select based on that. Or better yet, figure out what most people believe is the most common public perception of what’s attractive. You end up having the winners not actually be the faces people think are the prettiest, but the average opinion of what people think the average opinion would be on the prettiest faces. Now, replace pretty faces with fundamental values, and you have the stock market.
What we have today is the extreme of this. We’re seeing a sudden influx of dumb retail money into the market, who don’t know or care about fundamentals, like trading penny stocks, and are buying beaten down stocks (i.e. “buy the dip”). The stocks that best fit all three of these are in fact companies that have just gone bankrupt, like HTZ and WLL. This slowly becomes a self-fulfilling prophecy, as people start seeing bankrupt stocks go up 100% in one day, they stop caring about what stocks have the best fundamentals and instead buy the stocks that people think will shoot up, which are apparently bankrupt stocks. Now, it gets to the point where even if a trader knows a stock is bankrupt, and understands what bankruptcy means, they’ll buy the stock regardless expecting it to skyrocket and hope that they’ll be able to sell the stock at a 100% profit in a few days to an even greater fool. The phenomenon is well known in finance, and it even has a name - The Greater Fool Theory. I wouldn’t be surprised if the next stock to go bankrupt now has their stock price go up 100% the next day because of this.

What is the smart money doing - DIX & GEX

Alright that’s enough talk about dumb money. What’s all the smart money (institutions) been doing all this time? For that, you’ll want to look at what’s been going on with dark pools. These are private exchanges for institutions to make trades. Why? Because if you’re about to buy a $1B block of SPY, you’re going to cause a sudden spike in prices on a normal, public exchange, and probably end up paying a much higher cost basis because of it. These off-exchange trades account for about one third of all stock volume. You can then use data of market maker activity in these dark pools to figure out what institutions have been doing, the most notable indicators being DIX by SqueezeMetrics.
Another metric they offer is GEX, or gamma exposure. The idea behind this is that market markets who sell option contracts, typically don’t want to (or can’t legally) take an actual position in the market; they can only provide liquidity. Hence, they have to hedge their exposure from the contracts they wrote by going long or short on the stocks they wrote contracts to. This is called delta-hedging, with delta representing exposure to the movement of a stock. With options, there’s gamma, which represents the change in delta as the stock price moves. So as stock prices move, the market maker needs to re-hedge their positions by buying or selling more shares to remain delta-neutral. GEX is a way to show the total exposure these market makers have to gamma from contracts to predict stock price movements based on what market makers must do to re-hedge their positions.
Now, let’s look at what these indicators have been doing the past week or so.
In the graph above, an increasing DIX means that institutions are buying stocks in the S&P500, and an increasing GEX means that market makers have increasing gamma exposure. The DIX whitepaper, it has shown that a high DIX is often correlated with increased near-term returns, and in the GEX whitepaper, it shows that a decreased GEX is correlated with increased volatility due to re-hedging. It looks like from last week’s crash, we had institutions buy the dip and add to their current positions. There was also a sudden drop in GEX, but it looks like it’s quickly recovered, and we’ll see volatility decreased next week. Overall, we’re getting bullish signals from institutional activity.

Bubbles and Market Sentiment

I’ve long held that the stock market and the economy has been in a decade-long bubble caused by liquidity pumping from the Fed. Recently, the bubble has been accelerated and it’s becoming clearer to people that we are in a bubble. Nevertheless, you shouldn’t short the bubble, but play along with it until it bursts. Bubbles are driven by pure sentiment, and this can be a great contrarian indicator to what stage of the bubble we are in. You want to be a bear when the market is overly greedy and a bull when the market is overly bearish. One of the best tools to measure this is the equity put / call ratio.
Put / Call Ratio
The put/call ratio dropped below 0.4 last week, something that’s almost never happened and has almost always been immediately followed up by a correction - which it did this time as well. A low put / call ratio is usually indicative of an overly-greedy market, and a contrarian indicator that a drop is imminent. However, right after the crash, the put/call ratio absolutely skyrocketed, closing right above 0.71 on Friday, above the mean put / call ratio for the entire rally since March’s lows. In other words, a ton of money has just been poured into SPY puts expecting to profit off of a downtrend. In fact, it’s possible that the Wednesday correction itself has been exasperated by delta hedging from SPY put writers. However, this sudden spike above the mean for put/call ratio is a contrarian indicator that we will now see a continued rally.


