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.
Remember to keep your emotions in check as both AMC and GME begin to squeeze. Write down your affirmations and goals, and start planning your exit strategy.
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.
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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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When the margin call takes place, do we enter our sell amount then? Do we set a limit Sell amount previous to the squeeze? Webull will only allow me fo set a small sell limit. Please anyone… I habe signed up 8 of my friend and family. I own only AMC shares. Please tell me how to exit this as a true Ape with maximum potential and Diamond hands! Thank you for the article and I love you all Apes! ❤️
Michael
Hi Michael, thanks for being here brother. I wrote an exit strategy guide to help the community any way I can regarding selling once AMC squeezes. Here’s the link: https://franknez.com/an-excellent-amc-exit-strategy-guide-short-squeeze/
How does this effect institutional holders, like Citadel? If I’m reading this right, this is only for Charles and TDA users.
Hi Joe,
This not just for Charles and TDA users. Charles Schwab’s margin page mentions Charles Schwab nor TDA will restrict any transactions for both AMC and GME stock. Citadel pays flow orders from nine online brokers, one of them is Charles Schwab. This most certainly affects them. https://wallstreetonparade.com/2021/02/citadel-is-paying-for-order-flow-from-nine-online-brokerage-firms-not-just-robinhood/
I’m excited I am new to all this but I told about this opportunity from a friend and took a chance and Lord willing this will pay off student loan debt. I’m still learning what this means for me investing through my Charles Scwab account so thank you for the article. I appreciate it!
Hi Anna – you have a good friend. This margin raise affects people who are borrowing the stock such as short sellers betting against AMC or GME. Us retail investors don’t have to worry about this as we’re paying for the assets in full amount. This is good news for the community because it only proves what we already know. We’re winning
Ok I see, I really need to learn more on the terms.
If you have any recommendations on investing books that I can read to learn more about the concept. Please advise. I’m also a realtor who is trying not have my eggs in one basket but multiple streams of income.
My suggestions to you Anna is to be involved in the community. A lot of the articles I’ve published have proved to be extremely helpful to the community. Within them you’ll also find some of the biggest YouTubers covering this information. You’ll be learning something new every day.
Ok thank you so much. I will search you up on Face book and Instagram.
See you there!
How can selling naked shorts be permitted with AMC when the practice itself is illegal? What am I missing here?
This is what we’ve uncovered during this journey. The SEC will go down as the biggest fraud in history as well.
I am a new Ape! Help me understand something please. If we are all holding and buying the dips when we can, how can there possibly be any shares left for the hedge funds to buy and cover? I know some holders are selling but by the sounds of many of the posts on various message boards, we all understand that we need to hold for this to everyone take off. Again, with some of the estimates that are oh there with the number of shares that are held, how can there possibly be any left to buy? Thank you in advance for the lesson!
Hi John, this is a great question brother. See, the transactions don’t occur between us and short sellers directly. Securities are transacted through a middle-man so to speak, or ‘clearing houses’. They’re in charge of fulfilling your order when you sell or buy. They then hold the security and pass them on endlessly between investors.
That’s exactly the point John, the naked shorts (fake shares) need to come from somewhere eventually. That will be from us (apes) at the price we are willing to sell at. The longer we hold, the more the price goes up.
This is huge and completely justified from Charles Schwab.
No doubt this is massive! 🍿🦍
https://www.schwab.com/margin-updates
The author should date this about 3 months in the past. Because that’s around the time they changed it for GME. Just scroll to the bottom of your own link.
This is +3 week old news.
And now more people than just the Reddit community know it – thanks for advising.
Would this mean that they would also require retail investors to have 100% margins on their long AMC positions? If so, then there may be some impact on some retail investors as well.
Hi Fred,
No – margin accounts are held by short sellers, not buy us retail investors.
Uh retail investors have margin accounts and the ability to take short positions and buy puts.
Yeah absolutely. Certain brokers don’t and some do. Most investors who are required to keep a minimum margin are those leveraging their positions (shorting).