Tag: Momentum Trading (Page 3 of 6)

Ken Griffin Attacks: “Pension Plans Destroyed by Retail Investors”

Ken Griffin on Retail Investors
Market News: Ken Griffin on retail investors

Ken Griffin accused the retail community of destroying teacher’s pension plans by taking down Gabe Plotkin’s Melvin Capital.

Melvin Capital is a hedge fund that was short on ‘meme stocks’ holding a large position in GameStop.

The company is scheduled to shut down in June after it had suffered a 50% loss in 2021, and an additional 20.6% in the first quarter of 2022.

Sources say Melvin Capital has already begun to liquidate its positions to pay back investors in cash.

In this Bloomberg exclusive, Ken Griffin plays a role of the victim, defending Mr. Plotkin and the hedge fund whose mission it was to bankrupt GameStop.

Ken Griffin’s Citadel is also short on AMC Entertainment – the hedge fund lost billions last year betting against retail.

Let’s discuss it.

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CNBC mourns the loss of Melvin Capital

CNBC says Melvin was one of the biggest victims from the meme stock frenzy last year due to its large short position in GameStop.

They say Citadel and Point72 had to provide Melvin Capital with a lifeline to stay above the water.

The hedge funds combined provided Gabe Plotkin with $2.75 billion in capital last year.

However, as things went south quick for Melvin, both hedge funds demanded the capital back.

Something Ken Griffin and his affiliates fail to mention.

Mainstream media has also danced around the fact that hedge funds planned to wipe American companies by overleveraging their short positions during the pandemic.

Success in doing so would delist AMC, GameStop, and other meme stocks from the stock market.

Betting against companies with intention to bankrupt them to the ground is no charity work.

It’s un-American and a nefarious practice that has dragged out for too long.

Ken Griffin blames retail investors

In the video below, Ken Griffin gives his thoughts on retail investors and the entire ‘meme stock’ phenomena.

Ken Griffin takes a jab at the retail community saying retail investors who aimed to bankrupt Melvin Capital also wiped-out pension funds from teachers.

But Ken, retail investors don’t get up in the morning and think to themselves, “let’s wipe out a multi-billion-dollar hedge fund.”

Melvin Capital lost because he went against retail – the first time in history the people fight back corruption in the stock market, and win.

Ken Griffin lost billions shorting AMC stock, the retail community is currently his biggest adversary.

AMC shareholders continue to buy and hold the stock until short sellers exit their positions, which will result in a short squeeze.

Today’s retail investors are armed with education, they understand what they hold and what it’s doing to hedge funds.

While Ken Griffin and affiliates might be pumping a narrative as victims, high profiles such as Elon Musk, Jon Stewart, and Ryan Cohen have stood up against short sellers.

For the first time in history, Wall Street is getting their a** kicked, and these hedge fund managers certainly do not like that.

Hedge funds should prepare for bigger losses

Institutions are about to lose a massive amount of collateral due to executive order 14032 in early June.

This presidential order is prohibiting Chinese securities to be used as collateral starting June 2nd, 2022.

It was responsible for initiating margin calls when AMC Entertainment stock rose to $20 per share in January, and $72 per share in June of last year.

With liquidity drying up in global markets, it’s going to be quite difficult for hedge funds to keep up with margin requirements on heavily shorted ‘meme stocks’.

Massive selloffs in the market have proved just how distressed financial institutions are.

We’re seeing for the first-time hedge funds begin to shut down as they take the lead in liquidity burn.

Retail investors have been the majority of buyers in today’s markets according to Bank of America.

Hedge funds are headed towards a larger train-wreck of disaster they cannot get off of.

As they continue to tank the markets, margin requirements go up thanks to DTCC B16845-22.

Hedge funds have lost control.

But I’m curious to know what you think.

Leave your thoughts in the comment section of the blog below.

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AMC’s Shares on Loan Are at An All-Time High

AMC's shares on loan
Market News: AMC’s shares on loan reach 157.87 million

AMC’s shares on loan have massively increased since its grand runup to $72 per share last year in June.

The movie theatre chain continues to be quite the attraction for retail investors as it is still heavily shorted.

The pandemic no longer threatens AMC Entertainment, and the company has improved drastically when it comes to fundamentals.

However, short sellers did not expect this to happen.

And now they’re stuck with millions of shares on loan that eventually have to be returned.

The results?

A short squeeze.

Let’s discuss it.

