Major Deep ITM CALL Option Dates. A Massive Net Capital BOMB Might Explode This Week.
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| Author       | Source       | 
| :-------------: |:-------------:|
|  [u/Criand](https://www.reddit.com/user/Criand/) | [Reddit](https://www.reddit.com/r/Superstonk/comments/n4h832/major_deep_itm_call_option_dates_a_massive_net/) | 

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[DD 👨‍🔬](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22DD%20%F0%9F%91%A8%E2%80%8D%F0%9F%94%AC%22&restrict_sr=1)

0\. Update

Edit: Ah here we are after cinco de buyo. No big price move was made. That's some good shit if you ask me. The prediction was that we'd see a price surge again if they delayed FTDs once more. The fact that it didn't happen today - no Deep ITM CALLs or PUTs occurred today - is reason to believe this is almost over. If Net Capital theory is correct, there's two possibilities here:

A) They raised enough capital to kick it to the next threshold on May 17. Remember, only 50% will be accounted for as of tomorrow. More time to try to hit the price down.

B) They went net negative and it's over. They were unable to reset FTDs. Only a matter of time before things start unwinding.

I also see some exciting stuff being posted today. Two caught my eye:

DD pointing to theoretical margin call price has been passed three days in a row.

We also possibly saw 1m+ in volume evaporate in after hours. Interesting shit.

So once more - see you soon moon.

1\. Preface

I am not a financial advisor.

Take it all in, and then question what you read. We want all perspectives here. Criticism of DD is what makes this subreddit so amazing - it helps us re-evaluate our theories.

I also love dates. I think they should be promoted more as long as there is data behind it. Picking arbitrary dates based on Tweets, yeah, I can see a problem with that. But it really feels like we can pinpoint this shit down. And if it's wrong - you know what - we come back and re-evaluate everything. It helps us grow, learn, and find new perspectives. You no longer look at data one way, you take a new approach.

I have never done a TLDR but let's put it this way:💎🤲 =💣=💀🐻

TLDR in picture form:

<https://preview.redd.it/vjttbykab1x61.png?width=316&format=png&auto=webp&s=ce91afc315f2e1872aa8043a9eb941fee53669c5>

Edit: a real TLDR:

Deep ITM CALL + OTM PUT options expiry causes MMs (Shitadel) to have a debt due to them pushing FTDs out. The debt must be resolved quickly or they could become net negative, violating a Net Capital rule. If they violate the rule they essentially lose their MM privileges because they don't have enough capital for their positions in the event of a default.

Day 0 = 0% of debt accounted for in calculations

Day 7 = 25% of debt accounted for in calculations

Day 14 = 50% of debt accounted for in calculations

Day 21 = 75% of debt accounted for in calculations

Day 28 = 100% of debt accounted for in calculations

They appear to not want more than 50% of the debt accounted for and try to push FTDs out between day 0 and day 13 because once day 14 hits the 50% could bring them net negative.

Day 13 coincides with the spikes I've been observing:

Feb 5 -> Feb 24

Feb 19 -> Mar 10

And what might be coming:

April 16 -> May 5

2\. Recap

[I posted the other day theorizing a link between certain option dates and a spike the second Wednesday following expiration.](https://www.reddit.com/r/Superstonk/comments/n2dkw2/scoobydoo_and_the_deep_itm_calls_of_april_16_is/) For example:

February 5 Options Expiration -> February 24

February 19 Options Expiration -> March 10

April 16 Options Expiration -> May 5

What happened on February 24? We spiked up. Significantly.

What happened on March 10? We climbed up. Significantly, until a flash crash brought us down. And there's pretty good evidence that points to the flash crash being caused by nearly 80,000 PUTs from July 16, 2021 being exercised on March 10th.

What happened on May 5? We'll find out. But I'm sure I'll get a bunch of shit spam comments if it all goes downhill lmao.

3\. Theory Hole

I was claiming that the link was due to T+13 forcing of FTDs by the broker, but that isn't necessarily true. [/u/keijikage](https://www.reddit.com/u/keijikage/) identified that:

> T+13 only counts if it is on the threshold securities list (10k shares FTD + > 0.5% of shares outstanding). HOWEVER...there may be some nonsense going on around net capital"

We haven't seen GME on the threshold list since February 3rd. So the T+13 FTD delivery theory seems to be out the window. However, the pattern still stands. And boy does this new information look spicy.

4\. The Link Between Options and Spikes Still Exists

There's no doubt in my mind that we're witnessing a pattern here, and that it will repeat. Each spike in price has to link to a date in the past - that's where I started going down this rabbit hole. I mean, shoving a few crayons up my nose like Homer Simpson might have also influenced me.

