[colechristensen]

That’s the wallstreetbets angry meme explanation but not what happened.

What actually happened is brokerages are required to hold capital reserves to cover options held by customers. You can spend a few dollars and your brokerage is required to have sometimes tens or hundreds of thousands in the bank to cover your option.

During peak memestock options activity went to a crazy unprecedented level, Robinhood had to raise billions of dollars in a day or two, like nearly four billion in a few days. And it wasn’t enough so they had to stop trading or put limits on buying options for GameStop and a few others. Etrade and interactive brokers at least also did.

They didn’t go bankrupt or get stomped by regulators or congress because they were behaving within the law and reasonably in an unprecedented situation.

My understanding comes from articles like this one https://www.cnbc.com/amp/2021/02/03/why-investors-were-willi...

[mejutoco]

Weren't they also in direct communication with the (I think non-existing) hedge fund that would benefit from them allowing only to sell?

[colechristensen]

Really hard to comment on such a vague insinuation.

[mejutoco]

I saw gamestop the movie recently and it was stated as fact towards the end, IIRC. I was just vaguely remembering it, but I believe it is proved.