Hi Dario,
Your tweet about IBKR fraudulently selling your NVDA Put was highly interesting for myself and probably should be as well for many others who are not yet aware of what is going on.
IBKR using as a pretext that they would mitigate your risk when they sold your NVDA Put while as IMO you correctly concluded, they in fact probably were more interested in saving their own back tail, on itself can lead you to make conclusions.
Probably they are feeling some heat because of an uncomfortably high long exposure to NVDA.Â
I made during the last aprox. one year many times similar experiences with IBKR and am sure that many of my positions cause pain to that broker and for sure also to many other brokers.
I am small fish and my positions should not be of any concern for my broker, however, imo they are quite obviously engaged in naked shorting of small cap stocks in hundreds and much more likely in thousands of different stocks and therefore are exposing themselves to potentially unlimited risk and a completely upside down risk/reward ratio.Â
For myself I documented during the last few months how IBKR doctored my apparent risk in a way that fit them to justify selling off some of my positions in forced liquidations.
Your experience with them selling your NVDA Put was identical to what I experienced when they liquidated some of my stocks.Â
Since they are obviously short what they sold to me and other retail investors, they have to bear the unlimited risk of a naked short.
In order to maintain many "off the chart"-risk trades they need to have assets in their books as otherwise they would get margin called themselves.Â
Your post gave me an important hint and I understood that while they are engaged heavily in naked shorting small cap stocks, they at the same time have long exposure to the "magic seven" as well as indirectly to BTC through MSTR. Their long exposure provides the marginable assets they need in order to maintain enough margin for the trades in which they are short. They are condemned to succeed in pumping the assets where they have long exposure to ever higher prices while at the same time they need to suppress prices in the assets where they are short to ever lower prices as otherwise their criminal scheme would suddenly fall apart.
Their biggest risk is that retail investors can put the whole puzzle together and start to take them on in a GME-fashioned way. At last it will be retail investors that decide at which price they are willing to sell what shorts eventually will be forced to cover. Therefore their need to fraudulently remove critical assets from retail portfolios.
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I could go on for a long time and have gathered a lot of evidence on this topic, but I will mention only one example:Â
How is it possible that a stock like #DRUG (MktCap today 276M) blew in October from aprox. 1.10 to a high of 79USD in five trading days, trading on October 15th alone a volume of almost 103 million shares while the float is only 5,02 million.
Where would the price have gone to, if that company's float would not have traded 20 times over in one single day? Also watch stock borrowing rates that IBKR charges when stocks explode out of nowhere. In many cases there are no shares available for borrowing and rates explode to hundreds of percent. So while no shares are available to borrow for a big broker like IBKR and borrowing rates are unbearably high for possibly legitimate short sellers, someone sells twenty times the float in one single day. I believe it should be clear that this kind of volume must be sold nakedly, probably under market maker exemption rules which large brokers and banks obviously have access to. Â
There are hundreds of companies that experienced explosive price increases in their stock, only to be subsequently sold down again, trading the companies float in some cases more than 100 times in one single day. IMO shorts are completely trapped in an unprecedented way.Â
There are many entities that are acting in an apparently unreasonable way, in your case selling your NVDA put as well as in many cases liquidating small cap stock out of retail portfolios. Nasdaq maintains SMCI on its exchange which also appears to be unreasonable, because otherwise NVDA might collapse and could potentially lead to unresolvable margin problems. MSFT, MSTR, UBS, etc., legalized fraud everywhere.Â
Looking at each part of the puzzle individually gives the impression that acting of brokers, exchanges, banks, self-regulatory organizations like SEC and FINRA as well as politicians seems to be completely unreasonable.
Putting the puzzle together reveals the full picture of an entirely synchronized but corrupt system that is selling assets that it never had at accelerating pace, while at the same time pumping ever fewer marginable assets which they use by definition in order to somehow balance the whole fraud. Watch for "Assets sold, not yet purchased" and how they price these assets in their financial reports and the puzzle should be complete.
I would be very interested in your point of view on what I tried to describe above as you have much deeper understanding on how these companies really work.Â
I appreciate you spreading your knowledge as otherwise I would have been unable to see through their game and at this point would be completely frustrated as we value investors are getting robbed in broad daylight and no-one seems to care.
Now, however, I can see the level of desperation they show in every action they take.Â
Their desperation nurtures my optimism. It was not us retail investors that intended to take them on, it was them that conspired against us and payback shall be a bitch.
I never was interested in stocks like NVDA or MSFT and it was only through your excellent analysis that I could see through that part of the game. So big thank you once again and please keep it on.Â
Hi Sir
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I can disagree with nothing in your writing; what you described is obviously what's happening and the fact that the regulator is doing nothing about it is the most concerning part. This is also the reason why I decided to stay away from stocks in this environment since I learned during the GME saga first and shorting CS after that the whole system is rigged against retail traders who are only allowed to profit when they find themselves on the same side of the big institutional investor whales.
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@dariocpx Thank you Dario for your reply. It's good to know that I am not completely nuts with my thinking about what the Finmafia is doing to us. I have not thrown in the towel and hope that our knowledge and tenacity will lead us eventually to success.
Two movies that show both sides of a similar game that happened during the Global Financial Crisis: The big short (Showing how a "good guy" played the MBS collapse) and Margin Call (shows how the bad guys got destroyed).
What we have at hand now is IMO a huge opportunity and is in many ways similar to what happened in 2008 but far more is at stake this time. Obviously the other side will try everything to safe their skin.
Movies will be made on the subject in the aftermath. In fact I know of one which already is in the making.Â
IMO the way to play the current game is to very slowly accumulate deep value stocks that have been nakedly shorted to ridiculously low prices. Dollar cost average on the way down and never chase. Such stocks can be relatively easily found.
A liquidity crunch imo has to happen before the FED will open the flood gates once again. During that liquidity crunch I believe that naked shorts will be roasted as nobody during a tight liquidity scenario wants to have to deal with a naked shorts liability.
Once the Magic 7 drop, brokers and banks involved in naked shorting of small caps will start to have margin problems. So I expect more and more buy-ins to happen. In Fact I believe that it will be these buy-ins that will trigger the next bigger crisis.Â
Once the stocks are in the portfolio, inform your broker that you do not give consent on your stock being lent and furthermore put in GTC limit sell orders on progressively higher prices for all your shares, speculating in that way on a short squeeze.
First sell orders should be on relatively low prices to partially sell a position in order to recover the invested capital. Rinse and repeat. Don't play on margin and maintain cash in your account. Document how your broker plays their dirty game and be very patient.Â
Always keep in mind that when naked shorts need to cover, the last few irrational sellers of deep value stocks will turn around and now will have to buy huge amounts of shares that actually should never have existed, not to go long, only to close their shorts. Therefore don't be shy in raising your GTC limit sell orders on the remaining shares to what might appear to be "very elevated prices".
Investigate what happened to GME's price when it squeezed. Probably most would have been making much higher profits if they had held on for a bit longer on just a small percentage of the initially owned shares.Â
The short squeeze season has in my opinion already started. Watch for the winners every day and see on the corresponding charts how they in the past have been beaten down. Compare daily volumes to the respective float.Â
I wish you and all the good people a Happy and hopefully very successful new Year.