On top of that, it's not even a P&D group, people there are just trading against each other, you have both bears and bulls and thetas. There's never been a concerted effort to pump SPCE for instance.
Someone's just bought a $1000 call option on a stock that's currently $400? Automated trading systems will probably raise alerts on that stock since someone must know something for that to happen.
This appeared to happen when WSB were meme-ing on TSLA and a whole bunch of them bought $1000 call options when it was $400. Shortly afterwards TSLA skyrocketed in value.
People buy far out-of-the-money calls all the time, they're actually overvalued compared to fair returns. Setting the strike price that high just makes the option more and more of a lotto ticket: the vast majority of the time it's just going to expire worthless, but that small chance of being "in the money" when the option expires is your jackpot. A fitting choice for that whole WSB attitude.
In other words, demand for volatility via buying options can actually beget volatility in the movement of the stock price.
The trading system and its operators deserve whatever fate results from such a decision.
Not an expert but I'd be surprised if one trade like that triggered anything, could easily be a hedge.
Regardless, option trading tends to have human traders behind the wheel, and they're trained to figure out what's going on (trading options is similar to playing poker).
It's still at $780, so whether they were the effect or not it's held some permanence.
Unlikely. Automatic trading systems will not see their trades. Most (if not all) of WSB trades are done through the Robinhood app. Robinhood users are not charged transaction fees executing their trades, they can do this because they sell their flow (these orders) to HFT firms. HFT firms are willing to pay for Robinhood's flow (trades) because the average user is not an insider, has no idea what he's doing and is most likely gambling. If you're an HFT you'd rather trade with a common person, then an informed investor because maybe they know something you don't.
https://themarketear.com/posts/cqKGhoO98L/image/0
Pair that with poor price discovery: few actively managed funds; shit-ton of indexation (both explicit and closet). We may, and I repeat - may, see some interesting action here. Legends like Michale Burry or David Einhorn often complain about price discovery. Which is even more strange given the fact that the number of publicly traded companies in the US was cut down in half since 1996.
The question is "what effect does have?", not "does option trading effect the market?"
Day trading on your smartphone was not really a "thing" pre-Robinhood, and then they came along with commission free trades on both stocks and options.
So not only did they make it easier to day trade given no explicit fees for doing so, they also mainstreamed options trading, which is actually what most people in WSB do almost exclusively, and really the only way you can 10x-100x your money in a few months (or in less time).
IMX trails what happens in the markets. Retail investors don't create trends, they follow them off the cliff.
https://www.reddit.com/r/wallstreetbets/comments/ef0xhj/eli5...
P.S: Stonks only go up! ... I mean down (as of late).
imho, robinhood gets the most out of it. the number if issues this reddit sub has found with RH is mind-boggling
I was imagining that some big money quant fund had written bots and scrapers to use r/wsb as an algorithmic amplifier since over time they can make money on tiny shifts. Or maybe that would just make a good movie plot.
> We have discussed this theory before, during Tesla’s wild rally, and I conceded that they’ve got a point. Not a perpetual motion machine, but a motion machine, sure. The machine runs on leverage. If you have $100, you can buy $100 worth of stock, and the stock will go up a little; your trade will be self-reinforcing. If you get a margin loan, you can buy $200 worth of stock, and the stock will go up a bit more; your trade will be a bit more self-reinforcing. On the other hand if the stock then goes down a bit, your broker might call more margin from you, and if you can’t put up more money the broker will liquidate your whole position and the stock will go down. Trading on margin magnifies swings
Or what he originally wrote:
> the call options should have a volatility-increasing effect: Dealers who sell call options have to buy stock to hedge, and they have to buy more stock to adjust their hedge as the stock goes up (and sell as it goes down), meaning that speculators who buy Tesla call options to bet on the price and volatility going up also to some extent cause that to happen. To some extent! “LOL BLOOMBERG ADMITTING THAT AS LONG AS WE BUY THE CALLS THE STOCKS WILL GO UP BECAUSE OF HEDGING ALGORITHMS,” was Reddit’s takeaway from Kawa’s article, and I would not personally go that far.
