Time’s running out for shorts!
$T2 Biosystems (TTOO.US)$ Naked shorting leads to an artificial supply of new shares, which is why it’s called a “synthetic” share The CEO stated himself that there is a high amount of retail interest in this stock. Add CRG & other institutional shares, and there is most likely a relatively small public float Since the public float is small, we know market maker must have low inventory (not many shares available to short) So what does the market maker do in order to create liquidity, since they know a lot of shares a locked up in retail hands? Well they naked short the stock in order to create real sell orders from retail, such as a “stop loss hunt” (to cut losses) This frees up more “actual” shares from the retail hands back into the public float Here’s the problem… that strategy (naked shorting) only works in the long run IF a company lacks strong fundamentals. We know that’s not the case for T2 Biosystems So this presents an awkward situation for the market maker. They can continue this play of naked shorting in order to free up “actual” shares from retail, but only so long as there isn’t overwhelming demand We’ve seen what price can do intraday on 424MM volume (+70%). But the market maker can suppress that price action the next day if volume (momentum) dries up, right? Because they can overwhelm retail demand with naked short supply & suppress price. Can’t do that with 424MM demand To bring it home, my point is that market maker is 100% naked shorting this stock, but with the right news, such as a surprise factor on government contracts, we could see multiple days/weeks of half billion demand… at that point, market maker won’t be able to suppress price like a ticking time bomb 💣
not a financial advice
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JESSE JAMES8832 : very informative thanks
Dons hobby : Thanks a lot Ghorghor really appreciate you taking the time to post very informative