A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.
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| Author       | Source       | 
| :-------------: |:-------------:|
|  [u/Criand](https://www.reddit.com/user/Criand/) | [Reddit](https://www.reddit.com/r/Superstonk/comments/ny2ov4/a_revisit_to_net_capital_what_is_truly_driving/) | 

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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\. Preface

Well well, I think it's time to revisit an old topic. Net Capital. I posted about this in the past and for some reason gave up on it. I can now provide counter DD to my own T+21/T+35 theory.

Remember - I am not a financial advisor and I do not provide financial advice! Everything in here is based on research and discussion with others on the topics. As always, do your own research and criticize. Take my opinions with a grain of salt.

Wanting to revisit the Net Capital topic was a few things. There were posts about ETF FTDs spiking severely as of May 12th - even more than the highest peaks of January. I had my own doubts over time of how we could possibly have multiple cycles overlapping, when it felt more like there would be only a single cycle. And of course, some people commented and/or posted counter DD! Which I think is awesome, it's always good to provide counter DD.

Kenny and his gang love to continue digging a hole for themselves - while the whole financial world tries desperately to contain this potential market crash from coming to fruition.

GME shorts and Reverse Repo Market go brrrrrrrr.

TLDR: Sorry I'm too lazy right now. About to post this and go to sleep. 😎

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/p9ruup81br471.png?width=1016&format=png&auto=webp&s=459845688e21d10000f45ba7e81c9de8a6839321)](https://preview.redd.it/p9ruup81br471.png?width=1016&format=png&auto=webp&s=459845688e21d10000f45ba7e81c9de8a6839321)

Kenny And The Boys

My previous post about [Net Capital](https://www.reddit.com/r/Superstonk/comments/n4h832/major_deep_itm_call_option_dates_a_massive_net/) was thinking that we'd see significant price movement T+14 days after April 16th options expirations. That didn't happen, so I tossed it out of the window. (Criand, you dumb bitch)

Which then led me down the path of the [T+21 Loop Missing Link](https://www.reddit.com/r/Superstonk/comments/nf22qz/theory_on_the_ftd_loop_missing_link_a_t35_surge/). It got pretty popular. It's the whole T+21/T+35 conjunction theory that occurred May 24th and May 25th. While it definitely appears to be right, I have been doubting it ever since May 24th. Especially after a courageous ape [u/dentisttft](https://www.reddit.com/u/dentisttft/) posted the [Counter DD to T+21](https://www.reddit.com/r/Superstonk/comments/nsady3/t21_is_not_actually_a_thing_counter_dd/) theory. T+35 (May 24th) didn't have significant enough price movement. If it truly was a new T+35 initiating a loop, then it should have exploded up in price on May\
24th. And for that, I think it's time to put that theory to bed.

The counter DD that [/u/dentisttft](https://www.reddit.com/u/dentisttft/) posted is excellent and you should definitely take a look. If my post is wrong, [/u/dentisttft](https://www.reddit.com/u/dentisttft/) still proposes another possibility: that T+35 from the FTD spike could initiate buy pressure around June 17th.

Ever since the counter DD, I decided to revisit Net Capital since that is what [/u/keijikage](https://www.reddit.com/u/keijikage/) brought to my attention so many weeks ago. Very smart guy by the way! Always very knowledgeable and provides amazing discussion!

Looking back on Net Capital now, especially with the ETF FTD spike that occurred on May 12th, it might finally paint the picture as to what has been going on this whole time with the "T+21 cycle", the March Gamma Ramp, and the June Gamma Ramp.

1\. GME FTDs, ETF FTDs, Massive Resurgence Started May 12

First, I want to discuss ETF FTDs, as something absolutely wild occurred in May. Note that we do not have the full months FTD data yet. The SEC releases the data in first half and second half of the month reports. So, it cuts off quite conveniently when FTDs began to go haywire.

