They're going to heavily investigate everyone that made a half million on a super high volume, widely shorted stock in a time of extreme volatility? To the point of finding a smoking gun that connects them to the hackers? I'm happy to be proven wrong about this but it seems implausible unless they were sloppy.
Why wouldn't they? To me it seems unthinkable they wouldn't invest significant resources into such an investigation, and I could think of plenty of ways they could narrow down suspects. There's a trade-off between potential reward and decreased exposure risk, there. Also, as stated by others, they'd already need to have significant (fiat) capital, and ideally a history of trading (else they'll automatically be near or at the top of the suspects list), which seems unlikely to me.
People with enough money to be investing regularly also probably don't need to orchestrate elaborate smash-and-grab cybercons to make money. People in such a position would already be doing fine and would have the added bonus of never fearing going to jail. I suspect whoever did this likely doesn't have much fiat money, or if they do, it's probably mostly dirty money which wouldn't be feasible to invest with.
Here, there's no risk/reward trade-off like there would be from shorting. It's a much more scalable attack: every additional hijacking results in additional expected value, but no additional risk. With some form of stock betting, the more you scale it up (in terms of reward potential), the more the activity would stand out.
I think the attackers made the smartest possible decision, given what they had/could do, if their goal was purely total profit (plus not getting caught). If their primary goal wasn't money, then it's certainly a squandered opportunity, but most criminals are just in it for the money.
Yes, absolutely. I mean, if you put in years of preparation and are an active trader with a big portfolio, 500k$ is probably getting through the net. But if you're a newer trader, not much invested or not many positions? You're sure as hell getting some questions.
I mean, yeah, there might be a ten or hundred people who match this criteria, but market manipulation is a very serious crime and when people lost many millions, the SEC is going to pour a lot of resources into checking everyone.
EDIT: This is also assuming the hacker is American. I bet you a lot that this matches very few people in, for example, India.
I don't think it's a stretch to assume this hacker group has some member with an active account, or to charitably take "you" to mean someone with (at least) a sporadic day trading history.
I have heard of drug busts that began with detectives going to a university in a town where the drugs (think synthesized drugs) seem to be originating from. Cross-reference all students on financial aid with all students that had taken Organic Chemistry 300. You could count the number on one hand.
Each were watched, one was seen making the handoff....
Sure, that's because America's law enforcement are extremely interested interested in the "war on drugs".
Will they go to those same lengths to find people who profit a few hundred grand or a mil on the stock market, when the consequences of what we're talking about could result in tens or hundreds of millions of dollars of profit/loss?
> They're going to heavily investigate everyone that made a half million on a super high volume, widely shorted stock in a time of extreme volatility?
These arguments all seem to be operating on the assumption that there would be a large number of day/swing traders who would exit their positions with perfect timing, but this is unlikely because they wouldn't have the knowledge that the price move was ephemeral and driven by a false rumor. The number of people who made a half million off it would be a lot smaller than you think.
Well, don't ever assume lack of sloppiness. ;) But to the large question: markets are built on trust, and the SEC has the job of ensuring the trust bedrock of the US markets via enforcement. A high-profile move like the one we're describing here, manipulating the US markets so brazenly, is worth spending more money than exchanged hands in the fraud to find the perpetrators, just so they can put heads on pikes and make everyone feel better that the system works (because the net loss of value if market trust breaks down is much, much higher).
I think what the parent is saying that the original post definitely misses is that the trading volume in short expiry options on Tesla is so high that it would be impossible to detect one trade in a sea of hundreds of thousands.
Why short at all? That is asking for trouble.
Buy some stock, then make some incredibly positive claims on Elon’s Twitter (l4 self driving perfected, coming next week to all customers after a lengthy secret testing. New battery chemistry wildly better than anticipated, twice the power density and a life of 25000 charge cycles - and it even costs less to make, without needing any cobalt or rare earths).
Watch stock go up, sell before the whole thing is clarified.
Trading the stock directly would probably not maximize gains. I'm saying you could buy short expiry call options and make far more money (or puts if you're trying to move the price the other way). Part of the reason people trade options is because you can make (and lose) far more money with less capital than you can by just trading the underlying security. In many cases it's higher risk, higher reward.
Here's a scenario demonstrating the idea:
Let's say I spend $92,300 to buy 61 shares of TSLA at its current price of $1,512.18. Then I post my Tweet causing TSLA to jump to $1600.00 on the same day and sell my 61 for $97,600. My total profit is only $5,300.
But what if instead I buy $92,300 of 7/17 TSLA call options at $1600? They cost only $9.23 per contract for 10,000 contracts. Now the same price movement to $1,600.00 today causes the value of my options to increase to $39.16 per contact. I can sell them for $391,600 netting me a total of $299,300 for the same starting capital. If you have access to margin then you're talking millions in profit with even a small price movement (though at that point you probably have to start worrying about the SEC).
As Matt Levine (who's twitter account is referenced in the article) says though, short-dated out-of-the-money call options are a good way to get the attention of the SEC.
In general though I agree with you - I think a person absolutely could make more than $100k on the market with not a lot of capital and get away with it.
Of course, "not a lot of capital" is still more than no capital.
I think you vastly overestimate the SEC's ability to catch these things. It's searching for a needle in a haystack.
The only time where the SEC has a really easy chance of catching you is with very out of the money puts purchased only days before the attack. The volume is much lower there and that's a much more common way to make money on this stuff (since with put options you don't need to short massive amounts of the stock).