<https://preview.redd.it/kwr9wb8o30x61.png?width=507&format=png&auto=webp&s=57af9773746a233aeb9486f978437507e413034b>

In my last post, [/u/beyond-mythos](https://www.reddit.com/u/beyond-mythos/) pointed out a wonderful source of information - another DD with crazy amounts of data for Deep ITM CALL purchases: [The SI Is Fake I Found 44,000,000 Shorts](https://www.reddit.com/r/GME/comments/mhv22h/the_si_is_fake_i_found_44000000_million_shorts/)

The DD poured through data finding that FTDs were hidden in very specific options with Deep ITM CALLs. What dates enticed the shorters so much? *queue ominous music* dun dun DUN...

<https://preview.redd.it/11gjaljq70x61.png?width=559&format=png&auto=webp&s=1f1d295244e648846d7afd9cac6c1b1fe32ce193>

February 5, February 19, March 19, April 16, July 16, January 2022, and January 2023. I got absolutely JACKED when I saw that there was evidence pointing to the exact dates I wanted to link to the spikes:

February 5 and February 19.

Now you're probably asking, hey, I see March 19 on that list. Why didn't it spike on April 7?! Don't worry, because it's going to need a little bit more explaining in this post. I'll get there just bear with me.

You also might be wondering, "Ok what the hell are you looking at these Deep ITM CALL purchases for?". It is because we're theorizing that FTDs are being hidden through this malicious options practice. And on the other end of the spectrum, it's theorized that the SI% is being hidden through PUTs which also expire on these major dates. Both old and new shorts and being stuck in PUTs.

The DD also posted the following table, and I absolutely love [u/dejf2](https://www.reddit.com/user/dejf2/) for this glorious artwork. I'd pay at least 10 and a 1/2 Shmeckles for it. It shows the amount of deep ITM calls which were purchased not only for certain expiration dates, but when those purchases were made.

<https://preview.redd.it/i5xh3f2350x61.png?width=1933&format=png&auto=webp&s=8594466c3aa5675ebffdb39a8364e18c4f39d7f3>

You can see that they went absolutely nuts purchasing these Deep ITM CALLs on the January runup (dark red highlight) because liquidity was AWFUL. Robinhood pulled the plug on buyers, and let the buy pressure dry up while the HFs and MMs swapped FTDs to later dates because there were so many shares that had to be delivered. The retail buy pressure is the whale that is now splashing larger and larger FTD waves until the MOASS.

So thank you Robinhood, the floor was $1,000 back then but now there's going to be so much more money sucked out of the 1%.

<https://preview.redd.it/wmlo5r9yc1x61.png?width=594&format=png&auto=webp&s=8d786347ecdf326c3c940538547b93d76f7a72d0>

I did a rough calculation of the cumulative amount of Deep ITM CALL purchases for these dates ONLY with the red-highlighted area:

| Option Expiration Date | Cumulative Deep ITM Call Purchases (Red Area Only / January Runup) | Number of Shares Equivalent |
| --- | --- | --- |
| Combined | 287,000 | 28,700,000 |
| February 19, 2021 | 51,000 | 5,100,000 |
| March 19, 2021 | 4,000 | 400,000 |
| April 16, 2021 | 143,000 | 14,300,000 |
| July 16, 2021 | 31,000 | 3,100,000 |
| January 2022 | 58,000 | 5,800,000 |

Fucking... WHAT? In the January runup alone they had to purchase at least 287,000 Deep ITM CALLs to handle FTDs? That's equivalent to 28,700,000 shares. Hello float - or should I say more than the float - since it's now estimated that the float is around 23,000,000. Remember that this table is ONLY for the red highlighted area, so the total number upon option expiry is greater than the rough calculation table.

Let's look at the dates and their significance:

-   February 19 had 51,000 purchases. Two Wednesdays later, March 10, we see $GME climb to a price of $350 before being smacked down.

-   March 19 had 4,000 purchases. Two Wednesdays later, April 7, nothing. Hmm. Well, it certainly isn't a lot of CALLs in comparison but it should have done something - right? Even a tiny bump instead of the red day on April 7? Don't worry. I'm almost there.

-   April 16 had 143,000 purchases. Two Wednesdays later, May 5, we'll find out! Take a notice the magnitude of deep CALLs that were purchased for this day compared to February 19 - big fucking oof if the price spike happens again.

-   July 16 had 31,000 purchases, and January 2022 had 58,000 purchases. So obviously they wanted to spread out the FTDs among all the dates but for some godawful reason poured into April 16. If this does indeed pop again on May 5 but doesn't trigger the MOASS, we can expect it to pop following the next major Deep ITM CALL option expiration date.

But this doesn't really explain why the spikes occur two Wednesdays following option expiry.