For a while now it's been theorized ([with some pretty damn good evidence](https://www.reddit.com/r/Superstonk/comments/nrpjle/almost_1b_ftd_on_may_14th_between_gme_and/)) that ETFs containing GME have been heavily shorted. Supposedly they will short the ETF, buy up all of the other stocks in the ETF that were shorted, but leave GME alone. There's a net 0 effect on the other stocks but a net short on GME. This then starts to cause ETF FTD anomalies which they also try to suppress, but they can't hide forever. Because it appears that as of May 12th, these FTDs have begun to spill out of hiding.

[u/basketas87](https://www.reddit.com/u/basketas87/) posted about this surge of ETF FTDs in "[New data shows a large increase of ETF FTDs](https://www.reddit.com/r/DDintoGME/comments/nx013v/new_data_shows_a_large_increase_of_etf_ftds/)":

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/h7iq2v4njq471.png?width=1122&format=png&auto=webp&s=b4fbbca80002197058a20c5d8654e08ba8b4dbae)](https://preview.redd.it/h7iq2v4njq471.png?width=1122&format=png&auto=webp&s=b4fbbca80002197058a20c5d8654e08ba8b4dbae)

GME Price Vs. GME FTDs and ETF FTDs (which contain GME); Source: /u/basketas87

You can immediately see the ETF FTDs absolutely SKYROCKETED just before the cutoff of the SEC FTD bi-monthly report. We don't even know how high this has gone in the following days or if its come crashing back down. Remember - these are aggregate. We don't sum up the FTDs between dates. Whatever the number is upon a date is the current total of FTDs reported.

For a date-by-date tracking for these FTDs between January and the end of March, [/u/broccaaa](https://www.reddit.com/u/broccaaa/) provided an excellent chart in "[The naked shorting scam using ETFs: mass shifting of FTDs from GME to 20+ ETFs & 27+ billion dollars still owed in remaining SI](https://www.reddit.com/r/DDintoGME/comments/n1x75w/the_naked_shorting_scam_using_etfs_mass_shifting/)". This gives us an easier look at the exact dates when FTDs spiked earlier in the year.

> I selected GME and 19 ETFs containing GME. I chose to only look at the ETFs that contain the most GME shares and had large numbers of FTDs in 2021. - [/u/broccaaa](https://www.reddit.com/u/broccaaa/)

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/choe9jjris471.png?width=1709&format=png&auto=webp&s=3e907654b1e054734098c010839ec5ad07ab0633)](https://preview.redd.it/choe9jjris471.png?width=1709&format=png&auto=webp&s=3e907654b1e054734098c010839ec5ad07ab0633)

Aggregate FTDs for GME; GME and ETFs; Source: /u/broccaaa

Some notable aggregate FTD dates from this chart:

1.  January 29th

2.  February 2nd

3.  February 18th

And of course, the latest absolutely insane May 12th. Once again, we don't even know what the FTD numbers are for the second half of May. It could very well be much higher.

2\. Net Capital And Market Makers; Citadel's Can-Kicked Bag

Net Capital is detailed out [in this post](https://www.reddit.com/r/Superstonk/comments/n4h832/major_deep_itm_call_option_dates_a_massive_net/) but I will do a quick summary. It revolves around [Net Capital Requirements For Brokers or Dealers - 240.15c3-1](https://www.law.cornell.edu/cfr/text/17/240.15c3-1):

> ...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)

Or in other words, you must have enough capital to not be "margin-called". In this case, Citadel is a prime victim to this rule as they are a Market Maker and must sustain enough net capital to not go bust. If they do not, they're a risk to their customers and counterparties. This rule tries to ensure that they have enough money to pay up in the event of a default.

