THE MOASS WON'T HAPPEN UNTIL OPTIONS ARE NOT REGULATED: DTC-2021-005 JUST CHANGED THE GAME
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| Author       | Source       | 
| :-------------: |:-------------:|
|  [u/lighthouse30130](https://www.reddit.com/user/lighthouse30130/) | [Reddit](https://www.reddit.com/r/GME/comments/mibedc/the_moass_wont_happen_until_options_are_not/) | 

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[DD 📊](https://www.reddit.com/r/GME/search?q=flair_name%3A%22DD%20%F0%9F%93%8A%22&restrict_sr=1)

ERRATUM ON TITLE: THE MOASS WON'T HAPPEN UNTIL OPTIONS ARE REGULATED.

LET ME START WITH A QUICK INTRO: SO WE ALL KNOW HOW HF ARE HIDING THEIR SHORT POSITION.

Actually, even the SEC knows, since they wrote a "risk alert" on it in fuck** 2013.[Strengthening Practices for Preventing and Detecting Illegal Options Trading Used to Reset Reg SHO Close-out Obligations](https://www.sec.gov/about/offices/ocie/options-trading-risk-alert.pdf).

LET ME SUMMARISE THIS RISK ALERT FOR YOU

How do HF manage to make it look like they covered? Easily, with 2 types of deceptive options trading.

1.  A buy-write trade, i.e. selling deep ITM call + buying a synthetic long share from MM

2.  Buying a married put: buying an option put with a synthetic share.

What's the difference between selling calls and buying puts?

Well, not much, it's a question of obligation vs possibility, but in our scenario, it does not matter much.

Why buy a synthetic long at the same time as the option?

They use the synthetic share to appear as if they "close" their short position. Pouf FINRA number goes down, Bloomberg writes an article [" GameStop Short Interest Plunges in Sign Traders Are Covering](https://www.bloomberg.com/news/articles/2021-02-01/gamestop-short-interest-plummets-in-a-sign-traders-are-covering)" saying the HF have covered, end of the story.

How can they buy a synthetic long?

if a market maker buys options from an options writer, the market maker has legal privileges to do a version of "naked shorting" as part of their hedging function. This is necessary, under the current rules and the current system, for market makers to protect themselves when facilitating options trades.

Do buying synthetic long have an impact on the price of the stock?

Well, I do not think so, since they are not part of the float, they are not purchased on the market.

It it good news or bad news?

Well, we are not sure. There is a theory saying that the FTD cycles are getting bigger and it will only get worse for them, but I don't like the wait and pray tactic when we're dealing with HF. To me, it's rather a bad news to only rely on HODL and pray for the MOASS to start without the regulations in place to force short to close their positions.Their deceptive options duckery means they can reset their FTD indefinitely, the close-out requirement (which will trigger the MOASS) will never be enforced, and we are fucked.They are not bleeding as we thought they were. The SEC papers mention that with this tactic, they do not have to pay the borrowing fees for shorting, just a pre-arranged premium with the MM, which can be seen as a cost to leverage the MM hedging prerogatives of naked shorting.

Who is short then, the HF or the MM?

As long as the double trade is done (buy-write or married put), the HF are no longer short, fron a reporting standpoint, but the MM are, They usually don't want to stay short too long, so they most of the time exercise these options the same day. Which now makes the HF short on his turn, but with a reset for FTD.

[Someone remember Melvin Capital revealing 6,000,000 Puts in the SEC filing from February?](https://whalewisdom.com/filer/melvin-capital-management-lp#tabholdings_tab_link) But no long position with their put, so naked puts. I'm willing to bet 1 trillion dollars these puts are leftovers of married puts he used as deceptive options to trade to look like he covered during the Jan squeeze.

<https://preview.redd.it/9l3xg2226pq61.png?width=2836&format=png&auto=webp&s=14e2215d5bf26b53050ff56b22beaa8325819db1>

The amount of such options that need to be traded is too big not to be noticed. They all know. The SECC, DTCC, any concurrent HF, and now even us.

This is why I'm convinced our best chance is a regulation of Options trading. But that would be too much to ask, right? Well, the DTCC just made the best "April fool" joke to Citadel with [DTC-2021-005](https://www.dtcc.com/-/media/Files/Downloads/legal/rule-filings/2021/DTC/SR-DTC-2021-005.pdf), submitted after market close on Thursday (Have a nice Easter weekend Ken!)

How [DTC-2021-005](https://www.dtcc.com/-/media/Files/Downloads/legal/rule-filings/2021/DTC/SR-DTC-2021-005.pdf) could be a GAME CHANGER

It seems 005 is both a change of wording in their settlement procedure guide as well as an update in their operational book-keeping procedure.

What they are introduced is an additional reporting field. A "Status" or "system notation" tracking on security. To track if this security is borrowed, used as collateral, or coupled with an option. This is brilliant. They may not need to involve the SEC at all because they are not regulating anything, they are just adding a level of reporting in the tradings they manage.