Magic Markers on SPY, Daily
With Technical Indicators, there’s a few things to note
  • 1D RSI on SPY was definitely overbought last week, and I should have taken this as a sign to GTFO from all my long positions. The correction has since brought it back down, and now SPY has even more room to go further up before it becomes overbought again
  • 1D MACD crossed over on Wednesday to bearish - a very strong bearish indicator, however 1W MACD is still bullish
  • For the bulls, there’s very little price levels above 300, with a small possible resistance at 313, which is the 79% fib retracement. SPY has never actually hit this price level, and has gapped up and down past this price. Below 300, there’s plenty of levels of support, especially between 274 and 293, which is the range where SPY consolidated and traded at for April and May. This means that a movement up will be met with very little resistance, while a movement down will be met with plenty of support
  • The candles above 313 form an island top pattern, a pretty rare and strong bearish indicator.
The first line of defense of the bulls is 300, which has historically been a key support / resistance level, and is also the 200D SMA. So far, this price level has held up as a solid support last week and is where all downwards price action in SPY stopped. Overall, there’s very mixed signals coming from technical indicators, although there’s more bearish signals than bullish.
My Strategy for Next Week
While technicals are pretty bearish, retail and institutional activity and market sentiment is indicating that the market still continue to rally. My strategy for next week will depend on whether or not the market opens above or below 300. I’m currently mostly holding long volatility positions, that I’ve started existing on Friday.
The Bullish case
If 300 proves to be a strong support level, I’ll start entering bullish positions, following my previous strategy of going long on weak sectors such as airlines, cruises, retail, and financials, once they break above the 24% retracement and exit at the 50% retracement. This is because there’s very little price levels and resistance above 300, so any movements above this level will be very parabolic up to ATHs, as we saw in the beginning of 2020 and again the past two weeks. If SPY moves parabolic, the biggest winners will likely be the weakest stocks since they have the most room to go up, with most of the strongest stocks already near or above their ATHs. During this time, I’ll be rolling over half of my profits to VIX calls of various expiry dates as a hedge, and in anticipation of any sort of rug pull for when this bubble does eventually pop.
The Bearish case
For me to start taking bearish positions, I’ll need to see SPY open below 300, re-test 300 and fail to break above it, proving it to be a resistance level. If this happens, I’ll start entering short positions against SPY to play the price levels. There’s a lot of price levels between 300 and 274, and we’d likely see a lot of consolidation instead of a big crash in this region, similar to the way up through this area. Key levels will be 300, 293, 285, 278, and finally 274, which is the levels I’d be entering and exiting my short positions in.
I’ve also been playing with WLL for the past few months, but that has been a losing trade - I forgot that a market can remain irrational longer than I can remain solvent. I’ll probably keep a small position on WLL puts in anticipation of the court hearing for the disclosure statement, but I’ve sold most of my existing positions.