The very interesting part of this rule comes down to how they're calculating Net Capital in regards to short securities:

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/jzzkxo2qsq471.png?width=1311&format=png&auto=webp&s=9b26ce9297defa1c10492f9d1e2b2c6a1bc07252)](https://preview.redd.it/jzzkxo2qsq471.png?width=1311&format=png&auto=webp&s=9b26ce9297defa1c10492f9d1e2b2c6a1bc07252)

Net Capital Rule; Short Securities Deduction From Net Capital Per "Days After Discovery"

What this basically means is that after the short security difference is found to be unresolved after discovery (think FTD popping up is the "discovery"), then it's going to slowly start eating away at their net capital the longer it remains unresolved/undelivered:

-   Day 0 after discovery = 0% of the unresolved short security is calculated into their net capital

-   Day 7 after discovery = 25% of the unresolved short security is calculated into their net capital

-   Day 14 after discovery = 50% of the unresolved short security is calculated into their net capital

-   Day 21 after discovery = 75% of the unresolved short security is calculated into their net capital

-   Day 28 after discovery = 100% of the unresolved short security is calculated into their net capital

When you have these debts accounted for into your net capital, it is taking away that value, because it is a short difference you owe. As the days go by, net capital starts chunking down. So, if you have a rather large short security difference discovered one day (such as May 12th) then you want to resolve it quickly or risk defaulting.

Do you find a way to stuff the unresolved shorts back under the rug? Do you deliver and force buy-ins? Both? That appears to be the loop they've been stuck in, which slowly bumps the price floor upward.

You'll notice that there's a familiar number in there. Day 21. T+21? Oooh. Tasty. Here we go.

The total timeframe for Net Capital is [28 days](https://www.youtube.com/watch?v=ST2H8FWDvEA), but Citadel most likely cannot allow the Net Capital threshold to go past 75%. They must kick-the-can and force buy-ins on or before T+7, T+14, T+21 but complete the entire process by the net 75% threshold of T+21. They can't risk it going to 100% or else they'll most likely default.

Wham, bam, the T+21 loop ignites itself continuously.

3\. Plotting The Net Capital Loop - The Counter of T+21 and T+35

The major option dates still play a big role. But I don't think T+35 theory is what's really applying here.

What are "major options"? These are the only options that were available for the year 2021 back in early 2020. These are the option dates that were most likely opened up initially by shorters at the start of COVID. Perfect time to place bets and start their kill shot on GameStop:

-   January 15, 2021

-   April 16, 2021

-   July 16, 2021

Upon expiration, unrealized losses now became realized losses, and their overall capital receives a dent. It most likely gets harder to hide FTDs and hide them under the rug.

You know the most curious thing?

Posts about Citadel working the night-shift started just after April 16th options expirations.

That's also right around when Bank of America shut down a bunch of their locations. I won't buy their excuses. Bank of America looks like they're a bag holder and is freaking out too.

Something big had to of happened as of April 16th, and it's most likely that they had a huge dent in their capital that is now causing a slow bleed-out of FTDs that they've hidden, which then must be satisfied within the Net Capital timeframe of T+7, T+14, T+21, T+28, or else they can go net negative and default.

And of course, following April 16 options expirations, the ETF FTDs start to skyrocket on May 12th. My main intuition is that they were unable to hide these any more and they have started to spill out. Ruh-roh.

First, I'll plot out the T+21 Net Capital loop so that it isn't too cluttered:

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/xh4u2ugmfs471.png?width=1438&format=png&auto=webp&s=85188eccc2bf3841bb98e37e5be98b8badcc01c7)](https://preview.redd.it/xh4u2ugmfs471.png?width=1438&format=png&auto=webp&s=85188eccc2bf3841bb98e37e5be98b8badcc01c7)

Plotted Net Capital "T+21" Cycle, December 22 to July 26

Upon December 22, the clock starts ticking. It's possible that at this point the price was too high for them to NOT worry about Net Capital any more, and they had to start can-kicking and forced buy-ins.

