[qeternity]

> Can you provide some points on why the main premise(that there is still a large short position which is underwater) could be false?

I never said this wasn’t true. By all accounts this appears to remain true.

What I take issue with is all this talk of “naked shorting” which is a very specific thing and I’ve not seen any data to suggest this has happened at scale. It also fundamentally misunderstands now Citadel Securities makes money or even just options basics (the vast majority of retail are buying calls which means any MM will be long underlying against their short calls). It’s the conspiracy theory stuff which is nonsense.

[jw1224]

> the vast majority of retail are buying calls

This is almost certainly NOT the case. Do you have any data to back this statement up?

The MOASS theory relies simply on retail investors buying and holding shares. On the rare occasion when someone posts to Superstonk about their GME options, the user is quickly warned against them, without fail, every single time I’ve seen it happen.

Retail investors were no doubt trading options through Robinhood back in January. But after all the drama back then, Robinhood has since suffered a mass exodus of users to different brokerages.

It’s clear from spending any time at places like Superstonk that retail investors who’ve read any of the DD have moved away from RH en masse. There was a big push across the community to do this back in February, but I appreciate this isn’t obvious knowledge to someone who hasn’t kept up-to-speed with it for the past 6 months. Options are normally only ever mentioned by uninformed new users.

[qeternity]

> The MOASS theory relies simply on retail investors buying and holding shares.

I should have been clear: I meant that in terms of options volumes (as was my lead into that claim about options volumes) that most retail are buying calls, as opposed to puts.

I have no doubt that in totality, most retail are just buying shares. But for those trading options, it is overwhelmingly calls.

[UncleMeat]

> Robinhood has since suffered a mass exodus of users to different brokerages

Has it? Is there any public evidence that their user count is down?

[jw1224]

I don’t think they’ve publicly disclosed their user counts, but a quick search for “Robinhood users leaving” brings back countless articles like these:

https://fortune.com/2021/02/19/robinhood-brand-damage-gamest...

https://seekingalpha.com/news/3655984-76-respondents-plan-to...

If you go to Superstonk and search for “Robinhood”, you’ll find hundreds of real-world examples backing up my claim.

Any Superstonk users posting screenshots from Robinhood were immediately encouraged by their peers to transfer their shares away, in a mass campaign on the subreddit spanning the course of several weeks. Users would post helpful guides to walk others through the process, which I’m sure I remember reaching the front page at points.

Today, screenshots of brokerage accounts are posted to Superstonk many times throughout the day. But I genuinely cannot remember the last time a user posted a screenshot from Robinhood. T212, eToro, WeBull — screenshots all day long. But there is little to suggest a meaningful number of Superstonk users still use RH.

(Side-note: interestingly, the Robinhood exodus helped provide further evidence suggesting shorts are still in trouble. Many users who transferred their shares away from Robinhood found the cost basis of their transferred shares to be wildly inaccurate — often hundreds of dollars above the price they actually paid for them).

[UncleMeat]

Robinhood sent me some unsolicited recruitment a year and a half ago, where they claimed to have 10m users. Surely the number went up over the following year. Somehow, I don't think that hundreds of posts on a subreddit that is explicitly critical of Robinhood is evidence of a mass exodus.

I don't like Robinhood. They gamify investing (the two metrics they shared with me were number of users and average number of visits per day - which is a terrible metric for an investment platform). I have no desire for them to succeed. But what you've posted isn't evidence of a "mass exodus".

[gruez]

> but a quick search for “Robinhood users leaving” brings back countless articles like these:

>If you go to Superstonk and search for “Robinhood”, you’ll find hundreds of real-world examples backing up my claim.

All that proves is that robinhood is losing a bunch of superstonk users, but it doesn't say whether they're losing users in net or how much % of robinhood's userbase are made up of those users.

[jw1224]

Well, yes… If you search Superstonk, it proves a bunch of Superstonk users have left.

But I also linked to an article in Fortune, suggesting 56% of users want to leave. This was not a survey of Superstonk users.

Until they release any numbers, the best we can do is speculate. However it seems to me that RH’s reputation was significantly damaged as a result of this.

They also have an ongoing class-action lawsuit from retail investors to sort out.

Just type “Robinhood review” in to Google, and you’ll see this extends far beyond the Reddit echo-chamber.

[ItsMonkk]

I think much of reddit is junk, and very much agree with the QAnon take. I largely agreed with the point you are making until GME went back up in February. It happened all at once, so it was not retail traders but a centralized entity. That didn't make sense to me, and still doesn't make sense to me. I don't understand who profits from this behavior.

Burry at one point linked to a blog article on NOPE[0], the Net Options Pricing Effect. The NOPE is an extremely basic metric that attempts to figure out how much of the market is based on the underlying stock, and how much is based on derivatives. I expect Burry figured this out a decade ago and has a much better metric for himself. I think this is why he found this trade early.

As we learned in the housing market of 2006 and the XIV in 2017, when the derivatives gets to be much larger than the underlying, the tail starts wagging the dog. I think the only naked shorting going on is legal, as MM are free to do so if it provides liquidity according to the basic black scholes model.

We can see that the OI on $0.50 puts and $800 calls is extremely excessive. When you have the OI of the January 2022 is at $.50 puts at 132,345 contracts, it seems to reason that the tail is wagging the dog.

If Hedgefunds had puts and that made MM create naked shares, and those shares were then bought by Cohen who then joined the board and locked in those shares, that's in essence a Buyback. If those shares no longer exist and retail buying is leading to an even bigger squeeze, who is buying those puts? Why would Hedgefunds buy the puts again? They should have given up when they lost %50.

[0]: https://medium.com/swlh/options-degenerate-marketplaces-part...

[qeternity]

> I largely agreed with the point you are making until GME went back up in February. It happened all at once, so it was not retail traders but a centralized entity. That didn't make sense to me, and still doesn't make sense to me. I don't understand who profits from this behavior.

Agree with you here. These names have been coopted by pros. Who exactly I am just as clueless as you. But this sort of gamesmanship happens 24/7 in markets, it's just usually not as visible. It's probably coordinated, possibly illegal...but it's not the grand conspiracy that /r/wsb thinks.

> Burry at one point linked to a blog article on NOPE[0], the Net Options Pricing Effect. The NOPE is an extremely basic metric that attempts to figure out how much of the market is based on the underlying stock, and how much is based on derivatives.

Otherwise known as dealer gamma, something that is closely tracked in all markets. Options OI and pinning are serious business. NOPE didn't invent this.

Naked shorting is 1) risky and 2) not possible to the degree being alleged (also - cornering markets never works). MMs do not want to be massively naked short...it's antithetical to their business model.