Live Updates

As always, I'll be posting live thoughts related to my personal strategy here for people asking.
6/15 2AM - /ES looking like SPY is going to gap down tomorrow. Unless there's some overnight pump, we'll probably see a trading range of 293-300.
6/15 10AM - Exited any remaining long positions I've had and entered short positions on SPY @ 299.50, stop loss at 301. Bearish case looking like it's going to play out
6/15 10:15AM - Stopped out of 50% of my short positions @ 301. Will stop out of the rest @ 302. Hoping this wasn't a stop loss raid. Also closed out more VIX longer-dated (Sept / Oct) calls.
6/15 Noon - No longer holding any short positions. Gap down today might be a fake out, and 300 is starting to look like solid support again, and 1H MACD is crossing over, with 15M remaining bullish. Starting to slowly add to long positions throughout the day, starting with CCL, since technicals look nice on it. Also profit-took most of my VIX calls that I bought two weeks ago
6/15 2:30PM - Bounced up pretty hard from the 300 support - bull case looks pretty good, especially if today's 1D candle completely engulphs the Friday candle. Also sold another half of my remaining long-dated VIX calls - still holding on to a substantial amount (~10% of portfolio). Will start looking to re-buy them when VIX falls back below 30. Going long on DAL as well
6/15 11:30PM - /ES looking good hovering right above 310 right now. Not many price levels above 300 so it's hard to predict trading ranges since there's no price levels and SPY will just go parabolic above this level. Massive gap between 313 and 317. If /ES is able to get above 313, which is where the momentum is going to right now, we might see a massive gap up and open at 317 again. If it opens below 313, we might see the stock price fade like last week.
6/15 Noon - SPY filled some of the gap, but then broke below 313. 15M MACD is now bearish. We might see gains from today slowly fade, but hard to predict this since we don't have strong price levels. Will buy more longs near EOD if this happens. Still believe we'll be overall bullish this week. GE is looking good.
6/16 2PM - Getting worried about 313 acting as a solid resistance; we'll either probably gap up past it to 317 tomorrow, or we might go all the way back down to 300. Considering taking profit for some of my calls right now, since you'll usually want to sell into resistance. I might alternatively buy some 0DTE SPY puts as a hedge against my long positions. Will decide by 3:30 depending on what momentum looks like
6/16 3PM - Got some 1DTE SPY puts as a hedge against my long positions. We're either headed to 317 tomorrow or go down as low as 300. Going to not take the risk because I'm unsure which one it'll be. Also profit-took 25% of my long positions. Definitely seeing the 313 + gains fade scenario I mentioned yesterday
6/17 1:30AM - /ES still flat struggling to break through 213. If we don't break through by tomorrow I might sell all my longs. Norwegian announced some bad news AH about cancelling Sept cruises. If we move below $18.20 I'll probably sell all my remaining positions; luckily I took profit on CCL today so if options do go to shit, it'll be a relatively small loss or even small gain.
6/17 9:45AM - SPY not being able to break through 313/314 (79% retracement) is scaring me. Sold all my longs, and now sitting on cash. Not confident enough that we're actually going back down to 300, but no longer confident enough on the bullish story if we can't break 313 to hold positions
6/17 1PM - Holding cash and long-term VIX calls now. Some interesting things I've noticed
  1. 1H MACD will be testing a crossover by EOD
  2. Equity put/call ratio has plummeted. It's back down to 0.45, which is more than 1 S.D. below the mean. We reached all the way down to 0.4 last time. Will be keeping a close eye on this and start buying for VIX again + SPY puts we this continues falling tomorrow
6/17 3PM - Bought back some of my longer-dated VIX calls. Currently slightly bearish, but still uncertain, so most of my portfolio is cash right now.
6/17 3:50PM - SPY 15M MACD is now very bearish, and 1H is about to crossover. I'd give it a 50% chance we'll see it dump tomorrow, possibly towards 300 again. Entered into a very small position on NTM SPY puts, expiring Friday
6/18 10AM - 1H MACD is about to crossover. Unless we see a pump in the next hour or so, medium-term momentum will be bearish and we might see a dump later today or tomorrow.
6/18 12PM - Every MACD from 5M to 1D is now bearish, making me believe we'd even more likely see a drop today or tomorrow to 300. Bought short-dates June VIX calls. Stop loss for this and SPY puts @ 314 and 315
6/18 2PM - Something worth noting: opex is tomorrow and max pain is 310, which is the level we're gravitating towards right now. Also quad witching, so should expect some big market movements tomorrow as well. Might consider rolling my SPY puts forward 1 week since theoretically, this should cause us to gravitate towards 310 until 3PM on Friday.
6/18 3PM - Rolled my SPY puts forward 1W in case theory about max pain + quad witching end up having it's theoretical effect. Also GEX is really high coming towards options expiry tomorrow, meaning any significant price movements will be damped by MM hedging. Might not see significant price movements until quad witching hour tomorrow 3PM
6/18 10PM - DIX is very high right now, at 51%, which is very bullish. put/call ratio is still very low though. Very mixed signals. Will be holding positions until Monday or SPY 317 before reconsidering them.
6/18 2PM - No position changes. Coming into witching hour we're seeing increased volatility towards the downside. Looking good so far
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Some interesting news on value stocks in the stock market this week

