Langostino
I have a more than rudimentary understanding of the markets for options. Thank you. Your insult aside, I will ask you to explain in at least as much detail your side of my argument I am about to make. Please try to do so without ridiculing me.
First, explain how the options maker got the right in the name of "liquidity" to issue more shares by a multiple of 3 than a company like Novastar did? I mean that Novastar had to file forms with the SEC to issue a single share. Novastar had to find underwriters. Novastar has to comply with disclosure laws and produce audited financials and Q's and K's on a regular basis. What has been made public about those options MMs that I can use to determine whether I want to enter into an undated futures contract with them? Why wasn't I told that the shares I was buying did not exist? Why is my broker allowed to take my real money and not take delivery? Why do you think that is perfectly fine?
I bought and paid real money in good faith for real shares and they sold me fluff. Now they say I should just STFU because, in their opinion, the companies were not so good and deserve what is happening to them. They also ridicule me and call me names instead of answering the specific charges with a real answer. My question to you is are you going to feel the same way when your daughter's rapist says she deserved it because, in his opinion, her dress was too short? How are you going to feel about that when the police side with the rapist?
On the other hand, a hedge fund in a single transaction can buy enough puts to cause the options MM to issue bogus shares that don't exist and totaling over 20% of what Novastar issued without issuing a single disclosure to anyone. They don't even have to mark the sales as being short. How are the stockholders benefitting when that happens. What benefit is the additional "liquidity" of millions of bogus shares being issued every day by options MMs in a single company and mercilessly dumped into the market driving the share price down to pennies?
Why should an options market maker be allowed, without having to register them and at zero cost to him, to issue millions of shares in a target company? How is the investing public benefitting when 2/3 of what they think are shares held in their accounts are not real?
Who, exactly, are the beneficiaries of this practice?
For too long, the shorts have been running the game. Anyone who thinks we can run a market forever where the majority of shares in a given stock are not real is not being honest with themselves. What happened to the regulators? How could they have allowed a system where anybody who wants to short can just start issuing millions upon millions of counterfeit shares in the target company until it collapses under the weight?
Who gave the options MMs special status to violate laws that have been in place and not repealed since 1934?
The stock answer is "liquidity". The question is how much fraud can you accept in the name of "liquidity"?
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