5\. Ok, If Not T+13 From FTDs Then What Is Causing The Movement?

[/u/keijikage](https://www.reddit.com/u/keijikage/) pointed out a tasty rule. [Net Capital Requirements For Brokers or Dealers - 240.15c3-1](https://www.law.cornell.edu/cfr/text/17/240.15c3-1).

In summary, 240.15c3-1 is a net capital rule which:

> ...is designed to ensure that a broker-dealer holds, at all times, more than one dollar of highly liquid assets for each dollar of liabilities (e.g., money owed to customers and counterparties), excluding liabilities that are subordinated to all other creditors by contractual agreement. The premise underlying the net capital rule is that if a broker-dealer fails, it should be in a position to meet all unsubordinated obligations to customers and counterparties and generate resources sufficient to wind down its operations in an orderly manner without the need of a formal proceeding...
>
> ...A broker-dealer must ensure that its actual net capital exceeds its required minimum net capital at all times. - [Source](https://www.mercatus.org/system/files/peirce_reframing_ch6.pdf)

More ape-speak, this rule makes it so that if a Market Maker (Shitadel) wants to continue operating and not get ass-fisted by the SEC, they cannot carry a debt that makes their capital net negative. Otherwise, if they default, they're an idiot and have insufficient capital for the positions to pay out. How do you carry a debt? Let's say you are all nice and happy, shorting GME without a care in the world because you're a moron, operating net-netural, when suddenly a shitload of FTDs pour on you all at once. Oh shiiiit. I owe those shares and am carrying a debt! What do I do? Hmm I can either:

1.  Raise some capital or

2.  Sweep those FTDs under the rug using some sneaky sneak tricks. I'll pay that shit later, hoping the price of the stock is much lower and thus my debt calculation doesn't bring me negative.

What did we see every time a spike-up occurred? More god damn Deep ITM CALLs being purchased. Because they're hitting the (2) button and kicking them further down the road.

You know how much time they have to solve this net capital issue? Not long. The following is from rule 240.15c3-1 I linked, towards the bottom.

<https://preview.redd.it/4dsve3w3d0x61.png?width=1166&format=png&auto=webp&s=b88384871b2de08e37b92826df32f5e5c1322707>

This is my interpretation, please correct me if I am wrong. Every 7 days that pass by, their debt is subtracted from their capital at an increase of 25% each tick. In other words, each 7 days your debt is 25% more accounted for:

Day 0 -> Net Capital = Capital - Debt*0.00 = 0% of the debt accounted for in calculations

Day 7 -> Net Capital = Capital - Debt*0.25 = 25% of the debt accounted for in calculations

Day 14 -> Net Capital = Capital - Debt*0.50 = 50% of the debt accounted for in calculations

Day 21 -> Net Capital = Capital - Debt*0.75 = 75% of the debt accounted for in calculations

Day 28 -> Net Capital = Capital - Debt*1.00 = All debt accounted for in calculations.

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> Example A (Good Situation):
>
> Imagine you have $100. Then suddenly you get a piece of paper saying "your debt is $90".
>
> Day 0 -> Net Capital = $100 - $90*0.00 = $100
>
> Day 7 -> Net Capital = $100 - $90*0.25 = $100 - $22.5 = $77.5
>
> Day 14 -> Net Capital = $100 - $90*0.50 = $100 - $45 = $55.0
>
> Day 21 -> Net Capital = $100 - $90*0.75 = $100 - $67.5 = $32.5
>
> Day 28 -> Net Capital = $100 - $90*1.00 = $100 - $90 = $10.00
>
> All good! You're still net positive. This must have been what occurred for March 19 option expiry. The debt was insignificant! So much more time to spread out some Deep ITM CALL purchases. There was no way that they'd cross the net negative threshold from only 4,000 Deep ITM CALLs + PUTs.

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> Example B (Bad Situation, Shitadel):
>
> Imagine you have $100. Then suddenly you get a piece of paper saying "your debt is $250".
>
> Day 0 -> Net Capital = $100 - $250*0.00 = $100
>
> Day 7 -> Net Capital = $100 - $250*0.25 = $100 - $62.5 = $37.5
>
> Day 14 -> Net Capital = $100 - $250*0.50 = $100 - $125 = -$25.00
>
> Whoops! You're now net negative and you violated the rule and only when 50% was accounted for. Bye bye.

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It's important to note that the debt is based on current market price of the security. So if GME is trading $170 then the debt is based off of $170. If it drops to $150 the next day, then the debt is based off of $150. They want to kick this down the road until the price is really low. Probably in the $20s range. They're absolutely fucked.