It was a big week for companies beating expectations including a number of value stocks, trading on attractive valuations, reporting positive developments.
Hibbett Inc, the athletic apparel retailer, $HIBB (trailing PE 10.20) issued outstanding guidance with Q2 sales expected to rise 70%. Revenues have been boosted by pent up demand, competitor closures and stimulus money. Brick-and-mortar same-store sales are expected to grow 60% and online sales are forecast to jump 200%. Most significant for future growth is Hibbett has been winning new customers with 25% of brick-and-mortar sales and 40% of online sales coming from new shoppers.
Home builder PulteGroup $PHM (trailing PE 10.04) reported a remarkable rebound in demand as net new orders increased 50% in June. Home buyers, typically on higher incomes, appear to be less affected by COVID than the average and lower paid general public and, coupled with a “very limited supply of existing housing stock”, are driving a recovery in the housing market that are boosting home builders. PulteGroup’s CEO said the recovery in new home demand “was nothing short of outstanding.” New home construction jumped 17% and builder confidence rose to pre-pandemic levels after plunging in April.
PulteGroup’s smaller peer Meritage Homes $MTH (trailing PE 10.59) reported a much bigger increase with a 32% jump in orders in the second quarter, 78% increase in net earnings, 20% revenue growth and strong margin improvement. Steven J. Hilton, $MTH chairman and chief executive officer said “Based on our current forecast, we believe we can generate between $4.0-4.3 billion in home closing revenue for the year, including $1.0-1.1 billion for the third quarter, with home closing gross margins around 21% for the third quarter and full year. We estimate that will translate to approximately $8.75-9.25 of diluted earnings per share for the full year,”. Thats 36% higher than consensus forecasts.
Whirlpool $WHR (trailing PE 12.03) beat expectations with Q2 EPS of $2.15 (compared to estimates for 96 cents) and sales of $4 billion (estimates $3.6 billion). Both figures were down year-over-year, but the company pointed to “significant Covid-19 related disruptions.” CEO Marc Bitzer pointed to decisive actions and the resilence of Whirlpool’s business model while CFO Jim Peters highlighted the “solid cost takeout globally and strong cash flow improvement through disciplined working capital management,”.
Skechers $SKX (trailing PE 13.44) reported an earnings beat on Thursday and said “Despite the challenges of the second quarter, we are optimistic about the early-stage recovery we are seeing in much of our business, including... the explosive growth of our e-commerce channel,”. Remarkably the company was able to grow cash balances by more than $175 million during the quarter through working capital and operating expense management. As a result net cash accounts for about 20% of Skecher’s valuation.
Finally, with eBay (2020f PE 15.70) $EBAY due to report Q2 results on Monday, A Barron’s article said the stock was a buy with analysts (such as Edward Yruma at KeyBanc Capital Markets) expecting 23% to 26% growth as new sellers, consumer-facing improvements, and new payment options providing long-term tailwinds for the business. ” Yruma thinks eBay has regained lost market share during the Covid-19 pandemic and eventually should grow at rates exceeding overall e-commerce growth “as it both improves its consumer offering and takes advantage of stronger secular trends.” That means, primarily, that marketplace participants are increasingly realizing the importance of selling on multiple platforms. Trading on just 16x current year estimates, the valuation does look attractive.
This is not a recommendation to buy or sell. Stocks are not suitable for everyone. Some of the stocks mentioned are risky small cap and/or highly speculative. Please do your own research.
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The Great Unwinding: Why WSB Will Keep Losing Their Tendies