How do you get from Matt Levine saying "this cannot perpetuate an upward movement" and "other people are taking this to mean that the stocks will keep going up as long as we keep buying the calls, but those people are wrong" to "Matt Levine says this perpetuates an upward movement"? He made a direct, first-person statement of what he thinks, and you've inverted it.
Options are derivatives of the security so any influence on share price will be a very diluted reaction based on risk and general market sentiment which I don't think a few thousand users are capable of. They would need to carry serious notional volume (in the 9+ figures) or major hedging risk with their brokers for any price action to occur, and even that might not last beyond days or hours.
So...a second order derivative manipulation at best.
Theta gang just means someone who sells options and expects that option to expire worthless, thereby profiting from the slow decay of option value due to theta. It's a legitimate strategy in the options world for professionals, not just for WSB autists. Here's a random example of a finance professional running this strategy successfully in his personal account: https://earlyretirementnow.com/2019/03/27/passive-income-thr...
Disclaimer: I don't know this person, nor do I recommend copying his strategy if you don't know the options greeks; actually the amount of money you would need to execute his strategy would probably make most options beginner uncomfortable anyways.
Some people sell these contracts on the probability that they will expire worthless and they keep all the money that someone else paid for them.
On a naive level you could just think of the Reddit group simply spooking the herd to start going in a certain way. All fun and games.
In reality it's likely the same few individuals doing the triggering making it an effective pump and dump scheme. Someone has to lose out when stocks move with no underlying justification.
1) /r/wallstreetbets and /r/wsb are two different subreddits. /r/wsb are for those that got banned from wallstreetbets
2) When wallstreetbets first started it wasn’t as crazy as it was today. There were some aggressive gamblers but there was opportunity for real due diligence and decent conversation. I contributed more than a few posts back in the early days. After it got crazy I unsubscribed until recently. Robinhood and the options trading and margin trading has really made things crazy. I see absurd bets made on there that make me both jealous and glad I’m not 25 with too much money to gamble.
3) those who say it’s likely too small to make a difference go check out the timing of the Lumber Liquidator due diligence post and the subsequent jump in price. I don’t know what the difference is between pump and dump vs posting due diligence but there definitely was a correlation. I wish I still had my data account because I would love to see the exact correlation of options trading and stock trading to the posts.
4) the memes and gifs are hilarious if not vulgar and bigoted. But if you have thick skin some of the memes are very well made.
> Tips - Report a potential violation of the securities laws directly to enforcement@sec.gov. Please do not use this email box for general comments or questions.
The SEC exists to protect the people exchanging securities.
It involved a lot of web scraping Yahoo with Perl (specifically LWP) and then lots of analysis by humans with some help from automated tools. For example, if you plotted a histogram of each user's posts, you could clearly see when someone was at work (posted between 9am and 5pm with a drop off around noon) and at home (posts between 6pm and 2am with a peak around 10pm).
The analysts would often find a piece of information from a 2 year old post, e.g. 'Go Cubs!', and a one week old post "I just attended my 20 year UofI reunion" and quickly be able to narrow down on who the person might be. Coupled with Lexis Nexis (which was just coming online at the time), we routinely narrowed down individuals to just one possible person.
Given that this was done back in the early 2000's using ancient servers (by today's standards) and basic statistical analysis with a lot of legwork, I would be surprised if there weren't companies also trying to find the people on Reddit today.
The Reddit comments usually aren't long enough to be meaningful, and I think that there are now organised p&d teams, so that level of investigation isn't very useful anymore
The Yahoo comments usually weren't that long either. The key point was that while each individual post gave you, on average, only a little but of information, in the aggregate you got enough to narrow down who the source was to within 5 people. From there, you could usually narrow it down using "legwork" etc.
Lexis Nexis has been around a lot longer than that. By "online" do you mean web accessible?
And the best part with P&D is that most everyone involved knew what was happening, but they played along hoping to get out before it peaks.
And it was very real. You could get the emails pimping whatever the OTC stock was and watch as it pumped up, pumped up, pumped up, and then crashed to nothing.
We're writing about this speculative culture emanating from WSB and 4chan in a daily email. We send out a list of the most mentioned stocks, and do a longer form commentary, with quotes from those communities a few times a week.
It's just an email now, but we're going to roll out options analysis and a few other goodies in the coming weeks :)
(The language can be a bit crude, so this might not be for you, if that is a concern.)
