Community, another domino has fallen in the AMC saga. And what did it cost us? Only patience. If you sold early in the game I’m sorry you’ve had to see this historical event progress this far without you. This threshold security could change everything.
I want to thank my Discord community for sharing this information with everyone in the group. I’m proud of you guys. You’re always looking out for one another and I see every single one of you.
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What is a threshold security?
A threshold security protects stocks that have had 5 consecutive settlement days in a clearing house as “Fail-To-Delivers“. Protection from the SEC also requires that the stocks FTDs total more than 10,000 shares.
A fail-to-deliver for our new retail investors basically means that an investors trading contract, such as a call option, was not executed when it should have been. This occurs when a clearing house such as Citadel for example, does not deliver on their obligation to close the contract.
This creates fail-to-delivers which in turn limits the momentum and growth of a stocks price action. In other words, it tampers with the natural flow of a stocks growth.
FTDs and naked shorting
Another known cause for FTDs is the practice of naked short selling. This is when hedge funds trade imaginary shares that they don’t own or exist. These transactions fail to clear since the shares were never in a traders account to begin with.
This illicit activity is basically like adding zeros to a check you received without the full amount being in that account. When you get caught you’ll eventually have to pay it back. It’s that or you go to jail but we all know these sleezy people always get bail.
Well now the SEC has gotten involved and is saying no more. We’ve been heard community. And this is massive news. Here’s how this will affect AMC’s stock price.
Why is a threshold security significant to AMC?
A threshold security comes with regulations that heavily play in our favor. One of the regulations is known as rule 204. This is the one the entire community is going to be amped about.
Rule 204 requires brokers and dealers that are participants of a clearing house to close out failure-to-deliver positions.
Yes you read that correctly. Here is the source straight from the SEC’s “key points” under III. Regulation SHO.
“Closing out requires the broker or dealer to purchase or borrow securities of like kind and quantity.”SEC
AMC Entertainment was added to the NYSE Threshold Securities list on Friday, June 25th. Section 203(b)(3) states that clearing houses must close FTDs if they persist on to 13 consecutive trading days. So because AMC made it to the list on the 25th, then this means the start of these consecutive FTDs occurred on Friday the 18th.
If FTDs continue to happen up until the 7th of July then they will be forced to close these positions.
No matter what happens, it all plays in our favor
- It’s a win-win situation for retail investors. If hedge funds continue to manipulate the market and generate FTDs then they’ll be obligated by law to cover the millions of dollars and shares they’ve been failing to process.
- On the other hand, if shorts begin to properly exercise contracts then we will begin to see momentum pick up rather quickly from executed trades. This too can create several gamma squeezes due to the amount of volume being pumped into the market.
By adding AMC Entertainment to the Threshold Securities list, the SEC is basically stepping in and calling hedge funds out on the court. It’s a way of saying things need to be done the right way or else.
I’m extremely curious to see how this will play out. Remember, all of this is only a blip in history. We’re eventually going to experience the chapter after this. I’m excited.
The manipulation is being addressed now
Well community, it seems the SEC has finally heard you. We were loud and progress has been made. July is going to be a very interesting month for retail investors. If you’re a new ape in the community then be prepared to see the massive gains us seasoned apes are currently seeing at the moment.
And for you diamond handed apes that have been holding for many months now, it only continues to get better from here on out. More dominos keep falling and the cards continue to play in our favor.
I truly feel like we have all the data at hand we could ever possibly need.
Everything we’ve been talking about for months has been true. The media manipulation, the naked shorting, and now we patiently wait for the short squeeze. Finally, the biggest financial play of the century.
How are you going to celebrate when AMC Entertainment squeezes? Let me know in the comment section below. Lets have a conversation, I would love to hear it.
And if you haven’t joined my Discord community, here’s a personal invitation. This safe environment is going to provide you with the confidence you need to make sure your trade is an absolute success.
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Thank you for reading FrankNez – I look forward to providing you with tons of more value very soon.