The Great Unwinding: Why WSB Will Keep Losing Their Tendies
I. The Death of Modern Portfolio Theory, The Loss of Risk Parity, & The Liquidity Crunch
SPY 1 Y1 Day
Modern portfolio theory has been based on the foundational idea for the past 3 decades that both equities and bonds are inversely correlated. However, as some people have realized, both stocks and bonds are both increasing in value and decreasing in value at the same time.[1] This approach to investing is used pretty much in everyone's 401K, target date retirement plans, or other forms of passive investing. If both bonds and equities are losing value, what will happen to firms implementing these strategies on a more generalized basis known as risk-parity? Firms such as Bridgewater, Bluecrest, and H2O assets have been blowing up. [2,3]
Liquidity has been drying up in the markets for the past two weeks.[4] The liquidity crisis has been in the making since the 2008 financial crisis, after the passage of Dodd-Frank and Basel III. Regulations intended to regulate the financial industry have instead created the one of the largest backstops to Fed intervention as the Fed tried to pump liquidity into the market through repo operations. What is a repo?
A repo is a secured loan contract that is collateralized by a security. A repo transaction facilitates the sale and future repurchase of the security that serves as collateral between the two parties: (1) the borrower who owns a security and seeks cash and (2) the lender who receives the security as collateral when lending the cash. The cash borrower sells securities to the cash lender with the agreement to repurchase them at the maturity date. Over the course of the transaction, the cash borrower retains the ownership of the security. On the maturity date, the borrower returns the cash with interest to the lender and the collateral is returned from the lender to the borrower.[5]
Banks like Bank of New York Mellon and JP Morgan Chase act as a clearing bank to provide this liquidity to other lenders through a triparty agreement.[6] In short, existing regulations make it unfavorable to take on additional repos due to capital reserve requirement ratios, creating a liquidity crunch.[7,8,9] What has the Fed done to address this in light of these facts?
In light of the shift to an ample reserves regime, the Board has reduced reserve requirement ratios to zero percent effective on March 26, the beginning of the next reserve maintenance period.[10]
II. Signs of Exhaustion & The Upcoming Bounce is a Trap, We Have Far More to Go
A simple indicator to use is the relative strength index (RSI) that a lot of WSB is familiar with. RSI is not the be all and end all. There's tons of indicators that also are indicating we are at a very oversold point.
SPY 1 Y1 Day RSI
Given selling waves, there are areas of key support and resistance. For reference, I have not changed key lines since my original charts except for the colors. You can check in my previous posts. 247.94 has been critically an area that has been contested many times, as seen in the figure below. For those that bought calls during the witching day, RIP my fellow autists. The rejection of 247.94 and the continued selling below 233.86 signals to me more downside, albeit, it's getting exhausted. Thus, I expect the next area in which we start rallying is 213.
SPY 10 Day/30 min
Another contrarian indicator for buying calls is that notable people in finance have also closed their shorts. These include Jeffery Gundlach, Kevin Muir, and Raoul Pal.[11,12,13]
III. The Dollar, Gold, and Oil
As previously stated, cash is being hoarded by not only primary banks, but central banks around the world. This in turn has created a boom in the dollar's strength, despite limitless injections of cash (if you think 1 trillion of Repo is the ceiling, think again) by the Fed.
Despite being in a deflationary environment, the DXY has not achieved such levels since 2003. Given the dollar shortage around the world, it is not inconceivable that we reach levels of around 105-107. For disclosure, I have taken a long position in UUP. However, with all parabolic moves, they end in a large drop. To summarize, the Fed needs to take action on its own currency due to the havoc it's causing globally, and will need to crush the value of the dollar, which will likely coincide with the time that we near 180.
If we are indeed headed towards 180, then gold will keep selling off. WSB literally screams bloody guhhhhhh when gold sells off. However, gold has been having an amazing run and has broken out of its long term channel. In times of distress and with margin calls, heavy selling of equities selling off of gold in order to raise cash. As previously noted, in this deflationary environment, everything is selling off from stocks, to bonds, to gold.
/GC Futures Contracts 5 Y1 Wk
What about oil? Given the fall out of the risk parity structure, I'm no longer using TLT inflows/outflows as an indicator. I've realized that energy is the economy. Closely following commodities such as light crude which follow supply and demand more closely have provided a much better leading indicator as to what will happen in equities. Given that, oil will also most likely hit a relief rally. But ultimately, we have seen it reach as low $19/barrel during intraday trading.
/CL Futures Contracts 1 Y1 D
IV. The Next 5 Years
In short, the recovery from this deflationary environment will take years to recover from. The trend down will not be without large bumps. We cannot compare this on the scale of the 2008 financial crisis. This is on the order of 1929. Once we hit near 180, the Fed crushes the dollar, we are in a high likelihood of hitting increased inflation, or stagflation. At this point the Fed will be backed into a corner and forced to raise rates. My targets for gold are around 1250-1300. It may possibly go near to 1000. Oil could conceivably go as low as $15-17/barrel, so don't go all in on the recovery bounce. No matter what, the current rise in gold will be a trap. The continued selling in the S&P is a trap, will bounce, forming another trap, before continuing our painful downtrend.
I haven't even mentioned coronavirus and unemployment until now. I've stated previously we are on track to hit around at least 10,000 coronavirus cases by the end of this month. It's looking closer to now 20-30,000. Next month we are looking to at least 100,000 by the end of the April. We might hit 1,000,000 by May or June.
Comparison of the 2020 Decline to 1929
Chart courtesy of Moon_buzz
tl;dr We're going to have a major reflexive rally starting around 213, all the way back to at least to 250, and possibly 270. WSB is going to lose their minds holding their puts, and then load up on calls, declaring we've reached a bottom in the stock market. The next move will be put in place for the next leg down to 182, where certain actors will steal all your tendies on the way down. Also Monday might be another circuit breaker.
tl;dr of tl;dr Big bounce incoming. Bear trap starting 213. Then bull trap up around 250-270. We're going down to around 182.
tl;dr of tl;dr of tl;dr WSB will be screwed both left and right before they can say guh.
Hint: If you want to get a Bloomberg article for free, hit esc repeatedly before the popup appears. If it doesn't work, refresh the article, and keep hitting esc.
Remember, do not dance. We are on the cusp of a generational change. Use the money you earn to protect yourselves and others. Financial literacy and knowledge is the key to empowerment and self-change.
Some good DD posts:
u/bigd0g111 -https://www.reddit.com/wallstreetbets/comments/fmshcv/when_market_bounce_inevitably_comesdont_scream/
u/scarvesandsuspenders - https://www.reddit.com/wallstreetbets/comments/fmzu51/incoming_bounce_vix_puts/