So, Day 0 they'll see the debt but might not need to worry about it. If it's not a problem, such as Net Capital having no chance to go negative, then they're fine. Whatever. They won't violate the rule and they can go on being a happy Market Maker. But if it is a problem which would bring them negative and violate the threshold rule, then they'll start panicking. They want to resolve this before the threshold occurs which would make them net negative.

The fact that 50% of the debt is subtracted at T+14 is very curious. That implies they (Shitadel) can't risk the debt even being 50% accounted for. So it must be an absolutely massive position. Let's walk through February 19 expiration as an example:

1.  February 19 options expire. Deep ITM CALLs and possibly married PUTs expire that were used to hide FTDs and shorts. Day 0. Their Capital does not account for the FTD and short position yet. Well... they can try to drive the price down and hope that the debt calculations don't carry them net negative.

2.  Day 7 arrives on March 2. The FTDs and shorts are 25% accounted for. Maybe they'll start shifting some stuff out by purchasing new Deep ITM CALLs between March 2 and March 9 since the price doesn't seem to be going down as fast as they want.

3.  Day 13 arrives on March 10. Oh SHIT. They can't let Day 14 arrive or else 50% of the debt will be accounted for and they'll be net negative and thus violate the rule. So they start to move out a ton of FTDs to later dates by purchasing more Deep ITM CALLs. (If you reference the purchase anomaly chart in my previous post, you'll see tons of Deep ITM CALLs are purchased on the spike dates and run-up dates)

4.  Day 14 arrives on March 11. All is well in the world (for now) because their debt has been moved out.

Edit: But...why exactly does the price move up? On Discord, "Assets" has a great possible explanation. Assets - you are the best. ❤️

> 1.  You are obligated 100 shares through FTDs.
>
>
> 2.  You buy an ITM Call and Sell an OTM put.
>
>
> 3.  You short 100 shares of the underlying saying that it's actually covered by your ITM Call.
>
>
> 4.  You exercise your call and you are credited 100 shares.
>
>
> 5.  You tell your broker that you wish to cover your shorts with 100 shares and you tell the clearing house that you wish to satisfy your FTD with the same 100 shares.
>
>
> 6.  Both parties take the same shares and both parties look to the market maker to satisfy those 100 shares because you said they were good for it when you exercised.

> You've succesfully shorted and reset the FTD.

Apply this to the other major option expiry dates and you get the same picture. They want to fix this issue by the second Wednesday following option expiry because the massive amount of Deep ITM CALLs caused their debt to be too significant to carry the full 28 days. It brings them net negative by day 14. At least... that's the theory now. ;)

Let's finally apply this logic to our wonderful, beautiful, April 16th date which is the option expiration date of when a dumpster load of Deep ITM CALLs have been purchased:

1.  April 16 options expire. Day 0

2.  Day 7 arrives on April 27.

3.  Day 13 arrives on May 5. They (in theory) don't want it to hit day 14 when their net capital would be negative due to accounting for 50% of the debt. Whatcha gonna do this time, Shitadel?

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-   Perhaps this is what [/u/Suspicious-Singer243](https://www.reddit.com/u/Suspicious-Singer243/) was observing in [The March To Zero Liquidity](https://www.reddit.com/r/Superstonk/comments/n3ehw0/the_march_to_zero_liquidity_volume_or_bust/). The Market Makers are about to have a net capital bomb go off. They NEED to eliminate their debt by wiping out their FTDs that have appeared once again in order to become net neutral. They were able to swipe the FTDs under the rug on January 13, the January run-up, March run-up, and a few times here and there since then. But if 005 is enacted before the next pop then they have to deal with this massive 143,000 order from April 16 without delaying it any longer. RUH-ROH RAGGY.

-   Of course while I'm writing this, I see that May the Fourth could indeed end up being the Golden Ticket day per [/u/Door_Public](https://www.reddit.com/u/Door_Public/). It's very likely that 002/801 go into effect tomorrow. I've been thinking we'll see 002/801 as well as 005 enacted and within 24 hours a price spike would occur. If I see these rules go into effect tomorrow, I will NOT be able to sleep. [May the 4th Be With You](https://www.reddit.com/r/Superstonk/comments/n49zl5/srnscc2021801_confirmation_may_the_4th_be_with_you/)

-   [Bank netting accounts coming into effect by May 5](https://www.reddit.com/r/Superstonk/comments/mur8bz/srdtc2021004_the_dtcc_and_jp_morgan_theyre/)

-   [US Treasury Issuing 0% Bonds on May 4 and Maturing June 1](https://www.reddit.com/r/Superstonk/comments/n1hus8/the_poster_discrediting_the_0_40_billion_dollar_4/)

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See you on the moon. If not this week - sometime soon. ❤️
