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Hacking Wall Street
A common trade type on WSB that seems to work persistently is the mass buying by the collective of out-of-the-money (OTM) calls on various equities. The lower free float, the better. I have seen this enough now to declare the following: They have hacked Wall Street in this regard.
Given the rise of passive investing (which is now something like 45% of the entire market) and the importance of fund flows to the general market algorithm, the market is far thinner than people may realize. It is this thin market and general lack of active (i.e. aware, alive, non-robotic, etc) buyers and sellers on the margin that has enabled WSB’s OTM option brigades.
I contend that WSB is a consequence of the current market structure, which has accidentally enabled their goal-seeked market hacks and rendered older regimes of market thought inert. Not to mention that zero fee trades have become the norm across brokerage platforms. This is yet another key element to exploiting the thin market structure.
Think about it. If you have 1.6 million ‘degenerates’ each with $10,000 in their Robinhood accounts (or even $1,200 of Trump Bucks) and these ‘degenerates’ are actively buying OTM calls, even if 1% of them participate that’s a lot of marginal buying power.
Imagine being the poor option market maker at Citadel or Susquehanna. You might suddenly see $250 million worth of notional buying activity happen in OTM calls in minutes for no apparent reason. Then, as a market maker what do you have to do now that you are short $250 million notional of some stock via options? Delta hedge.
In this case, that means you have to buy the underlying stock. As the stock rises, the option delta rises, which requires more buying by the market maker - a virtuous cycle. WSB just took what could have been a relatively small sum of money, multiplied it once via options and then again via the option market maker.
In essence, WSB can become the tail wagging the dog. It’s brilliant! And more than that, it is so ultra-contrarian that no traditional market participant (except Softbank) would ever consider doing this. This is what I mean when I say they hacked Wall Street.
Veo que el canal alcista ha hecho su trabajo y lo han detenido en la primera resistencia (línea puntos), ahora en subida hasta la siguiente resistencia, sobre 2,6
Lo difícil ya lo has pasado, ahora mantendría siempre que estén por encima del pívot, por debajo reduciría posiciones o cerraría progresivamente, cortos donde stop que se puede subir sobre 1,3-1,4
Un stop parcial sobre 1,75 aunque este en realidad seria un nuevo punto pívot, ya sabes por arriba…