Re:Robinhood is limiting purchases of stocks: AMC, Blackberr...
by AndrewBissell on Thursday January 28, 2021 @01:37PM
(#25946668)
I mean, we can see that this idea that the stock is too risky to quote is not true because there is a two-sided market in it right now, which can be traded on multiple platforms. The only actually existing peculiarity here is that Robinhood is not allowing customers in possession of 100% margin to open a new long position.
Re:Robinhood is limiting purchases of stocks: AMC, Blackberr...
by JumpCrisscross on Thursday January 28, 2021 @02:21PM
(#25947490)
> we can see that this idea that the stock is too risky to quote is not true because there is a two-sided market in it right now
On exchanges. Those are buyers and sellers as well as market makers. Robinhood connects to a subset of the latter.
Re:Robinhood is limiting purchases of stocks: AMC, Blackberr...
by whimsicalism on Thursday January 28, 2021 @02:57PM
(#25948129)
> Those are buyers and sellers as well as market makers.
Nope, pretty much just market makers.
Re:Robinhood is limiting purchases of stocks: AMC, Blackberr...
by whimsicalism on Thursday January 28, 2021 @02:08PM
(#25947265)
Hopefully others realize that downvotes on HN do not change the reality of how market makers function.
People after the financial crisis liked to talk about fat tails. Risk models assuming narrow tails, reality having a taste for extreme events. This is a fat-tail event. We don't have great models for stocks as volatile and as correlated as GME is right now. Which means for even cash equities trading, we don't have a great sense around what the appropriate spread should be.
Market making has sometimes been described as vacuuming up nickels in front of bulldozers. These are bulldozin' times. You don't want to fill a bunch of sell orders in GME right before it gaps down 80%.