Each loop is separated T+21 because it appears that they cannot sustain higher than the 75% threshold each time. You can see the T+21 loop we're familiar with, starting December 22, and then traveling through January 25, February 24, March 25, April 26, May 25. And potentially continuing on to June 24 and July 26. [The next two dates if any apes are curious].

To get a closer look of the potential effects of the various Threshold amounts (T+7 (25%), T+14 (50%), T+21 (75%)) I've zoomed in on March 25th to May 25th. ENHANCE!

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/p6q5gox9fs471.png?width=1438&format=png&auto=webp&s=4da6c3ed2e8547ccd755b95ee895be235cbf9d44)](https://preview.redd.it/p6q5gox9fs471.png?width=1438&format=png&auto=webp&s=4da6c3ed2e8547ccd755b95ee895be235cbf9d44)

Plotted Net Capital "T+21" Cycle, March 25 to May 25, Price Spikes Prior to Each Threshold (T+7, T+14) Date

In the above it's unlikely but there is a chance that they have too many FTDs to shuffle around by the time Net Capital 25% (T+7) Threshold hits. This could initiate some buy-in pressure on or before that date, typically the day before, as outlined in the light green circle. The day before because they don't want those positions to be 50% upon the next day. They must be resolved BEFORE.

It is also unlikely but a greater chance that they have too many FTDs to shuffle around by the time Net Capital 50% (T+14) Threshold hits. This again could initiate some buy-in pressure on or before that date, typically the day before, as outlined in the blue circle.

And of course upon Net Capital 75% (T+21) Threshold, they must complete their rug-hiding and/or buy-ins to avoid going Net Negative. It is possible that the rug-hiding and buy-ins are in conjunction with one another, slowly increasing the price floor, and that between each threshold they try to short the stock more to push down the price.

Looping back to Section 1 when we identified the major FTD dates:

1.  January 29th

2.  February 2nd

3.  February 18th

4.  May 12th

There's a potential relationship to be seen with these insane FTD dates. Now this chart I'm about to show is highly speculative. I'm unsure if the Net Capital loop initiates upon the FTD spikes (though it certainly should, per Net Capital rule, because that would be when they are "discovered").

I say I'm unsure because I only see one data point here so far and somewhat of a second data point from the price run-up we've been seeing the past few days.

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/424mtt66sq471.png?width=1433&format=png&auto=webp&s=7b11bb6a0a8f06bafb2471e7dfc0b64c90f1cb1a)](https://preview.redd.it/424mtt66sq471.png?width=1433&format=png&auto=webp&s=7b11bb6a0a8f06bafb2471e7dfc0b64c90f1cb1a)

Plotted Net Capital "T+21" Cycle, December 22 to July 26, and FTD Spike Relationship

In the above picture, look at January 29th's FTD spike. Plotting the full 28 days of Net Capital out where 100% of the debts would be accounted for, that lands it on March 11th. They want to resolve this before March 11th, while the debts are still 75% accounted for. Remember that date? March 10th? I sure do. This could be why we saw the price spike, and why T+35 is incorrect in theory. But, it appears the major option dates still play a role, because of the May 12th FTD spike that just occurred, which followed April 16th options. Likewise, the January 15th options may have initiated the FTD spikes around January 29th and February 2nd.

If the same situation occurs due to the May 12th FTDs, then plotting out the full 28 days of Net Capital lands us on June 22nd. If these FTDs initiated Net Capital T+0 upon May 12th, then things could get crazy on or before June 22nd.

It is very possible that the run-up from May 25th to June 8th was all due to this new set of FTDs, and they had to start buy-ins on or before T+14 and T+21 from May 12th due to the sheer amount of unresolved shorts that were eating away at their Net Capital. If the FTDs aren't fully hidden again or all the buy-ins aren't complete, there's still T+28 to look towards, which lands on June 22nd. They would need to hide these FTDs again and/or buy-in on or before June 22nd. This would keep in line with the March 10th squeeze.