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AMC’ shares on loan reach 157.87 million

AMC shares on loan - AMC short interest
AMC shares on loan – AMC short interest

The shares on loan of a stock are the number of shares that have been borrowed and have yet to be returned.

We see this data when looking the short interest data of a ticker symbol to determine how much of the float is being shorted.

So, what does this mean?

AMC’s shares on loan essentially looks like debt to short sellers because they eventually have to return these shares back to the lender.

These shares amount to approximately 21.88% short interest (updated daily on the blog).

This is a very high short interest percentage – something mainstream media will not talk to investors about.

AMC’s short high short interest is what allowed it to reach $20 per share in January and $72 per share in June of last year.

Hedge funds lost billions, which is why mainstream media has focused on scaring retail investors out of their money by pumping out ‘DO NOT BUY AMC’ content.

Nothing has changed this year except AMC’s shares on loan and short interest keeps climbing.

AMC’s short interest was only at 20% when it surged to $72 – it’s now close to 22%.

Related: Free Live Daily Updates: AMC Short Interest Today

Is an AMC short squeeze on the horizon?

In recent articles I’ve said there is no better time to close short positions than today due to the bear rallies we’ve been having in the market.

The market has reached all-time lows providing short sellers with an incentive to close now before the market begins trending upwards again.

Unfortunately, new short sellers have jumped in on the hate bandwagon and are exposing themselves to very high risk.

Hedge funds have closed in the past year due to overleveraging their short positions in the market.

These are institutions who have lost billions of dollars and created major distress for real clients.

Individual short sellers should understand what they’re going up against when facing retail demand.

The fact is AMC Entertainment has the perfect short squeeze setup.

One can view short sellers as a nasty blackhead that needs to come out.

It’s there, it just has to get squeezed out.

Gross.

But you get the point.

AMC’s squeeze potential is big, it’s just a matter of when will it happen.

It’s very possible

If you’re an avid reader of my content, then you know all about executive order 14032.

Now, I don’t want to sound like a broken record player, but this could be a very big deal for AMC stock.

We saw this executive order play a very important role for AMC last year when it resulted in its January and May/June price runups.

The order is to go in effect on June 2nd, 2022.

And while the community doesn’t like to call out dates, expect something in June anyway.

Only you can control your emotions.

Optimistically, community members understand that whether executive order 14032 creates a massive impact or not, AMC is still a short squeeze play.

I’m interested to know what you think.

Leave your thoughts in the comment section of the blog below.

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Related: What's The Probability of AMC Squeezing in June?

Calls VS Puts: The Biggest Differences in Options Trading

Calls VS Puts
A simple guide to Calls VS Puts – Puts vs Calls – Calls vs Puts explained

This article is going to help new investors identify the difference between calls vs puts.

I’m going to provide you with a very simple overview and breakdown of what these two trading strategies mean in the world of options trading.

And if you’re not familiar with what options trading is, I will further explain that down below.

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What is a call option?

What is a call option?
What is a call option? – Calls vs puts explained

A call option is a bullish strategy that allows a trader to profit from a trade on the upside.

The trader essentially bets that the price of a stock is going to go up by buying call options.

How does a call option work?

When you open the options chain, you will have many contracts to choose from, ITM, ATM, or OTM, which I’ll use as a quick example for now.

If you are betting on the price of a stock to go up, you might buy a contract with a strike price of a few dollars above the underlying securities’ current price, depending on your risk.

If the stock does indeed move up in price, you will begin to see gains on your contract.

You may then sell your contract and profit from your play when you are ready.

What is a put option?

what is a put option?
What is a put option? – calls vs puts options – puts vs calls stocks

A put option is a bearish strategy that allows a trader to profit off a trade on the downside.

Unlike calls, traders buying put options are betting the price of a security will drop.

How does a put option work?

I’ll use another OTM example for now and explain the other scenarios below.

You will have many options in the options chain to choose from.

Here you will be able to select a contract to buy based on the ‘strike’ price you’ve selected.

The strike price you’ve selected is where you believe the price of a security will go down to.

If a price of a stock is at $20 and you buy a contract for a strike price of $17, you’re betting that the price of the stock will fall in the future.

If the stock falls to $19 then $18, you will begin to see gains on your bet.

The closer the price of the underlying security gets to $17, the more gains you will see.

You can then close your position at any moment before the contract’s expiration date and take profits.

Both these examples are examples of an OTM contract which I’ll explain more below.

Here are other examples of how calls vs puts work.

What is ATM and ITM?

