Yes. However, this was gambling, pure luck on my part. Nothing to do with trading.
TLRY
- Thread starter constitutionman
- Start date
i would agreed. This was gambling. I should have stayed with the long trend and got out when it went crazy. That's proper trading.
which broker did you use to short 100 CFDs of TLRY?
Here is my theory of what happened with TLRY, I have no proof but I have traded similar situations so many times I believe its likely to be correct. What you had here was a group that bought a good percentage of the float and then started to manipulate the stock. I have seen this in stocks like VLTC, GENE, and a number of others.
They will support it for weeks and weeks, and of course, will have to accumulate quite a bit of inventory. They do it as a group to avoid having to file with the SEC as a 5% holder (even though its illegal as a group is just one beneficial owner), its harder for the government to prove things.
Occasionally they will tank the stock to draw shorts in to fuel the move higher. Citron fell like a fool, as a matter of fact, he helped to create the move. Eventually they produce a short squeeze (and in this case, the easy availability of options fueled bearish bets like crazy) and when that squeeze reaches its climax, they will dump their inventory and walk away with giant gains. Guy Gentile recently pulled that off on AWX (which went from like $3 to $36). He did it badly, got sued for it and the SEC will probably come after him.
In this case the guys seem to have done a great job at concelling what they did so nobody knows who is behind it. But I do not think all of this action is explained by 'mj craze', I'm long and trade dozens of MJ tickers everyday, none of them behaved like this one. It really felt that this had a group propping things in the backstage. It reminds me a lot of the Jesse Livermore manipulations he described in Reminisces
The group behind it made a fortune out of this one as they usually do (Gentile made $5m in his manipulation and that was a small low float stock, in a stock like this I'm thinking they made at least $100M). My goal one day is to identify a group pump stock like this, go long and just hold for the huge gain. Its so hard to do because it goes against every trading inscting to be long something so overextended but one day I want to pull it off. These plays are giant transfers of wealth from dumb shorts to longs
They will support it for weeks and weeks, and of course, will have to accumulate quite a bit of inventory. They do it as a group to avoid having to file with the SEC as a 5% holder (even though its illegal as a group is just one beneficial owner), its harder for the government to prove things.
Occasionally they will tank the stock to draw shorts in to fuel the move higher. Citron fell like a fool, as a matter of fact, he helped to create the move. Eventually they produce a short squeeze (and in this case, the easy availability of options fueled bearish bets like crazy) and when that squeeze reaches its climax, they will dump their inventory and walk away with giant gains. Guy Gentile recently pulled that off on AWX (which went from like $3 to $36). He did it badly, got sued for it and the SEC will probably come after him.
In this case the guys seem to have done a great job at concelling what they did so nobody knows who is behind it. But I do not think all of this action is explained by 'mj craze', I'm long and trade dozens of MJ tickers everyday, none of them behaved like this one. It really felt that this had a group propping things in the backstage. It reminds me a lot of the Jesse Livermore manipulations he described in Reminisces
The group behind it made a fortune out of this one as they usually do (Gentile made $5m in his manipulation and that was a small low float stock, in a stock like this I'm thinking they made at least $100M). My goal one day is to identify a group pump stock like this, go long and just hold for the huge gain. Its so hard to do because it goes against every trading inscting to be long something so overextended but one day I want to pull it off. These plays are giant transfers of wealth from dumb shorts to longs
I totally agreed. There was so much pumping and constant buying today. Just insane.
I should have gone long and stayed long until the end or near the end. No one can time the top perfectly.
I'm glad that I was able to get out of my put at a profit (entry: $17, exit: $30). At one point, I thought the put was going to zero. Whew.
All these intraday halts are madness. What does it accomplish? Volatility Trading Pause they call it. Joke!
Also notice the last halt on TLRY was @ 3:48? halts are suppose to stop @ 3:35!
Controlling Market Volatility
The U.S. securities markets trade enormous volumes of stocks every day. Investors have come to expect prices to be set and transactions to be completed in the most efficient manner possible. Regulators work with market professionals to ensure that prices are set, and clearance and settlement take place, without disruptions. Every once in a while, markets may experience events, referred to as extreme market volatility, during which prices become erratic. The exchanges and FINRA have rules in place to take coordinated action to control market volatility for the benefit of investors. Those rules call for a pause in the trading of a single stock across all markets when the price changes by a certain percentage over the preceding five minutes, and for a market-wide trading halt when the Dow Jones Industrial Average (DJIA) declines by specified percentages. Read on to learn how single-stock trading pauses and market-wide circuit breakers work.
Single-stock trading pauses: a five-minute pause to let the price stabilize
Rapid price movement in a short period of time may signal that the price-setting process for a stock may be distorted. To keep the process from getting out of control, the listing exchange will call for a trading pause if the price moves up or down by specified percentages in a rolling, five-minute period. Here are the price moves that trigger the pause:
Also notice the last halt on TLRY was @ 3:48? halts are suppose to stop @ 3:35!
Controlling Market Volatility
The U.S. securities markets trade enormous volumes of stocks every day. Investors have come to expect prices to be set and transactions to be completed in the most efficient manner possible. Regulators work with market professionals to ensure that prices are set, and clearance and settlement take place, without disruptions. Every once in a while, markets may experience events, referred to as extreme market volatility, during which prices become erratic. The exchanges and FINRA have rules in place to take coordinated action to control market volatility for the benefit of investors. Those rules call for a pause in the trading of a single stock across all markets when the price changes by a certain percentage over the preceding five minutes, and for a market-wide trading halt when the Dow Jones Industrial Average (DJIA) declines by specified percentages. Read on to learn how single-stock trading pauses and market-wide circuit breakers work.
Single-stock trading pauses: a five-minute pause to let the price stabilize
Rapid price movement in a short period of time may signal that the price-setting process for a stock may be distorted. To keep the process from getting out of control, the listing exchange will call for a trading pause if the price moves up or down by specified percentages in a rolling, five-minute period. Here are the price moves that trigger the pause:
- 10 percent price movement, up or down, for securities in the S&P 500, the Russell 1000 Index and some exchange-traded products (ETPs);
- 30 percent price movement for other stocks priced at least $1.00; and
- 50 percent price movement for other stocks priced at less than $1.00.
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It's an interesting theory, and you could be correct. However the risk of holding a stock like TLRY overnight - especially in the last week or so - is that the company will do a secondary offering at a discount. Especially as the CEO admitted on Mad Money that he wants/needs to raise more capital.
I could imagine your 'corner the market' thesis could work for TLRY on an intraday basis - for example, buying up most of the float after the stock bottomed at $175 this morning, and then selling after 2.30pm.
But the risk of holding a large long position overnight is too great.
Maybe SunTrader is correct with his/her theory instead:
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I have heard from some good traders that there is a rule in terms of minimum amount of time after an IPO that you need before doing an offering. Furthermore, lots of times these pumps have some level of coordination with management since its to their benefit (even if $TLRY were to crash to $80, it would still be quite overvalued, etc)
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You raise some good points - thanks for your perspective.
On a related note, I am wondering just how strict lockup periods are? Are there any administrative restrictions that prevent insiders from selling during a lockup period?
https://www.cnbc.com/2018/09/19/pot...ets-a-boost-from-its-big-stake-in-tilray.html
"Seattle-based Privateer Holdings has at least a 76 percent stake in Tilray, according to FactSet."
(Obviously this refers to the total shares outstanding and not the float.)
Surely if you were the portfolio manager of this fund you'd be wanting to sell at least some of your holding as TLRY went above $200, $250, $290 ...
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