Binomo Review 2020 - Binary Option trading with Binomo ...

EDIT:
Here's another link to the long DD pdf, I'm told this site is better:
https://pdfhost.io/v/BV8RQ6bxD\_A\_Market\_Study\_1115
​
This is not financial advice.
I just posted an 88 page DD that wasn’t very popular (EDIT: got removed for bad links), but as part of it I briefly covered the FTX TSO fuckery, Swaps, ETFs, and some predictions. I still think it’s pretty good, but I wanted to shorten it down to see if this gets more traction. I also wanted to address TSOs and some other stuff because I think it will hopefully be helpful to some. Also, if more people see this you can help me learn and poke holes in my write-up.
I try to cover a lot here for the deep dive read my paper if you have the time.
Here are links to the full 88 page DD if anyone wants to read it:
https://anonymfile.com/9JRaW/a-market-study-1115.pdf
Let me know if there’s a bettesafer place or way to post it.
TSOs
So, the theory on FTX that I see spreading around is that GME TSOs (Tokenized Securities Offerings) are being used to hide naked shorts. I believe GME TSOs were actually used by naked shorters to inflate their books so they wouldn’t get margin called.
Locates
First off, TSOs cannot be used for a locate in the way the rules currently stand. There has already been extensive DD on how ETFs are used to hide naked shorts and so far this is the only way I have found that naked shorters can hide their fails.
Rule 3b-3: “In addition, Rule 3b-3 provides that a person has a "long" position in a security if he holds convertible securities, options, rights, or warrants, and has tendered for conversion or exchange the convertible securities or exercised the options, rights, or warrants.” https://www.sec.gov/rules/interp/34-48795.htm
Rule 3b-3 means that to mark a sale long rather than short you need to have some sort of convertible instrument that has also been exercised which basically means the shares have been shipped. You're only supposed to fail if your shipment doesn't arrive for some reason.
Options Exemption
The options exemption applied to market makers and it meant that market makers could sell a non-exercised put and naked short to hedge, they were technically supposed to settle in a timely manner, but we're all here because they didn't and still don't. This exemption only ever applied to market makers and options and this options exemption was taken away in 2008. I actually believe changes in Reg SHO in 2008 caused the financial crisis – you can read about that and Bernie Madoff in my DD up top. I believe the 2008 financial crisis happened because two exemptions were repealed:
Grandfathered FTD exemption gets repealed in December of 2007. https://www.sec.gov/rules/final/2007/34-56212fr.pdf
The market maker option exemption is repealed in September of 2008. https://www.sec.gov/news/press/2008/2008-204.htm
They needed to be repealed to end naked shorting (spoiler, it still didn't work), but I think naked shorters tanked the market to survive.
Look at how the options market climb gets crushed in 2008, probably because options were no longer a viable way to hide naked shorts:
1
https://preview.redd.it/r9ecyomwc60a1.png?width=1920&format=png&auto=webp&s=91d468e798aefe5582e04a740eeff4d830189037
​
Then look at how ETFs take off in 2008, probably because now they were the only way to hide naked shorts:
2
https://preview.redd.it/vtl4ymuwc60a1.png?width=1920&format=png&auto=webp&s=52e757190939fbcf1d481cbb27d1f414cf450c03
​
Now look at how FTDs in common stocks fell after 2008 and stayed relatively flat especially compared to before, while FTDs in ETFs went right back up:
3
https://preview.redd.it/bfv3d02xc60a1.png?width=920&format=png&auto=webp&s=b1bb00045bba7c82c7eef71e75c013d32a1968cd
​
Now let’s look at what I think are striking connections between rule changes by the SEC and drops in the market during the 2008 financial crisis:
4
https://preview.redd.it/g1zi7u9xc60a1.png?width=1920&format=png&auto=webp&s=9c6b1334d59248e2189c548be418ff80463d9acd
​
Current Rules
Currently you can mark a sale as long only if you have shares or have exercised “options, rights, or warrants” or have “tendered for conversion or exchange... convertible securities”. At the same time no matter if you sell the shares long, short, or short exempt; you still need to deliver securities of GME in T+19. Market Makers have until T+6 to deliver, then shares become FTDs on day T+7, the security get added to the Threshold List after five days of being FTDs if it’s not already on the list, then after 13 days of being FTDs the fails are forced closed. Here’s a calendar I put together that shows how it works:
5
https://preview.redd.it/tp0xi8hxc60a1.png?width=1920&format=png&auto=webp&s=7c6302ffe995e3beabe5beecf6849b8212032653
​
So, no matter what, naked shorters are forced to deliver shares or synthetics by the morning of T+20, the only way to make synthetics that can trick delivery seems to be naked ETFs.
ETF FTDs
Like I said there’s been a lot of DD on this so I’ll try to sum it up quickly. The idea to make naked shorts with ETFs takes only a few steps.

