NorthWest Biotherapeutics Inc (NWBO)

[Chiugray]

Continuing the thread:
Thoughts on the mechanics of “Chaos” in a Large, Giant, or MOASS short squeeze scenario.

The "Short vs. Short" Betrayal
Many assume the Shorts (Market Makers and Hedge Funds) are and will be a united front during a squeeze. Yes and no. The “counterparty” risk in synthetic short contracts changes the game into a "race to the exit".


1. The synthetic short contract (shared risk)
When a Market Maker (MM) writes a synthetic short contract for a Hedge Fund (HF), they become the direct counterparty.
- If HF goes BK (bankrupt) because they can't cover a "unicorn" NWBO short squeeze, that liability doesn't go away, it defaults to the MM.
- The MM becomes legally liable to deliver those shares to the clearinghouse.


2. Providing support to HFs
Because MMs don't want to inherit a 1.4B share naked short, a mark-to-market liability, they have a vested interest in keeping the HF "alive" as long as possible.

- Give "whales" more leeway than retail to avoid a forced liquidation
- They might work together to suppress more for example, ie spoof or wash trade, to buy more time
- (Key) That is why in a Large, Giant, or MOASS short squeeze, the duration of this type of short squeeze can be much longer than most think, several months long.


3. The Betrayal #1 (fighting to get out)
- Coordination between MM and HF exist generally, but only until it no longer makes sense to.
- Once DCVax-L is approved, the MM will realize the "FUD window" will be closing.
- At some point, to protect themselves, the MM will “suddenly” tighten the margin requirements on the HF.
- That will be to force the HF to buy shares now (at $10), so MM doesn't have to buy them later (at $20) for example.


4. Betrayal #2, The NSCC (Clearing House)
- If MMs are unable to deliver shares to the NSCC, the NSCC becomes legally liable because they guarantee every trade.
- Once fails-to-deliver (FTDs) start to pile up at the MM level, the NSCC must act to avoid “chaos” from creating systemic risk. To protect the broader market, the NSCC will seize assets and bid for NWBO shares, at any price.
- The NSCC algorithms will kick in and buy shares until the MM’s books are balanced.
- Meaning if the computer is told to buy 1B shares and “Diamond Hands” Longs only offer 10M shares, the price moves vertically until someone sells those shares.
- The NSCC will “betray” the MM to prioritize market stability and its own members, ie avoid having to use their own Clearing Fund money to buy shares and close the FTDs.


Side notes:
- I anticipate LP will have an ATM (At-The-Market) financing program already set up. They can raise some early cash amounts at peak prices with minimal dilution.
- As shorts cover, those shares will be returned to brokerages. That creates a pool of “clean” share liquidity (float) in advance of a future uplisting to an exchange.
- A catalyst-driven squeeze will be viewed more positively by "new money" (institutional investors) than a “uplisting forced squeeze”.


As always, IMHO, and best to all Longs.