0. Preface
I am not a financial advisor and I am not providing you financial advice.
I know that many, MANY people have looked into swaps, equity swaps, total return swaps, and so forth over the months. There's quite a few DDs on the matter! I either never saw the posts or did not dig into them until lately. So please know that the Equity Total Return Swap stuff is not my original theory. I've just tried to expand on it to fit the pieces together. The price movements, the Deep OTM PUTs (DOOMPs), ITM CALLs, and where Short Interest went. Which I'll discuss here.
I'm stealing this image from u/Chucry. Really sorry - I love the picture too much.
https://www.reddit.com/r/Superstonk/comments/p5rxo0/exclusive_footage_of_ucriand/
1. Equity Total Return Swaps - Hidden Short Interest
/u/quiquealfa described their theory about Equity Swaps being the main culprit in the meme stock price movements to me. So we started digging into the theory.
I was googling in a chain about Credit Default Swaps that led me to Equity Default Swaps which led me to 'Synthetic Prime Brokerages' which then led to Total Return Swaps, which finally led me to this post:
https://www.reddit.com/r/Superstonk/comments/ojh2eh/ultimate_wargame_theory_the_beginning_total/
Which I think is so amazing. It discusses Total Return Swaps and all of the players who may be involved in this "meme stock" situation. As u/Blanderson_Snooper calls them - the "Voltron Fund". This isn't just Melvin Capital and a few other SHFs being short. It's likely to be a massive amount of SHFs and SFOs around the world that abused naked shorting on a basket of stocks, putting not just the SHFs and SFOs at risk but the market makers and banks at risk as well.
Basically, they're all fucked if these stocks squeeze. The SHFs. The SFOs. The Market Makers. The Banks. All of them involved.
https://www.investopedia.com/terms/t/totalreturnswap.asp
The thing with Equity Total Return Swaps is that it's a ty
... keep reading on reddit ➡Alright, so one of the most interesting pieces of the L3 curriculum that stuck out to me was this concept of equity monetization. Let's say you've got $1M in TSLA stock that has a $100K basis. You want to de-risk, unlock liquidity, and diversify but you don't want the tax man bending you over on that $900K gain.
With equity monetization, you
- remove risk with either a traditional short (short sale against the box) or use futures/options/total return swap to offset your long position.
- Once risk is removed you can arrange a margin loan at very high (95-99%) LTV
- Because the loan is made against a riskless position, the interest rate is very low and can be partially offset by the proceeds from the short position or return swap.
- When you die, your heirs get a step up in basis. They sell the concentrated position, extinguish the margin loan, and walk away with zero capital gains.
So this all sounds bad ass, and I think there would be a huge demand for it if people knew about it, especially tech bros who have equity as a big part of their comp.
Is this all mainly theory or do people use it in the real world? How accessible is it, i.e. do you need millions for a counterparty/lender to even talk to you? If you want to advise clients on arranging such a strategy, where do you even begin?
EDIT 1: The title of this post should, in fact, start as follows: ”Both CBOE and NASDAQ filings state…” (see EDIT 2 below)
Thanks to the link shared by u/Dismal-Jellyfish, there is an interesting bit of info/data shared by the CBOE (Chicago Board Options Exchange) that I picked up on. They have made a filing to the SEC regarding a reduction in the ORF - Options Regulation Fee. This is a fee to “to assist in offsetting exchange costs relating to the supervision and regulation of the options market (e.g., routine surveillance, investigations, and policy, rule-making, interpretive and enforcement activities).”
The filing can be found here: C2 (Release No. 34-92596; File No. SR-C2-2021-012; August 6, 2021) https://www.sec.gov/rules/sro/cboe/2021/34-92597.pdf
Pages 3 and 4 explain why the CBOE has made this filing, which in fact decreases the ORF cost for each options contract:
Based on the Exchange’s most recent semi-annual review, the Exchange is proposing to reduce the amount of ORF that will be collected by the Exchange from $0.0004 per contract side to $0.0003 per contract side. The proposed decrease is based on the Exchange’s estimated projections for its regulatory costs, which have decreased, balanced with recent options volumes, which has increased. For example, total options contract volume in March 2021 was approximately 34% higher than the total options contract volume in March 2020 and the total options contract volume in June 2021 was approximately 25% higher than the total options contract volume in June 2020. In fact, March 2021 was the highest, and June 2021 was the second highest, options volume month in the history of U.S. equity options industry.
