Charles Schwab has raised margin requirements for short sellers shorting AMC and GME stock. The broker is adjusting 100% margin requirements for AMC on all long positions, and 200% on short term positions.
As for GameStop, the margin requirement is 100% on all long positions and a whopping 300% on short term positions. Community, this is massive. It’s the time we’ve all been waiting for. Lets go over what all of this means.
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I want to start out by giving a shout out to one of my Discord members by the name of Over Watch for sharing these details within our community. You’re the real MVP brother.
Resurfacing important news
It seems the Reddit crowd has brought to my attention that this raised requirement occurred some time ago. However, this is the updated and most recent version of the margin policy. With that being said, I’m glad my subcommunity was able to bring it to light and into the knowledge data base of even more people.
Apes need to know just how big this is. Both AMC and GameStop are in critical condition for massive gamma squeezes followed by the MOASS (mother of all short squeezes).
These two plays are way too risky for short sellers to continue shorting right now. Charles Schwab is now raising margin requirements for investors betting against the stock. So what exactly does this all mean?
It’s end game baby. Short sellers are getting margin called if they cannot meet their margin requirements.
How does this affect Citadel?
Citadel is paying for order flow from more than 9 online brokerage firms. Two of which are Charles Schwab and TD Ameritrade. This is not just for short sellers shorting these two stocks. This margin raise affects hedgies too.
What is 100% margin requirement?
A 100% margin requirement is when a broker, such as Charles Schwab, requires the short seller with a margin account to have the funds available to cover the exact amount being exercised.
In other words, if a short seller is going to be shorting AMC or GME for a specific amount, they must have the capital available in their account to cover their positions.
This essentially creates collateral for the broker. 100% margin requirement will be required if short sellers are going long on AMC or GME. This means playing this game for over a year. Ouch…
What is 200% and 300% margin requirement?
This is where it gets interesting. Margin accounts required to maintain a 200% or 300% margin requirements will need to have 2 to 3 times the capital in their accounts of the securities being exercised.
Hedge funds exercising millions of short shares in both AMC and GME are required to have 2 to 3 times the capital to cover their positions in their margin accounts.
This is insane if you ask me. Most margin requirements tend to be within 30%-50%.
What happens if margin requirements cannot be met?
If margin requirements cannot be met, then the broker (Charles Schwab) can close out as many positions needed to meet the minimum margin requirement.
This means Charles Schwab can forcefully liquidate short sellers accounts if they do not have enough cash at hand. And as we all know, hedge funds have been losing billions of dollars all year.
Margin calls are finally here
Margin calls are here and it’s only a matter of time before we begin to see AMC skyrocket due to shorts getting squeezed out of their positions.
The AMC and GameStop community have been waiting a long time for this. It looks like a short squeeze is finally going to be coming to fruition.
AMC and GME shareholders have been holding their positions since January of 2021. The community has been able to uncover the manipulation that occurs in the stock market as well as learn from one another about the markets.
Are short sellers still able to short AMC and GME stock?
According to Charles Schwab, short sellers are still able to short, naked short, and opt for put options as long as they have the funds available to cover the entire amount to be exercised.
It is strange however that short sellers are allowed to sell naked shorts with AMC stock but are prohibited to do so with GME stock. I wonder if this is due to GameStop moving to the Russel 1000 large cap.
Regardless, it’s going to cost short sellers so much more money now to keep their short positions open. Even if they continue to hold, they cannot hold forever. Not unless they want to live on the streets that is.
Charles Schwab margin call update
“Due to recent market activity, we’ve adjusted margin requirements on certain securities. Please note, neither Charles Schwab & Co. nor TD Ameritrade halted clients from buying any stocks, or selling any stocks they own, and neither firm restricted executing any basic options strategies.”
All of this information can be found on Charles Schwab’s margin page.
Prepare for massive AMC and GME gains
Community, there you have it. Retail investors are winning this fight against corruption and fraudulence. Continue to be patient. The seeds you planted months ago are about to sprout the biggest tree with the most delicious fruit you’ve ever tasted.
If you’re a new retail investor congrats, you’ve made it just in time. And if you’re wondering whether it’s too late to get in on AMC stock, the next following days to weeks should tell.
Stay updated on Discord
Stay updated on AMC with Frank Nez. I created this Discord group for new and seasoned apes to share DD, knowledge, and overall have a great hangout spot. Retail investors are learning something new here every day.
Here’s a personal invitation to our safe community. Be sure to share this post on your socials so other apes see this. Keep everyone informed and congrats on taking the risk. I’m already celebrating your success.
Also, leave me a comment below and let me know what this squeeze will mean for you. Everyone has a very personal and amazing story to share. I want to hear yours.
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