Citadel's naked shorting is the fuel to the moon.
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| Author       | Source       | 
| :-------------: |:-------------:|
|  [u/Blussi](https://www.reddit.com/user/Blussi/) | [Reddit](https://www.reddit.com/r/GME/comments/mtolfu/citadels_naked_shorting_is_the_fuel_to_the_moon/) | 

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[🔬 DD 📊](https://www.reddit.com/r/GME/search?q=flair_name%3A%22%F0%9F%94%AC%20DD%20%F0%9F%93%8A%22&restrict_sr=1)

Firstly: Naked shorting is legal. Yep, this shit which let's apes moon is legal - thank you SEC :)

Read this to understand naked shorting:

> [...] "naked" short selling contributes to market liquidity. For example, broker-dealers that make a market in a security[[4]](https://www.sec.gov/investor/pubs/regsho.htm#_ftn4) generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks as there may be few shares available to purchase or borrow at a given time.Source: <https://www.sec.gov/investor/pubs/regsho.htm>

Read this, something sounds similar?:

> The trading in the stock of Boston Chicken Inc. (BOSTQ) on the OTCBB during 1999 was very similar to Iridium. Boston Chicken is another bankrupt company, which was delisted from the Nasdaq National Market on December 10, 1998**. Throughout 1999 almost all stock analysts valued the company as nearly worthless**, yet the stock was being touted by public investors through the use of Internet chat rooms. Therefore, buyers continued to enter the market. BOSTQ began 1999 at a price of 30 cents per share and rose to 90 cents by late January 1999. The stock continued in the 60-70 cents range through July and then slowly dropped to a low of 10 cents by the end of December 1999. Hill Thompson continued to fill the steady flow of buyers during the first part of the year by selling short. At one point Hill Thompson was at risk for an extremely large short position. However, Hill Thompson did not try to cover its position by buying into the market for this would have added to what Hill Thompson believed was an already overvalued price. As the public investors began to sell, Hill Thompson slowly covered its short position. Hill Thompson believes that it maintained an orderly market in the face of unfair attempts by some public investors to raise the price of BOSTQ and saved some public customers from potentially greater losses than they may have already suffered.
>
> Source: <https://www.sec.gov/rules/concept/s72499/broy1.htm>

So uhm. We have a float of only 70M shares, of which in a conservative calculation around 100% is "locked" by insiders or institutions (<https://www.reddit.com/r/GME/comments/mevufb/ownership_summary_available_on_gamestops_website/>).

Why is this a problem? Well, as long as noone is interested in Gamestop, all is cool. But if now retail or new institutions want to buy shares, there is NO SHARES TO BUY. However, funnily, the market regulations got the them - for this our favourite market maker (Citadel) comes in play. But oh no, Citadel also doesn't have a share! So Citadel puts up his magic hat and creates a *Phantom Share* from nothing which he uses to fill the order.

If the buy demand exceeds the shares available on the market, the MM takes a (naked) short position to keep the market liquid.

This whole thing wouldn't be a problem, because usually people will sell again when they made some profits or when the share price drops, letting the MM to cover. But well, if THE WHOLE WORLD STARTS BUYING SHARES OF A STOCK WITH NO AVAILABLE FLOAT, DIAMOND HANDS AND CONSTANTLY BUYS MORE THAN IT SELLS (4:1 or higher order ratio) OVER 3 MONTHS (see [Dejiro](https://www.degiro.ie/knowledge/blog/most-traded-stocks-march-2021) statistics for Europe, see Fidelity statistics posted in this sub, see [RBC](https://www6.royalbank.com/en/di/hubs/investing-academy/article/top-10-traded-stocks-in-march/kkr40d4p) statistics for canada, see [comsec](https://www.commsec.com.au/mosttradedinternationalshares) statistics for australia), CITADEL CONTINUES TO PRINT SHARES AND CAN NOT COVER THEM.

These shares are similar to "normal shorts", however don't need to be borrowed (NO FEE), are not reported into the SI but need, of course, also be covered at some point.

FTDs:

Naked shorts usually end up as FTD (and FTR), however, can be hidden through noise (HFTs or Day-traders) which can be used to reset the FTD timer. But, if the buy demand exceeds what the noise can hide (ie. buy volume increases), we see a high amount of FTDs. Also, if shares can be located through the NTCC borrower program, MMs can use these shares freely as a borrowable. ([Read this: Naked Short Sales and Fails to Deliver: An Overview of Clearing and Settlement Procedures for Stock Trades in the US](https://www.researchgate.net/publication/228260887_Naked_Short_Sales_and_Fails_to_Deliver_An_Overview_of_Clearing_and_Settlement_Procedures_for_Stock_Trades_in_the_US))

TLDR: If we assume that institutions and current retail holders aren't selling more than retail, whales or other institutions buy, Citadel (or other MMs) continues to naked short everyday (which is not reported into SI) to provide Liquidity, increasing the lovely floor price.

This shit is huge. It only needs a catalyst which forces MMs to cover and it's at the moon boys and girls. Maybe this week, but if not, it doesn't matter - because if apes continue diamond handing, each day will just add fuel to the rocket.

I like the stock, this is not financial advice.