1- Upon sign up, the confirmation email says: For questions about this list, please contact: coand@gmail.com - I'd suggest you use the @topstonks.com address - it really looks more professional.
2- The page focuses too much on the features and not the benefit. I think people are less interested in 'data' 'analysis' and seeing a sample and more on what's in it for them. Maybe run a regression analysis and tout the benefits. If most of the stocks tank, then tout how you can fade the public, or if they tend to go up, again, mention that.
3- Why is it beta? What's beta about it? It's OK to mention it's in beta, but then you need to make it clear what's the long term vision or why you say beta. Personally, I'd get rid of that part.
In any case, this is an excellent idea that could easily branch out in a lot of directions. I'm subscribed and will look forward to seeing what you develop this into. :)
The BUZZ ETF is traded and invests based on how often particular stocks get mentioned in social media and new reporting. I'm sure they're monitoring r/WSB as well.
Disclosure, do not hold or have any affiliation with Buzz Index products. Just heard about it before.
(This is a personal pet peeve since I have a short email address that tons of people sometimes think belongs to them, and get a huge amount of mail intended for other people.)
- Even if you are in the US, there is still some liability risk of EU recipients. Not super clear, but better safe than sorry.
- Double Opt-in can improve email deliverability. Clutter folders are starting to detect and filter out emails with low engagements. An opt in email forces an engagement, and weeds out bad recipients.
- It's a better all-around experience.
I could be a minor and they wouldn't have a clue.
I didn't realise that Bloomberg blocks private mode too. Messages like this assume that tracking is the default and make sure that we keep losing privacy. I really dislike this trend.
I suspect that if somebody were to invent a good anonymous micropayment system they'd be happy to adopt that instead. They just want to get paid; your privacy just happens to be the currency that's easiest to come by.
They'd also be guilty of of violating AML, KYC, and other money transfer regulations. It would get shut down faster than you can say "Wait! Don't do that!"
Win-win!
Baitblock has tracking resistance that also deletes first party cookies/other tracking mechanisms when it detects that you're not logged into a website.
I don't think it's about throwing away privacy for readers using reader mode, it's a matter of wanting to be compensated through the subscription model. Between the two, getting compensated won out.
This userscript fixes that. Same protection is used in several other mainstream media websites. I have found one website which is broken by this userscript though, so I don't recommend using it with wildcard for all websites instead of the few which use this protection.
If I want to force them to either fall in line with the GDPR or get out of Europe, I need to find my local responsible agency, send them an email, and pray that they have the will and resources to act on it.
It was so frustrating in the earlier days of WSB to want to talk about options. The rules were that "it was the place to talk about VIX and speculative options trades" but it was just full of trash about biomed penny stocks and FDA approval gambles.
It was what set it apart from other "finance" communities online and especially reddit: not being risk adverse.
But then it became similar to other finance communities by having an absolute anathema to anything bitcoin or crypto. The mods there didn't seem willing to see them as options trades that never expire. Crypto has similar returns to options contracts, without the time limitation or theta decay or an actual option. If you are an options trader, crypto is not risky. This still seems to be the case there, so thats been making it less interesting to me.
If I do fund an equities options account and want to trade earnings or some follow on swings for the rest of the quarter, I still like to enjoy the memes and laughs with the WSB crowd.
They really fall short on commodities trading, credit trading, crypto trading, amongst other markets.
Thank god. I just recently joined WSB and would immediately quit if this was about shitcoin gambling. Options at least are based on stocks and they have real value. Way different than the inherent value of 0 of crypto BS.
Total system? its mostly a zero sum outcome against normal incremental gains. Individuals? huge swings. Many snakes and few ladders. Feels like you got onto a ladder but (if I read this right) also got off on a higher cloud, than you entered.
So, it's somewhat ironically become a way to coordinate purchase/selling of a stock by getting enough of the hivemind to go along with a particular stock.
It's still a terrible place for general advice though.
There were a few posts by people pumping their stocks and the like but I think the current market correcrion/recession bell tolling will scare most people off
The charm of the subreddit is that it's hard to figure out who's who.