1. Naked short a bunch of ETFs to your buddy – probably 50,000 ETF shares at a time, usually the size of a creation basket. Set a future creation date for the ETFs, your naked shorting buddy won’t demand creation delivery because that would cause buying pressure on the underlying.

The SEC in 2020 stated that, “[c]urrently, ETF creations and redemptions with scheduled settlement dates beyond T+2 are settled broker-to-broker outside of NSCC.” https://www.sec.gov/rules/sro/nscc/2020/34-89088.pdf

1. Your buddy then pays you to redeem the naked ETFs for the shares packaged inside – this payment is a sort of rent payment to borrow your ETF creation/redemption loophole.
   
2. Deliver the synthetic shares to your buddy, the shares came from naked ETFs so the shares are technically naked shares, but they look like long shares on your books because you redeemed naked ETFs for synthetic shares.
   
3. Your buddy sells those shares on the market and it appears as a long sale, but it’s really a naked short since it was pulled out of a naked ETF.
   

There are most likely some futures and options involved which I include in this graphic. This graphic is supposed to show what a successful naked short through ETFs could look like:
6
https://preview.redd.it/eavcx9sxc60a1.png?width=1080&format=png&auto=webp&s=3932d1997ce1701ac26d136ab4fc41b89ff9f2fe
​
To close a successful naked short, the naked shorter would buy the shares back for cheap and deliver them to the Market Maker under the futures contract so that the Market Maker can create the ETFs.
To roll an unsuccessful naked short, the naked shorter would have new naked ETFs sent to them with a future creation date to cover the old ETF FTDs. Then they would open new futures contracts and options contracts with new expiration dates off in the future.
Failing ETF shares to your buddy to then unpackage and short still seems like the best and possibly only way to hide naked shorts. I believe this is where naked shares of GME are still being hidden, in the ETFs.
FTX and TSOs
If naked shorters are hiding their shorts in ETFs then TSOs aren’t needed in the first place for a locate, but even if they were, TSOs don’t work as a locate based on the current rules. I think TSOs served a different purpose that was maybe just as vital though.
One of the participants in the naked shorting set-up using ETFs needs to be a Market Maker that can redeem and create ETFs, that MM would probably also have a pretty good finger on the pulse of retail. In January 2021 a huge amount of retail call options were about to expire in the money, and retail was gobbling up shares of GME at the same time. I’ll try to cover witching windows which pretty clearly show buying pressure on GME here in a bit, but naked shorters were also going to need to start buying shares around this same time into the March witching date. The Market Maker in this situation may have even sold a bunch of those call options and could have been worried about delivering a bunch of shares because retail was exercising a bunch of GME calls.
In other words, naked shorters knew there was retail demand and knew they were going to have to start buying up GME shares. GME was about to skyrocket and shorters were likely to get margin called.
I believe naked shorters buying GME and exercising call options started the explosion in January 2021 and they knew this buying pressure was coming. If the SEC asked about any naked shorts they pointed to the redeemed ETFs as their locate. If they wanted to keep the FTDs they needed to hedge what was about to be a failing naked short position somehow. Call options would lead to buying pressure on the stock and long swaps would lead to hedging with more call options. TSOs could be used to hedge for margin while not applying any buy pressure if they’re not actually backed up by securities. The TSOs on their books, which were likely backed by hot air made it appear as if they weren’t about to go bankrupt.
So you're a naked shorter who needs to buy to cover and hopefully close your GME naked shorts, why did you ever let that genius investor talk you into shorting Gamestop? You get some TSOs on your books to hedge your short position if GME skyrockets. Don't want to get margin called and then you start buying the shares you need. GME skyrockets and your TSOs save you for one more day.
A little bit of tin foil: SBF (Samuel Bankman-Fried) isn't Lehman Brothers, he's the Madoff fall guy to distract everyone. Madoff has too many connections to the options loophole to not have been naked shorting in my opinion. Madoff kind of said he was a fall guy for naked shorting in 2008 from prison. I elaborate more in my 88 page DD.
So, why was there about to be buying pressure on GME? Witching Dates and something I call Witching Windows and I believe if there are too many naked shorts it can lead to Witching Waves.
Witching Waves
Basically, the idea is that naked shorts are hidden in ETFs and paired with Futures and Options that both have expiration dates on one of four days during the year. The third Friday of March, June, September, and December. Our Witching Days (aka witching dates, quad-witching, triple-witching) signify the dates around which old ETF FTDs need to be closed, or covered and rolled. If, GME has naked shorts hidden in ETFs then you would probably start to see witching waves as buy pressure around these dates cause an increase in price before new naked shorts and legitimate shorts paired together create a decrease in price.