ATM vs ITM
Options trading: ATM vs ITM

ATM stands for “at the money”.

At the money (ATM) is the current price a stock/security is trading at.

When your strike price is near the current share price this is considered to be “at the money” (ATM) for both calls and put options.

ITM puts

ITM stands for “in the money” and will be a little different for puts vs calls.

When a strike price is in the money for put options, it means the price is above the “at the money” (ATM) price.

Example: You’re betting the price of a stock will go down, so you buy a put options contract “ITM” for $11 while the stock is currently trading at $10 (ATM).

You contract has a higher probability to earn gains since the current share price (ATM) is already below your strike price (ITM).

The further the price of a stock goes down from your strike price, the more money you make.

ITM calls

When a strike price is in the money for call options, it means the price is below the ATM price.

Example: You’re betting the price of a stock will go higher so you buy a call option contact “ITM” at $9 while the stock is trading at $10 (ATM).

Your call option contract has a better probability of making money from the start since the current share price is already above your strike price.

If the price of that stock continues to surge, then you will continue to make gains.

“In the money” (ITM) contracts are a little more expensive to buy since your probability to make money is higher.

“At the money” (ATM) contracts which are closer to the “current” share price had a medium risk factor and are cheaper than ITM contracts.

So then what are OTM contracts?

OTM “out the money” explained

OTM Explained
Calls vs puts explained – OTM – Calls vs Puts options

OTM, or “out the money” is the strike price above the ATM for calls, and the strike price below the ATM for puts.

Call option example: If you buy a call options contract OTM at $12 and the price of the stock is currently at $10 “at the money” (ATM), you are betting the price of a stock will rise above $10 per share.

Put option example: If you buy a put options contact “out the money” (OTM) at $8 and the price is currently at $10 “at the money” (ATM), you are betting the price of a stock will go below $10.

Remember, the closer a stock’s price gets to your strike price, the more gains you will reap.

So, the further out the money your strike price is, the higher the reward may be.

Should you buy ATM, ITM, or OTM?

Every trader will use the strategy that best tailors to their risk.

  • Out The Money (OTM) = High Risk / High Reward
  • At The Money (ATM) = Medium Risk / Medium Reward
  • In The Money (ITM) = Low Risk / Low Reward

Traders will need to study the performance of an underlying asset to get a feel and understanding of where the price may go.

Once you have determined whether you will be buying puts vs calls or vice versa, then you may begin to look at the contracts available.

Options contracts explained

Every 1 contract equates to 100 shares of a particular stock.

OTM contracts are usually less expensive.

With these contracts you can buy 100 shares of a stock for only cents.

ITM contracts are more expensive because they are the safest choice.

ATM contracts are in between ITM and OTM in pricing.

The options chain will allow you to choose when contracts based on short-term or long-term expiration dates.

You can go short or long on both a call and put options contract.

These expiration dates may vary from only a few days to weeks, to months, and even years.

Whether you should trade short-term or longer-term expiration options contracts is a strategy that will be highly based on your trading goals.

Where can you trade options?

options trading with webull
Options trading with Webull – calls vs puts options – calls vs puts explained

The most popular platform to trade options is Webull.

Webull is where I personally began learning reading charts and familiarizing myself with the options chain and data.

Here traders will be able to purchase calls vs puts or vice versa.

Some traders use both strategies to make money during a bull and bear market.

Other platforms where you can trade options include:

  • TD Ameritrade
  • ETrade
  • Robinhood
  • Fidelity

If you’re already invested in stocks, you might already be using one of these platforms.

The difference between trading stocks and trading options is that you will need to open a margin account for options.

A cash account will not allow you to buy calls vs puts.

You can earn 5 free stocks from Webull when you sign up using my affiliate link.

If you choose not to keep these 5 stocks, you can sell them and fund your margin account to trade options.

Puts VS Calls: Why trade options?

puts vs calls: why trade options
Puts vs Calls stocks – calls vs puts options – calls vs puts explained

Buying puts or buying calls allow traders to bulk up on stock and use leverage to make money in the stock market.

There are 4 different ways you can trade options.

  1. Buy Calls
  2. Sell Calls
  3. Buy Puts
  4. Sell Puts

All four essentially allow you to use leverage and make money whichever side of the play you want to begin trading options.

However, selling calls and selling puts from the get-go will require further in-depth explanation, which I will do in another article.

For today’s breakdown, I’ve explained buying both calls and puts.