I love WSB, though. It's been a constant source of laughter and entertainment over the past few years. Now that it's hit the mainstream, I hope the wild culture doesn't dilute down too much.
There are a few honest stories of losses and failure in WSB, but the majority of loss stories or bad picks quickly fade into obscurity or are deleted by their original posters. What remains are the highly-upvoted success stories.
If anything wallstreetbets loves massive loses more than massive gains.
Secondly, maybe there are some people genuinely attempting to use the forum to pump and dump but frankly, they're probably not succeeding and even if they are, that's exactly the sort of person the SEC is actually interested in prosecuting. But literally there is no evidence it's happening at all, let alone at any scale or is profitable.
Finally, I love the idea that market makers are just sitting there going "sure is weird that we've seen a lot of retail flow on MIK, better continue straight forwardly hedging using the future and not exploit this predictable market pattern"
I'd really recommend subscribing (free, email, don't think there's RSS) if you don't already (I got the recommendation on HN). He's prolific though, rarely a day without an email, and often two or three - it wasn't long before I couldn't keep up; I just skim and read more thoroughly those that grab my attention now.
I don't understand options, other than a few things about them which help me trade them
It's ok to ignore the big picture. Not everything has to have a profound meaning behind and similar are the stock moves. I believe most of the movements are irrational, so studying fundamentals or anything is going to offer nothing other than wasted time.
I love the crazy vibe of that subreddit which motivates me to take crazy positions which I'd have never taken if I carried on with my risk averse friends.
Even if probability of becoming double digit millionaire from a single digit millionaire is small through options trading. It's well worth it because once you've saved enough to retire, why not bet on random positions? You never know when you'll fall on the long tail end of the game and experience the Black Swan event which changes your life forever.
Then I am also doing other things which people might consider crazy like steroids to maintain Greek god physique - considering neither I am model, atheletic or body builder.
YOLO is not bad way to live if it gives you the highs you need move out of sorrows and sufferings.
https://www.amazon.com/Introduction-Options-Trading-Frans-We...
[0] http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-s...
Oh wait, Bloomberg's trying to run for president?
Owning one of the authoritative news outlets feels like maybe that's an illegal conflict of interest, there, then.
I have a bit amount of money on the side, I didn't know where to invest. Would now be a good opportunity to lump sum all the money, or would you Dollar Cost Average?
Anyone else with the same dilemma, and would have more arguments? Or maybe an other perspective on that?
I am putting 2k in tomorrow morning for VGRO. If it dips another 5% I am doing 2k more.
There's an old adage in London that it's time to sell when the retail buyers start entering the marketing...
I've been having a pretty good time perusing the forum and making bets of my own, even making a decent profit (relative to the money put in). I don't risk more than I'm willing to completely lose though. Some people on that forum are a quite reckless.
WSB tends to celebrate losses (aka “loss porn”) and it’s well-deserved - many tend to do really stupid things (like “YOLOing” 100% of their portfolio into a single position). But if you know how to manage risk effectively (Kelly’s criterion etc) it’s possible to consistently make profits.
Amidst the chaos of shitposts and degenerate gambling there is often quality DD hidden throughout. The odd thing is I suspect WSB has reached critical mass to the point where it’s achieved feedback loops and can actually move markets, thanks to algorithms misidentifying unusual options volume caused by wild speculation & shameless gambling.
It's easy enough on the surface to understand, but much harder to actually execute, because you generally do want some deeper understanding of market trends and how stocks move. That barrier of entry hasn't slowed down most people on WSB, because the loss porn was kind of the point of the subreddit. They didn't really care if they guessed right, they cared about having the most daring bet.
if there’s roughly 1000 upvotes on a piece of content, and assuming only 1% of lurkers ever up vote; that means there are roughly 100,000 people taking investment info from this sub.
let’s say they have an average portfolio size of $10k, then 100,000 users * $10,000 = $1 billion dollars.
assuming they split the portfolio by meme %, so like 1/3 TSLA, 1/3 SPCE, 1/3 AMD; then we’re looking at like $330 million in trading volume going into SPCE.
when you look at the last couple days of trading volume on SPCE, about 30million shares traded daily, was previously around $10 a share , it about equals out, that like $300million dollars of meme money did a pump and dump on SPCE