They might look something like this:
7
https://preview.redd.it/lghvxb5yc60a1.png?width=1920&format=png&auto=webp&s=54e2866a8e1310f68b45a2749e830ae7051df7f7
​
The Purple are the witching dates, the blue box is the witching window around each witching date. The witching window starts on the last day naked shorters can roll their futures contract with cash and keep hiding their FTD position. The last day of the witching window is T+19 from the witching date which is the day of forced delivery. If GME is shooting up in price on this day and naked shorters haven’t closed or rolled all of their FTDs then they’re basically fucked. Margin calls anyone?
So let’s look at the GME chart with the same purple and blue boxes overlaid:
8
https://preview.redd.it/lyccmgfyc60a1.png?width=1920&format=png&auto=webp&s=447552e197cb7dea56587f6ab10bdf1a3f812f87
​
Witching windows show pretty strong witching waves in my opinion. GME usually bottoms out at the end of most witching windows, before peaking around the first day of the next witching window or at least usually in the first half of the witching window, before falling back down, and so on.
March and Spring of 2023 look interesting to me. It’s the only day where the peak of GME is after the witching date, I think this could be a sign that the March witching date is the hardest time for naked shorters.
I think Legitimate Short Interest is Naked Shorters
No one in their right mind who actually does research on stocks and naked shorts by finding legitimate borrows would touch GME right now in my opinion. By legitimate short interest, I just mean where a borrow for the shares is actually located and used. GME has all of you (and me) buying and DRSing GME regularly. Legitimate shorters have so many other stocks that are tanking right now to short and profit from. I believe the majority of legitimate short interest on GME is a sign of FTDs leaking out onto the market. Who would fight Apes right now, if they weren't desperate.
Currently reported short interest sits around 17%. Naked shorters are sitting un an untold toxic bag of FTDs that are likely hiding in ETFs, when they can’t hide any more they turn to actually borrowing the stock like some sort of peasant I guess. I need to look into this more, but here is a chart I quickly slapped together overlaying the GME witching waves and windows on top of reported short interest.
9
https://preview.redd.it/jzmmb1syc60a1.png?width=1920&format=png&auto=webp&s=047b1f7818db68d02db6cad876299a757a89becf
​
I believe this shows that as naked shorters started buying to close and cover FTDs they were also legitimately shorting by finding actual borrows. The legitimate shorting helped suppress their buying. They then create new FTDs which drives the price down and they close out of their legitimate shorts at the lower price. The cycle continues. Does Kenny sleep at night? Who knows?
Swaps and Bullet Swaps = Leverage
Let’s talk about swaps really quick because they’ve been popular recently too. As far as the rules I’ve read go, and I’ve read quite a few SEC filings in the last two months, swaps can not be used for a locate either. Therefore, swaps can not be used to hide naked shorts. No shares are ever delivered during the life of a swap, so naked shorts can’t exercise a swap and point to the swap as a borrow for their shorting. Swaps also don't create synthetics that naked shorters could deliver.
I believe swaps are more just about growing your short position through leverage without any shorting showing up. Creating leverage through put options can create legitimate short interest through hedging which could alarm any potential short squeezers. Short swaps are also likely hedged with put options, but not with any shorting. When the swap comes due they are settled in cash, so I don’t believe short swaps or bullet swaps will lead to buying pressure on GME.
Here are just some examples of what a successful and unsuccessful short swap could look like:
10
https://preview.redd.it/kufr262zc60a1.png?width=1920&format=png&auto=webp&s=7f212b8f64f78b201a5f114637a432afbf727acb
​
11
https://preview.redd.it/8zi5hxazc60a1.png?width=1920&format=png&auto=webp&s=bc3967d001dfdca543421c1b1cc0474684a0bae4
​
As you can see you can successfully hedge with put options, so if Archegos has a bunch of bullet swaps on GME and they come due then Archegos would owe Credit Suisse a bunch of cash and Credit Suisse’s put options would be worthless. No buying of shares would be necessary. So, I believe if there are still bullet swaps open then Credit Suisse just loses out on a big pay day from Archegos. I doubt they need to buy any GME shares.
The story is that Archegos blew up because long swaps on Viacom and Discovery crashed in price when both stocks fell. I do think it's interesting this happened at the same time that GME had a strong rise in March of 2021. I would be surprised if short bullet swaps on GME didn't at least add to Archegos blow-up in March.
This doesn't mean that Archegos didn't also have large amounts of GME FTDs. If they had short bullet swaps then I wouldn't be surprised if they also had naked shorts.
Predictions
I hate to say it, but I believe the witching waves paint a clear picture that naked shorters most likely have control over the price through the winter. My predictions:
1. It looks like GME bottomed out around October 13, 2022. It now looks like GME will rise into the next witching date like it has for the past couple of years. So for my first prediction, I believe we will see a rise in the price of GME that will peak for 2022 sometime around Monday, November 21st to December 9th. If I had to choose one date, I’d put my money on GME peaking on Friday, November 25, 2022.
2. Again, I hate to say it, but I believe naked shorters have control over the price of GME until March 2023. The price of GME fell from the start of the December 2021 witching window until the March 2022 witching date and I believe we will follow a similar trend again. So my second prediction is that after GME peaks in later November it will fall in price until about Tuesday, March 14th, 2023.
3. My third prediction is that GME will hit low prices and it will be a good time to buy shares around January 16, 2023 to February 3, 2023. Then I think GME could have a small rise.
4. I predict GME will hit it’s lowest prices in early March. Might be a good time to buy and DRS. I think naked shorters will be desperate to get prices as low as possible around this time right before they're forced to go on a buying frenzy.
5. My fifth prediction is that Spring of 2023 will be a horrible time for any shorters of GME. I think GME will skyrocket in Spring (March/April) of 2023 and that the rest of the market could at the same time face a crash similar to the 2008 financial crisis. GME has consistently had large price gains in March/April for the past two years. Usually bottoms in GME hit outside of the witching windows then peaks in GME’s price usually hit around the beginning of the wave or at least in the first half of the wave. March 2022 is the first and only time in the past two years where GME’s price peaks after the witching date. I believe this could be a sign that naked shorters were in danger of losing control of the price of GME in March. I think things could be really bad for them this time around with all of the DRSing that’s happened. And all of the Apes.
6. My sixth prediction is that short interest will be a sign of naked shorts leaking out into the market as the FTDs they are.
Conclusion
Naked ETFs or ETF FTDs seem to be the only way to hide naked shorts. There is likely a limit to how many FTDs naked shorters can shoot out into the market before they’re actually uncovered as FTDs.
Naked shorters appear to be legitimate shorting when they close out large FTD positions in order to suppress their buying pressure.
Tokenized Securities Offerings (TSOs) were most likely used to hedge failing short positions and survive margin calls, TSOs can’t be used under the current rules as a locate. Unpackaged ETFs were used as the locate for the naked shorts and TSOs were used as the hedge since hedging with calls or long swaps would have lead to buying pressure.
Short Swaps are most likely just about creating huge amounts of leverage. You and your buddy are about to naked short a ton of stock and know the price is going to fall because of basic supply and demand. You open a short swap with your buddy and/or with others, and your buddy buys a bunch of puts to hedge. No short position is ever registered, the price falls because of your naked shorts hidden in ETFs, and you make even more money off of the swap position. Usually.
TL;DR
I try to cover a lot here so if you want to deep dive you can read my 88 page DD on all of this and more.
ETFs seem to be the only way to hide naked shorts. I’ve spent the last two months reading a bunch of SEC filings, but I’m still pretty smooth.
TSOs were used to hedge to survive margin calls, naked shorters knew immense buying pressure was incoming because they needed to buy GME. They bought up TSOs to hedge the failing short position and to live to see another day.
Swaps are used to create leverage. If you know the price will drop from naked shorts then you can open short swaps that are hedged by put options. No shorting ever hits the books and your leverage grew. The price falls and no shorting hits the books so it looks like organic selling. Your short swap position makes you more money off of the naked shorts and they’re safely hedged by the other party with put options.
March 2023 raises my eyebrows. My predictions are that GME will rise now for a bit and peak in late November to early December. Then I think GME is going to fall until late January and early February before possibly having a small rise. March is going to be tough, but hodling should be easy after two years. I predict GME will fall hard into early March because naked shorters will be crushing the price to close and cover as many FTDs as they can at the lowest price they can. I think a lot of FTDs come due every March witching date. Then I think GME is going to skyrocket in Spring of 2023 (late March/April). Early March might be a really really good time to buy and DRS, I know you all can be weary of options, but I’ll probably buy some calls in early March.
TL;DRS
Naked shorts are hidden in ETFs, TSOs were used to hedge to survive margin calls, Swaps are used to create leverage
Don’t be worried if GME falls pretty hard into early March – if it does it’s just naked shorters trying to crush the price so they can cover as low as possible.
My money is on MOASS in Spring 2023 – I make some other preditcions
I know a lot of you are weary of options, but I’m buying GME call options in early March that expire on or sometime after April 21st, 2023
DRS, Hodl, and Time are our three best allies
This is not financial advice.