Update 1 3/22/2020 - Limit down 3 minutes of futures. Likely hit -7% circuit breaker on the cash open on Monday at 213 as stated previously.
Do not think we will hit the 2nd circuit breaker at 199.06. Thinking we bounce, not too much, but stabilize at least around 202.97.
Update 2 3/23/20 9:08 - Watching the vote before making any moves.
9:40 - sold 25% of my SPY puts and 50% of my VXX calls
9:45 - sold another 50% of SPY puts
9:50 - just holding 25% SPY puts now and waiting for the vote/other developments
11:50 - Selling all puts.
Starting my long position.
11:55 - Sold USO puts.
12:00 - Purchased VXX puts to vega hedge.
2:45 - Might sell calls EOD. Looks like a lot of positioning for another leg down before going back up.
It's pretty common to shake things out in order to make people to sell positions. Just FYI, I do intraday trading. If you can't, just wait for EOD for the next positioning.
3:05 - Seeing a massive short on gold. Large amounts of calls on treasuries. And extremely large positioning for more shorts on SPY/SPX.
Will flip into puts.
Lot of people keep DM'ing me. I'm only going to do this once.

That said, I'm going back into puts. Just goes to show how tricky the game is.
3:45 - As more shorts cover, going to sell the calls and then flip into puts around the last few min of close.
Hope you guys made some money on the cover and got some puts. I'll write a short update later explaining how they set up tomorrow, especially with the VIX dropping so much.
3/24/20 - So the rally begins. Unfortunately misread the options volume. The clearest signal was the VIX dropping the past few days even though we kept swinging lower, which suggested that large gap downs were mostly over and the rally is getting started.
Going to hold my puts since they are longer dated. Going to get a few short term calls to ride this wave.
10:20 - VIX still falling, possibility of a major short squeeze coming in if SPY breaks out over 238-239.
10:45 - Opened a small GLD short, late April expiration.
10:50 - Sold calls, just waiting, not sure if we break 238.
If we go above 240, going back into calls. See room going to 247 or 269. Otherwise, going to start adding to my puts.
11:10 - Averaging a little on my puts here. Again, difficult to time the entries. Do not recommend going all in at a single time. Still watching around 240 closely.
11:50 - Looks like it's closing. Still going to wait a little bit.
12:10 - Averaged down more puts. Have a little powder left, we'll see what happens for the rest of today and tomorrow.
2:40 - Closed positions, sitting on cash. Waiting to see what EOD holds. Really hard trading days.
3:00 - Last update. What I'm trying to do here posting some thoughts is for you guys to take a look at things and make some hypotheses before trading. Getting a lot of comments and replies complaining. If you're tailing, yes there is risk involved. I've mentioned sizing appropriately, and locking in profits. Those will help you get consistent gains.
Bounced off 10 year trendline at around 246, pretty close to 247. Unless we break through that the rally is over. Given that, could still see us going to 270.
3/25/20 - I wouldn't read too much into the early moves. Be careful of the shakeouts.
Still long. Price target, 269. When does the month end? Why is that important?
12:45 - out calls.
12:50 - adding a tranche of SPY puts. Adding GLD puts.
1:00 est - saving rest of my dry powder to average if we still continue to 270. Think we drop off a cliff after the end of the quarter.
Just a little humor... hedge funds and other market makers right now.
2:00pm - Keep an eye on TLT and VXX...
3:50pm - Retrace to the 10 yr trend line. Question is if we continue going down or bounce. So I'm going to explain again, haven't changed these lines. Check the charts from earlier.
3/26/20 - Another retest of the 10 yr trendline. If it can go over and hold, can see us moving higher.
9:30 - Probably going to buy calls close to the open. Not too sure, seems like another trap setting up. Might instead load up on more puts later today.
In terms of unemployment, was expecting close to double. Data doesn't seem to line up. That's why we're bouncing. California reported 1 million yesterday alone, and unemployment estimates were 1.6 million? Sure.
Waiting a little to see the price action first.
Treasuries increasing and oil going down?
9:47 - Added more to GLD puts.
10:11 - Adding more SPY puts and IWM puts.
10:21 - Adding more puts.
11:37 - Relax guys, this move has been expected. Take care of yourselves. Eat something, take a walk. Play some video games. Don't stare at a chart all day.
If you have some family or close friends, advise them not to buy into this rally. I've had my immediate family cash out or switch today into Treasury bonds/TIPS.
2:55pm - https://youtu.be/S74rvpc6W60?t=9
3:12pm - Hedge funds and their algos right now https://www.youtube.com/watch?v=ZF_nUm982vI
4:00pm - Don't doubt your vibe.
For those that keep asking about my vibe... yes, we could hit 270. I literally said we could hit 270 when we were at 218. There was a lot of doubt. Just sort by best and look at the comments. Can we go to 180 from 270? Yes. I mentioned that EOM is important.
Here's another prediction. VIX will hit ATH again.
2:55pm EST - For DM's chat is not working now. Will try to get back later tonight.