Note that the CBOE are bound by SEC regulations to adjust the ORF, in line with options volumes. So even if they did not necessarily want to make this change, they have no option but to adjust the fees and provide a justification. In doing so, they have somewhat revealed the hand of what is happening overall i.e. historically high volumes of options being traded in these last few months.
Why is this significant? Because it has been conjectured by many Apes that much of the fuckery we have been seeing for hiding FTD obligations is through options trading. This filing seems to indicate there has been a huge increase in volumes from precisely the timing that line up with this mechanism being used.
Of course that could be coincidental, but I think we have learned enough this ye
... keep reading on reddit ➡Prioritizing Equity video series: Critical race theory & intersectionality
“In this Oct. 4, 2021, Prioritizing Equity discussion, join AMA Chief Health Equity Officer, Aletha Maybank, MD, MPH, and leaders across a continuum of disciplines for a special discussion on critical race theory and its applications to the field of health equity.”
The Seattle Times endorsed Jane Aras for the Bellevue school board due to her support for kids’ interests.
www.seattletimes.com/opinion/editorials/the-times-recommends-jane-aras-for-bellevue-school-board-district-5/?fbclid=IwAR3d9ClHc0nwcZGvkEASzAyKCJKhac-yPBkSYhp7xpSNxoWDBfqssEsgoP4
Her opponent Gregg Smith was criticized for confusing statements on CRT that “amplified misunderstanding of the district’s equity initiatives.”
https://imgur.com/a/gnasob4
Thanks to the link shared by u/Dismal-Jellyfish, there is an interesting bit of info/data shared by the CBOE (Chicago Board Options Exchange) that I picked up on. They have made a filing to the SEC regarding a reduction in the ORF - Options Regulation Fee. This is a fee to “to assist in offsetting exchange costs relating to the supervision and regulation of the options market (e.g., routine surveillance, investigations, and policy, rule-making, interpretive and enforcement activities).”
The filing can be found here: C2 (Release No. 34-92596; File No. SR-C2-2021-012; August 6, 2021) https://www.sec.gov/rules/sro/cboe/2021/34-92597.pdf
Pages 3 and 4 explain why the CBOE has made this filing, which in fact decreases the ORF cost for each options contract:
Based on the Exchange’s most recent semi-annual review, the Exchange is proposing to reduce the amount of ORF that will be collected by the Exchange from $0.0004 per contract side to $0.0003 per contract side. The proposed decrease is based on the Exchange’s estimated projections for its regulatory costs, which have decreased, balanced with recent options volumes, which has increased. For example, total options contract volume in March 2021 was approximately 34% higher than the total options contract volume in March 2020 and the total options contract volume in June 2021 was approximately 25% higher than the total options contract volume in June 2020. In fact, March 2021 was the highest, and June 2021 was the second highest, options volume month in the history of U.S. equity options industry.
Note that the CBOE are bound by SEC regulations to adjust the ORF, in line with options volumes. So even if they did not necessarily want to make this change, they have no option but to adjust the fees and provide a justification. In doing so, they have somewhat revealed the hand of what is happening overall i.e. historically high volumes of options being traded in these last few months.
Why is this significant? Because it has been conjectured by many Apes that much of the fuckery we have been seeing for hiding FTD obligations is through options trading. This filing seems to indicate there has been a huge increase in volumes from precisely the timing that line up with this mechanism being used.
Of course that could be coincidental, but I think we have learned enough this year that there are not many coincidences in this whole saga… And as u/Wallstreet_Owes_Me pointed out in this post - which really sho
... keep reading on reddit ➡