There are a variety of things that attract investors to trading options.

  1. Short-term gains
  2. Big returns
  3. Losses are limited to what you put in your contract
  4. Quick accumulation of cash / shares

If you’re here today, it’s because you’ve probably seen people in your space talk about how much money they’ve made playing options.

And while options can yield a full-time income stream, new traders should also be aware of the risks.

Is trading options risky?

Is trading options risky?
Calls vs puts options – puts vs calls stocks –

Trading options has its risks as bets aren’t 100% guaranteed to play in your favor.

However, there are a few things you can do to increase your chances at becoming profitable.

  1. Familiarize yourself with technical analysis / chart patterns
  2. Only buy what you can afford to lose

While traders can certainly trade based on market sentiment, it would be wise to gain some understanding of how prices move through technical analysis.

TA can help traders determine the trajectory of a stock’s price moves in the coming minutes, hours, days, and even weeks.

It’s best to armor yourself up and learn as much as you can to properly set yourself up for success.

If you’d like me to do a write-up on bullish and bearish patterns leave me a comment below.

When it comes to choosing between calls vs puts, it really comes down to adapting to the changes in the market to help you increase your income potential.

If you have any questions, be sure to leave a comment below.

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AMC Falls After Trading Halt: Was This Illegal?

AMC Falls After Trading Halt: Was This Illegal?
Trading halts cause AMC stock to fall more than 11%

AMC falls more than 8% the day after market makers halted trading, though the SEC has the power to halt trading as well.

The theatre chain stock had risen to more than $34 per share shortly after the market opened.

But a trading halt seized retail momentum causing the stock to plummet.

Coincidentally, GameStop was also halted as the game retailer soared to almost $200 per share.

Was this illegal? And should it be illegal?

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Who can halt trades?

who can halt stock trades
Who can halt stock trades?

Market makers, exchanges, and the SEC can halt trades.

As AMC falls, retail investors continue to ask why this ongoing manipulation in the market continues.

The question is who halted the trade of AMC and GME stock?

Prior to a halt, individual exchanges typically make an announcement alerting investors and keeping them informed.

Shareholders did not receive an alert.

So, did the SEC halt trading or was it market makers?

Most retail investors wouldn’t be surprised if it was both as the SEC Chairman Gary Gensler has not addressed retail’s concern.

The SEC has failed to address retail investors’ issues and has neglected to enforce proper measures against short seller market manipulation.

What is the purpose of halting trades?

The purpose of halting trades is to refrain investors from having a massive selloff, or in ‘meme stocks’ case, to refrain the stock from squeezing shorts from their positions.

Our financial system is in a great state of emergency at the moment.

And retail investors have created a disruption for just about every corrupt player in the game that feeds off of the small investor.

So, what can retail investors do about this manipulation in the market?

Retail investors must persistently raise awareness about the issues the community is facing.

The moment retail stops fighting for a fair market is the moment greed driven politicians and institutions win.

With enough energy and time, more and more people will begin to wake up to the truth.

Related: How do hedge funds manipulate the stock market?

Will these halts have a long-term effect?

AMC’s and GameStop’s trading halt might have slowed down the process of squeezing shorts, but only for a moment.

See, the data hasn’t changed despite the market manipulation.

And it’s true, the longer short sellers drag this momentum play the bigger the event will be.

That’s because the number of shares being loaned have reached an all-time high and they continue to multiply.

This applies to GameStop too.

Eventually they’ll have to buy these borrowed shares back.

How long will that take?

That will depend on how long they can afford to hold their positions since they pay a fee to short both AMC and GME stock.

Be sure to check out this article here for more on what will trigger AMC to squeeze plus data, chart analysis, and patterns.

Days to cover is going down

I want to share this chart with you really quick.

The grey line going up shows short sellers have more shares now to cover than they did back in January and May/June of 2021.

This instantly tells us AMC’s next runup is going to surpass that of May/June’s all-time high.

The purple line shows us the ‘days to cover’.

Every time AMC’s DTC went down, we experienced new ATHs.

We can see in the chart that the days to cover is coming down again.

As Trey says, this is not a dead cat.

Expect AMC’s next runup to be more violent than June’s runup last year.

Will this be MOASS?

You’ll have to keep an eye out on the short interest data to identify how much percentage goes down during the climb.

This will give us a rough estimate of how many short sellers are left in the play.

And as AMC falls today, keep in mind that the entire market is also falling.

Big price moves are coming for AMC, be prepared.

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