Replies to post #119532 on Avid Bioservices Inc (CDMO)

[The Other Guy]

Yes, it's a scheme that uses options to make a large lump of shares available for purposes of shorting. I will look for a link and post it. Similarily used in DNDN and ARNA to manipulate price.

[investingdog]

<< ..reverse conversions? >>


Usually a deal between a hedgie and a MM. MM creates synthetic long position consisting of long call and short put at the same strike price and the same expiration date. That position allows MM to short the stock and remain market neutral. The hedgie gets the opposite, short call, long put and gets the shares from MM. Those "phantom shares" are usually called "bullets".

Hedgie will first sell more calls, buy more puts and make a deal with somebody like Adam F to put out a hit piece on the company and at the same time start firing those "bullets" to get the bear raid going. During the raid the hedgie will cash in on options and may start buying the shares back by harvesting the stop loss orders.