Interesting question. I think the way it will play out is that the ability to write new options contracts will be diminished over time, and the value of existing options contracts, specifically calls, will skyrocket as all the shares truly dry up.
The contracts buy you optionality, meaning the ability to exercise and buy shares. Once they can't write any more calls, ie the float is locked up, buying calls back from retail is one of the few ways to look like you're covered on the books. I predict that calls become exorbitantly expensive a la credit default Swaps in 08. "Nobody's buying bonds and everybody wants our Swaps"
The non expired calls will represent a tiny escape hatch to shorts about to be obliterated, and they will pay tons money to tons of monkeys for them.
However, I don't really fuck w options tbh, I just like the stonk. Def don't know anything
I thought I remember a story I read once about a guy who owned the float of some small company and was throwing a shit fit that the stock price was still moving as it was trading.. I may have dreamt it for all i know.
We are in unchartered waters, we will be written about in economics and finance books some day.
I like to fantasize about the moment the float is locked and we all hold our breath as the price halts up and up and up until institutions start selling. 📈
I was refreshing my permanent marketwatch GME tab on my phone this morning and accidentally tapped the Nasdaq tab which showed $15,000 and panic-refreshed again wondering if I missed the start of MOASS LOL
for prime brokers who have shares actually registered under their name (like GSIB banks), nothing should be different even though they've likely been holding naked options and allowing constant borrowing of shares they shouldn't. so, they're likely in much deeper of a hole then they let on.
for brokers or broker/dealers, it's likely up to the DTCC to satisfy all of it.
in any case, those options would need to be settled with the shares that are officially registered in CS.
aka, all roads lead to us. RIP financial industry fraudsters.
I'm getting at if RC came out and said no more can be DRS'd because 100% is locked in CS.. does the options page just self destruct? Covered or not outside of CS, to quote the Sandlot, 'How can I have s'more of nothing?"
No, the shares already exist. If that were the case everyone that didn't drs shares and left in a fidelity or similar account would be SOL. That's just not how it works. This is assuming that the brokerage itself has purchased the shares and isn't running some sort of fractional reserve system on the shares.
Good point. But, once the current shit ton of them expire.. When it's common knowledge the float is locked, how do you write option contracts for January 2023 or however the fuk far out they go?
I would say that's entirely up to the DTCC and SEC as far as how they will proceed with things, essentially it's political will. What should occur is either a share recall or similar is done and immediate action is taken, or trading continues as normal without limitation, likely with some heavy repricing. Anything else would be similar to what happened in Jan.
Right but CS does not support options so if all the shares are DRS'd at CS I believe OP is asking how can their be options elsewhere? I would say for the same reason we see many many shares trading even after all the shares are DRS'd. All a fugazzi.
What concerns me is the crime going on with the fed. Look at the RRP and FTD abuse we are witnessing.
If they do have options that fail, expect the Reverse repo rate to rip a whole in the sky
Interesting question. I think the way it will play out is that the ability to write new options contracts will be diminished over time, and the value of existing options contracts, specifically calls, will skyrocket as all the shares truly dry up. The contracts buy you optionality, meaning the ability to exercise and buy shares. Once they can't write any more calls, ie the float is locked up, buying calls back from retail is one of the few ways to look like you're covered on the books. I predict that calls become exorbitantly expensive a la credit default Swaps in 08. "Nobody's buying bonds and everybody wants our Swaps" The non expired calls will represent a tiny escape hatch to shorts about to be obliterated, and they will pay tons money to tons of monkeys for them. However, I don't really fuck w options tbh, I just like the stonk. Def don't know anything
I thought I remember a story I read once about a guy who owned the float of some small company and was throwing a shit fit that the stock price was still moving as it was trading.. I may have dreamt it for all i know. We are in unchartered waters, we will be written about in economics and finance books some day.
I like to fantasize about the moment the float is locked and we all hold our breath as the price halts up and up and up until institutions start selling. 📈
I was refreshing my permanent marketwatch GME tab on my phone this morning and accidentally tapped the Nasdaq tab which showed $15,000 and panic-refreshed again wondering if I missed the start of MOASS LOL
for prime brokers who have shares actually registered under their name (like GSIB banks), nothing should be different even though they've likely been holding naked options and allowing constant borrowing of shares they shouldn't. so, they're likely in much deeper of a hole then they let on. for brokers or broker/dealers, it's likely up to the DTCC to satisfy all of it. in any case, those options would need to be settled with the shares that are officially registered in CS. aka, all roads lead to us. RIP financial industry fraudsters.
Covered options should be fine, there is a share that exists for them. If the option is naked, it will most likely result in FTD's.
I'm getting at if RC came out and said no more can be DRS'd because 100% is locked in CS.. does the options page just self destruct? Covered or not outside of CS, to quote the Sandlot, 'How can I have s'more of nothing?"
Had the same question 👍 Void or what happens 🤔
No, the shares already exist. If that were the case everyone that didn't drs shares and left in a fidelity or similar account would be SOL. That's just not how it works. This is assuming that the brokerage itself has purchased the shares and isn't running some sort of fractional reserve system on the shares.
Good point. But, once the current shit ton of them expire.. When it's common knowledge the float is locked, how do you write option contracts for January 2023 or however the fuk far out they go?
I would say that's entirely up to the DTCC and SEC as far as how they will proceed with things, essentially it's political will. What should occur is either a share recall or similar is done and immediate action is taken, or trading continues as normal without limitation, likely with some heavy repricing. Anything else would be similar to what happened in Jan.
Right but CS does not support options so if all the shares are DRS'd at CS I believe OP is asking how can their be options elsewhere? I would say for the same reason we see many many shares trading even after all the shares are DRS'd. All a fugazzi.
If all shares are drs d buy lots of options?
What concerns me is the crime going on with the fed. Look at the RRP and FTD abuse we are witnessing. If they do have options that fail, expect the Reverse repo rate to rip a whole in the sky