Page 42:

*Collateral loans**:*

*The collateral loan service allows a Participant (the pledgor) to pledge securities as collateral for a loan or for other purposes and also request the release of pledged securities. This service allows such pledges and pledge releases to be made free, meaning that the money component of the transaction is settled outside of the depository, or valued, meaning that the money component of the transaction is settled through DTC as a debit/credit to the pledgor's and pledgee's DTC money settlement account. When pledging securities to a pledgee, the pledgor's position* ~~*is moved from the pledgor's general free account to the pledgee's account*~~ *continues to be credited to the pledgor's account, however with a system notation showing the status of the position as pledged by the pledgor to the pledgee. This status systemically* ~~*which*~~ *prevents the pledged position from being used to complete other transactions. Likewise, the release of a pledged position* ~~*would move the pledged position back to*~~ *the* *results in the removal of notation of the pledge status of the position and the position would become* ~~*pledgor's general free account where it would then be*~~ *available* *to the pledgor* *to complete other transactions.*

**** Collateral Loan Program*

*About the Product The Collateral Loan Program allows you to pledge securities* ~~*from*~~ *held in* *your general free account as collateral for a loan or for other purposes (such as Letters of Credit) to a pledgee participating in the program. You can also request the pledgee to release pledge securities* ~~*back to your general free account*~~*. These pledges and releases can be free (when money proceeds are handled outside DTC) or valued (when money Page 42 of 45 proceeds are applied as debits and credits to the pledgee's and pledgor's money settlement accounts). A Pledgee may, but need not be, a Participant. Only a Pledgee which is a Participant may receive valued pledges.*

*Pledges to the Options Clearing Corporation**A Participant writing an option on any options exchange may fully collateralize that option by pledging the underlying securities by book-entry through DTC to the Options Clearing Corporation (OCC). If the option is called (exercised), the securities may be released and delivered to the holder of the call. If the option contract is not exercised, OCC validates a release of the pledged securities,* ~~*which are then returned to the Participant's general free account.*~~

**** Release of Deposits with Options Clearing Corporation on Expired Options**OCC automatically releases securities deposited with it to cover margin requirements on an option contract when the option contract expires.* ~~*The securities are then allocated to your general free account.*~~ *Notification of the released securities is received via the Collateral Loan Services functionality in the Settlement User Interface or automated output.*

Could this mean no more synthetic long, FTD, and other fuckery? This could force the Reg SHO Close-out Requirement which will trigger the MOASS into Uranus.

I WISH I WAS A COW TO BE JACKED TO ALL MY TITS !!

TOO APE ; DID NOT READ:

If short sellers are facing a squeeze because shares are hard to buy, or scrutiny for holding an illegal short position, they can create an appearance of having closed their short position through the use of deceptive options trades. (Selling ITM call or buying married put).

It does not make them cover, just reset the clock so FTD doesn't skyrocket.

DTCC is unhappy about this mess and could be trying to ensure Options can no longer be used like this.

When it gets enforced, it could force a close-out requirement (force HF to buy the stock in the actual market, launching our rocket to the sun)

EDITS 1:

So, guys, I see lots of questions around when this goes into effect.I believe it's effective immediately after the SEC approves it.

How long does the SEC usually take to approve these fillings?WELL, SURPRISINGLY, NOT SO LONG! Could be even just a week or two.Here a brief history:

-   DTC-2021-003 (Force HF to reveal their position on a daily basis): submitted the 09/03, approved the 16/03

-   [SR-DTC-2021-004:](https://www.dtcc.com/legal/sec-rule-filings) Approved in a few days

-   [SR-DTC-2021-003](https://www.dtcc.com/legal/sec-rule-filings) was approved quickly as well

-   All the ones before are approved (before Jan 2021)

EDITS 2:

This is not financial advice, but I've been told by French Apes that DTCC stands for "Dans Ton Cul Citadel", is that right?

EDITS 3:

Please smart apes, come forward and help us make it stronger and more accurate versiom of this DD. I suspect the 005 will have MANY different interpretations, which would imply to re-work this DD.

EDITS 4:

I added another important missing paragraph from the filling that really explains why it will regulate options. This filling is not really a regulation (which would explain why SEC won't need to review it), it's a bookkeeping tracking update (almost a software update). They are going to be more precise in their reporting logic. They will tag synthetic longs as "pledged" with an option. So they link the synthetic long and the option together. This is what's new in their procedural book-keeping method.

Edit 5:I was invited to speak about this DD on a nice Ape YT channel today.[Here's the video of him and me breaking down this DD if you're interested.](https://www.youtube.com/watch?v=UQrOk5Syzl4)

EDITS 5:\
An article from the TOKENIST just literally confirmed my DD. I suspect this guy literally copied-pasted it.\
[Is WSB Reddit Army About to Make a Comeback with Tweaked Trading Rules?](https://tokenist.com/is-wsb-reddit-army-about-to-make-a-comeback-with-tweaked-trading-rules/)
