The High Stakes Room DD was created by AMCBiggums and Randall Cornett, and released on 12 August. We are reproducing it here without editing, but please note Apes Army do not endorse any information contained within. This is not financial advice. DYOR.
The High Stakes Room
What is the high Stakes room?
Imagine you’re walking into a casino and you have 100 million dollars. you sit down at the table and ask for chips. The dealer looks at you and says that’s cute. But it’s a couple billion to play at this table. This is what you call ISDA. Remember the movie “the big short”. Now look at this clip if you don’t believe me. THIS IS THE SCENE THEY GO TO THE BANK AND APPLY FOR AN ISDA LICENSE.
(Watch This Video Link Below For a Big Short Scene referencing ISDA.)
Charlie & Jamie of Brownfield Fund making ISDA pitch to JPMorgan Chase – The Big Short (2015)
What is ISDA?
International Swaps and Derivatives Association
ISDA is a trade organization of participants in the market for over-the-counter derivatives. It is headquartered in New York City, and has created a standardized contract (the ISDA Master Agreement) to enter into derivatives transactions. In addition to legal and policy activities, ISDA manages FpML (Financial products Markup Language), an XML message standard for the OTC Derivatives industry. ISDA has more than 925 members in 75 countries; its membership consists of derivatives dealers, service providers and end users.
ISDA Master agreement
This is the s.e.c master agreement document.
I highly recommend you watch the two minute video.
Requirements for an ISDA Master Agreement
An ISDA Master Agreement is the standard document regularly used to govern over-the-counter derivatives transactions.
there are no exchanges or intermediaries since they are done exclusively between the two parties. The agreement itself is standard, but it is accompanied by a customized schedule and sometimes a credit support annex. Both of which are signed by the two parties in a given transaction.
Flex Options
Flexible exchange options, or FLEX options, are nonstandard options that allow both the writer and purchaser to negotiate various terms. Terms that are negotiable include the exercise style, strike price, and expiration date, as well as other features and benefits. These options also give investors the opportunity to trade on a larger scale with expanded or eliminated position limits.
KEY TAKEAWAYS
FLEX options are a specialized kind of option offering extreme negotiable flexibility.
FLEX stands for flexible exchange option.
These options do not have regular quote streams but publish quotes only by request.
Flexible Exchange Option (FLEX) Definition
In other words it’s an OTC contract for the BIG BOYS TO NAME THEIR PRICE TERMS AND EXPIRATION DATE. Equity FLEX options are designed to extend investor access to customized derivative products. With Equity FLEX options, investors are able to set key contract terms like exercise prices, exercise styles, and expiration dates, and to trade in size, with no position or exercise limits.
Now here’s the rules.
FLEX Options vs OTC Execution (According to CBOE)
Now here is a flow chart for OTC flex options. Notice how they pass CBOE and instead go to ISDA WHERE ISDA POSTS THE TRADE. if it is a listed option. It is sent to OCC for clearing. But in these unlisted terms. IT is cleared by the two parties that write the agreement.
FLEX options were created in 1993 by the Chicago Board Options Exchange (Cboe). 1 The options target the over-the-counter (OTC) market of index options and provide customers with more flexibility. FLEX options now trade on other exchanges as well as the CBOE
Married puts
A married put is also considered a synthetic long call since it has the same profit profile. The strategy is similar to buying a regular call option (without the underlying stock) because the same dynamic is true for both: limited loss, unlimited potential for profit. The difference between these strategies is simply how much less capital is required in simply buying a long call.
Married Put Definition – Options & Derivatives Trading
What Is a Synthetic Put?
A synthetic put is an options strategy that combines a short stock position with a long call option on that same stock to mimic a long put option. It’s also called a synthetic long put. Essentially, an investor who has a short position in a stock purchases an at-the-money call option on that same stock. This action is taken to protect against appreciation in the stock’s price. A synthetic put is also known as a married call or protective call.
A reverse conversion
is a form of arbitrage that enables options traders to profit from an overpriced put option no matter what the underlying does. The trade consists of selling a put and buying a call to create a synthetic long position while shorting the underlying stock.
Reverse Conversion Definition.
Overstock Lawsuit :
OVERSTOCK COM INC v. GOLDMAN SACHS CO | FindLaw (keys to lawsuit below)
Market makers will use otc flex trades.
which you guessed it they are part of isda. so they can write flex options & write an isda agreement with the other party. And they would not need to go through an exchange.
which means (Bonafide) MARKET MAKERS CAN DO THIS.
FTDS & REGSHO
as you can see they are able to use these shame resets on ftds. so they are still naked but they appear to have been covered. or they appear to be reset the 13 days back to day one. or they are able to do SHAM CLOSE OUTS as you can see in the last picture above. THIS shows how they MAKE MONEY BY DOING FTDS.
Attached is the flex report.
below in the OCC report for flex options
if you look at June 2nd the day we peaked. you can see below there are AMC flex options opened, there are also i share Russell 2000 which is the ETF with the most AMC shares.
remember right after the peak we seemed to not be able to break 62. Every time we did we dropped back down. Here is a flex option taken out that day.
closing statement:
By looking at previous lawsuits. We found a way they are able to suppress failure to deliver. This could be the way they are kicking the can every time we think they are going to have to cover FTDS. ISDA as we saw in the big short. Are the kings of the market. you need to have a MASSIVE AMOUNT OF MONEY to even sit at the table. OTC FLEX OPTIONS are not sent to the CBOE as you see in the flow chart above. They are sent to ISDA because of what is known as an ISDA agreement. This is a signed agreement between two parties. This agreement is not sent to any exchange period. We are able to get the data if we REQUEST IT. Flex options have no position limit so they can have a super amount of contracts per option play. In the lawsuit we learned bonafied market makers have the ability to do this. They use Flex options , buy-writes , and married puts to create synthetics they are able to suppress FTDs with. by not filling FTD’s this is a way they can suppress price action as well. We have learned about sham resets. sham close outs to fill positions that they never held in the first place. while profiting from hiding FTD’s.
We are releasing more information about this in another dd. We already packed a lot of information into one dd.
Randall Cornett Youtube: www.youtube.com/RandallCornett
Randall Cornett Twitter: https://twitter.com/RandallCornett
AMC Biggums Youtube: AMCBIGGUMS
AMC Biggums Twitter: AMCbiggums (@ACbiggums)
EDIT: You can watch Randall Cornett’s video on the High Stakes Room here: https://www.youtube.com/watch?v=7VXKEoIqLt8&t=11s
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