Stream today for those who missed it, 2:20-4:25 - https://www.twitch.tv/videos/576598992
Thanks again to WallStreetBooyah and all the others for making this possible.

9:10pm EST Twitter handles (updated) https://www.reddit.com/wallstreetbets/comments/fmhz1p/the_great_unwinding_why_wsb_will_keep_losing/floyrbf/?context=3, thanks blind_guy
Not an exhaustive list. Just to get started. Follow the people they follow.
Dark pool and gamma exposure - https://squeezemetrics.com/monitodix
Wyckoff - https://school.stockcharts.com/doku.php?id=market_analysis:the_wyckoff_method
Investopedia for a lot. Also links above in my post.

lol... love you guys. Please be super respectful on FinTwit. These guys are incredibly helpful and intelligent, and could easily just stop posting content.
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Understanding Short Selling  by Wall Street Survivor ... How to Margin Trade (Long or Short) on Kraken Exchange! Short Video - Short Selling and Margin Short Selling on Margin (Bán khống trên số tiền ký quỹ) How short selling works

Margin trading and short selling were banned in China until March 2010, when a list of 90 stocks was selected as pilot stocks to lift the leverage ban. Since then, during our sample period, the list of eligible stocks has been extended five times to around 950 stocks. Thus, relevant stocks experienced a positive shock in the level of leverage Sarah decides to short 1,000 shares of the stock at its current price. To start, Sarah's got to take a couple more steps than just visiting her online trading platform and selecting short sell. With short selling, investors require a non-registered margin account rather than a typical investment cash account. Short selling is the sale of a security that is not owned by the seller or that the seller has borrowed. Short selling is motivated by the belief that a security's price will decline, enabling it Short selling is an advanced trading strategy involving potentially unlimited risks, and must be done in a margin account. Margin trading increases your level of market risk. For more information please refer to your account agreement and the Margin Risk Disclosure Statement. The trading market consists of equities market without owing any shares of stock. The short selling Zerodha involves selling stock that is not owned by you and involves buying those stocks when the price drops.. However, thinking in the way actually does not offer much profit, but the concept is being operative in the trading world.

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Understanding Short Selling by Wall Street Survivor ...

How to Margin Trade (Long or Short) on Kraken Exchange! Credible Crypto. ... How Short Selling Works - Duration: ... TOP 5 Day Trading Beginner Mistakes to AVOID - Duration: ... What is short selling? Most people think of investing as buying a stock (or other asset) and making money when its price goes up - but it’s also possible to ... 📌TIMESTAMPS! 1:33 Margin Level Recap 4:00 Short Sell Trade 9:04 Close/Settle Short Position 15:45 Execute your margin trade the "automatic" way 17:35 Positio... We’ll cover a bit about why going short is an essential tool for any cryptocurrency trader, what going short really is and how it works (more on margin calls, leverage, and liquidation coming in ... ⚡️ Welcome Welcome Group "Margin Trading" Gather a Closed group, and while out instructions and deals ===== Ký Advertising sign: BingBon: https://bit.ly/bingbon0 (Transactional copy floor ...