This could also very well explain what was going on with AMC. (Don't freak out on me yet, I love looking at AMC because it's very good analysis to track. It's been following the same exact T+21 pattern as GME)

4\. AMC Behavior - Given Up On By Shorts? Too Expensive To Juggle With GME?

AMC has gone on an absolute RUN. It increased nearly 70% in one day. Take a look at the following chart now that you know about Net Capital and the different T+7, T+14, T+21, T+28 Thresholds:

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/xn0tukmw4r471.png?width=1434&format=png&auto=webp&s=a679b5628fd370944ba680b6de0bf5e6dcadd35a)](https://preview.redd.it/xn0tukmw4r471.png?width=1434&format=png&auto=webp&s=a679b5628fd370944ba680b6de0bf5e6dcadd35a)

AMC Behavior from May 12th to June 24th

Damn. Did they just GIVE UP on AMC and decide that it's too much to deal with? Do they not have enough capital to deal with both GME and AMC (and possibly other short meme stocks)? I think so, because this lines up quite well. They had to fix Net Capital for AMC by T+7 (25%) Threshold on June 4th probably because it was too expensive to handle alongside GME, and GME is the one they really need to keep their ammo for.

Between T+7 and T+14, they of course short some more, trying to pull the price down in preparation of the next Threshold cycle of T+14, which will probably cause an equivalent or greater amount of buy-ins. This lands on... June 15th. And if it's like previous cycles, that would imply that they want to do the buy-ins by June 14th (next Monday) to avoid those unresolved shorts hitting the next threshold amount. Big price spike coming again?

Even then, the current T+21 cycle isn't over. The threshold of 75% doesn't land until June 24th, where things very likely will continue to spike upward with an equivalent or greater spike of the run before T+7 (25%) Threshold.

I truly think that they've put all of their effort into containing GME and have more or less "given up" on AMC because it's not as big of a deal to them. That's why it's mooning like crazy while GME is taking a little time to wake up.

5\. GME Behavior - Shorts Holding On As Long As They Can

With the same exact timeframe of AMC, let's finally look at GME and the current cycle going on. The ETF FTDs from May 12th line up T+28 (100% Net Capital Threshold) on June 22nd. Again, if the Net Capital loop initiated upon that FTD spike, then things could get absolutely wild on or just before June 22nd.

Otherwise, it might just be the standard T+21 Net Capital loop, which has that extra pressure from the ETF FTDs, where the Net Capital loop initiated on May 25th, and ends on June 24th.

[![r/Superstonk - A revisit to Net Capital. What is truly driving these T+21 loops, the March and June gamma runs, and how skyrocketing ETF FTDs might cause big price movements in the coming weeks.](https://preview.redd.it/p3yueytz4r471.png?width=1441&format=png&auto=webp&s=48a0f3e70ac922a345e5b58c0219bd1470dff2ab)](https://preview.redd.it/p3yueytz4r471.png?width=1441&format=png&auto=webp&s=48a0f3e70ac922a345e5b58c0219bd1470dff2ab)

GME Behavior from May 12th to June 24th

By the time of T+7 (25% Threshold), it appears that they really needed to apply some buy-ins, and the price started to rise quite significantly. Just like AMC, but not as extreme, because they want to put all of their energy into keeping this bad boy from popping off.

Once again... take a look when T+14 (50% Threshold) will hit. June 15th. From the above analysis, the buy-ins would occur on or before this threshold date, typically right before. Know where that lands? Next Monday. June 14th.

It's possible that they won't be able to sustain to the 75% threshold any more, but now must sustain the 50% threshold of T+14 where they need to resolve their unresolved shorts by.

Maybe there will be a big price spike next Monday. Otherwise, keep an eye out for the T+28 date of the ETF FTDs, landing June 22nd, or the original T+21 date, landing June 24th.

I believe we're also waiting for the Russell 1000 change the week of June 24th. ;)
