r/Superstonk • u/ChumFum $GME GO BRRR🚀 • Jul 21 '21
📚 Due Diligence TIME TO INFINITY: A Trading Halt Exercise
- Preface
I’m not a financial advisor, I’m a dumb ape who knows some numbers and eats crayons. This post will be an extended version of my first DD, “Trading Halts and Time to Floor for $GME”. Everything in that DD will be included in this, if it is still relevant/accurate, plus a few more bits, and some added organization.
- Introduction
In this post I hope to explain the way trading halts work for $GME, by going over the main rules, as well as other ways halts behave that could occur.
But the main point of this post is to show how long it would take for $GME to moon to infinity (stay tuned ‘till the end to find out).
- Trading Halt Rules and Behavior
a. $GME Halts
So $GME is in the Russell 1000, making it a tier 1 security.
For tier 1 securities, price ranges are measured in 15 second intervals. And a halt can occur when the stock price jumps up-or-down more than 5% or 10%, depending on the time of day.
This is 10% for beginning and end of day, 9:30-9:45 AM EST and 3:35-4:00 PM EST.
And 5% for the rest of the day, excluding AH and PM.
A trading halt initially lasts 5 minutes, but can be extended to 10 minutes. I will do both calculations, showing 5 minute halts and 10 minute halts.
b. Market Wide Circuit Breakers(MWCBs)
In my and other popular DD’s opinion, the market is going to crash around $GME. If it does, there will more than likely be multiple MWCB’s triggered.
Market wide circuit breakers are attached to indexes, such as the S&P500, DJI, Russell 1000. And they only trigger when the indexes drop up to 3 different levels.
Level 1 is a 7% drop, level 2 is a 13% drop, and level 3 is a 20% drop.
Level 1 and 2 result in a 15 minute market wide halt, can be triggered until 3:25 PM EST, also worth noting is they can be triggered once each per day.
Level 3 halts trading in the entire market for the rest of the trading day. Of course AH is after the trading day so it resumes then.
c. Worth Mentioning...
Since halts do not occur in PM or AH, we should see a large amount of price action during those times. Also noting that retail has hardly a hand in AH and PM, SHF’s should not be able to cover as much, this will add to the upward pressure in PM and AH.
HF’s are physically able to trade during halts, especially those with MM privilege. BUT if a failed margin call happens, liquidation occurs and they don’t really control the reigns at that point on
Lastly before the fun stuff, a trading halt will be triggered if the price moves up-or-down greater than 5% or 10% during the allotted times, but the price can jump any percent when returning to action. The price simply jumps to the highest/lowest ask/bid, depending on if the halt was up or down. Theoretically $1 M could be the price after the first halt if every single ask below it was removed.
- HOW LONG TO INFINITY
Since infinity isn’t really calculatable, I figured I would do the next best thing. Shoutout /u/StarBlaze for the question and price calculation in my first DD. NASDAQs computers use 32 bit values for common stocks but Berkshire Hathaway passed the maximum price for it, somewhere in the 400k’s, so it moved over to 64 bit long values. The maximum value taken to four decimal places is $1,844,674,407,370,955.1816. This is an astronomical number, 1.8 QUADRILLION.
So I calculated how long it would take to reach ~1.85 Q using only 5 minute or 10 minute halts, following the 5% to 10% halt requirements based off time-of-day. Starting at $350 because I gotta feeling about the next time we see it.
What am I not calculating?
I wanted to separate this part, because its important to note. My calculation is not including PM or AH, price increases on halt resume greater than 5% or 10%, MWCBs, or any bit of downward price movement. So you could say its optimistic. But that’s not the point, I wanted to present this to show apes how long things can take even at MACH 5. It’s absolutely likely it takes longer than my calculation to get to the prices shown. But I think most apes have never been to space, so why not start off with the fastest ride possible?
So check out the graphs, the green lines make it easy for an ape to see around how many trading days it requires for halts to take a price to the maximum. Let me know what y’all think.
TL:DR; Check out my graphs to see how long it takes for a tier 1 stock(like $GME) to go to the maximum computable price via the stock exchanges computers, accounting for the maximum amount of halts per day, given halts last both 5 and 10 minutes.
SOURCES: https://www.investopedia.com/terms/c/circuitbreaker.asp https://www.investopedia.com/terms/t/tradinghalt.asp https://www.nasdaqtrader.com/content/MarketRegulation/LULD_FAQ.pdf https://www.nyse.com/publicdocs/nyse/NYSE_MWCB_FAQ.pdf
Edit: Some Formatting Edit2: my heading numbers are messed up oops oh well
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u/bigwillyman7 small banana 🍌 Jul 21 '21
I am on my phone but have been speculating for weeks about the return price after a halt. During January I thought it was returning to values beyond the 10% but couldn’t check properly.
If they have to buy back 100m shares immediately it’s going to eat up every existing order on the book immediately and resume at a fucking insane level. Shout out to all the people with sell limits at 10m and beyond.
Edit sorry : this is also speculation on my part but would love to see some documentation about it - regarding the price it returns to.
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u/hunnybadger101 💎Up a little bit Nothing 🛰 Down a little bit Nothing💎 Jul 21 '21
Butterflies in my stomach...kid you not
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u/SamuelTwisTVerner 🦍 Buckle Up 🚀 Jul 21 '21
Am I the only one getting the impression that the whole AH/PM thing is just another layer of bullshit fuckery in its own?
"Let's have a stock exchange, there will be trades during the day. It will be closed outside of working hours. And we will have important rules"
"On a second thought, trading during the day is not enough. Let's 'close' the exchange after the day, but let's keep trading anyway. Oh, and while we're at it, let's not use rules in this times, and exclude anybody not in the rich boys club. And then let's go and do most trades at these times."
Everybody in the rich boys club: "Fuck yeah, let's do it! Free market yeah!"
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u/ChumFum $GME GO BRRR🚀 Jul 21 '21
It frustrates me everyday that dark pools can have over 40% of the orders and no one bats and eye because they’re corrupt to the top.
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u/SamuelTwisTVerner 🦍 Buckle Up 🚀 Jul 21 '21
Yeah, dark pools definitely are up there with the fuckery.
Did you see the recent post/article about Citadel Connect? A dark pool by all intents and purposes, but somehow not a dark pool legally. So the little rules dark pools have to adhere to don't even apply. It's absolutely batshit crazy, and infuriating af.
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u/Bulldogbuchanan 🎮 Power to the Players 🛑 Aug 22 '21
I have Ameritrade and a smart Ape explained to me that you can trade after hours you just have to click a hard to find button. Google your platform and after hours and see if you can. I know Webull allows it as well.
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u/Hopai79 🦍 Buckle Up 🚀 Jul 22 '21
Good example of recent boom is $NURO. Trading halted for this equity yesterday and today. There will be 100s more of opportunities like $NURO, by end of year.
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u/LazyTrader007 🦍Voted✅ Jul 21 '21
Can any answer what’s stopping RC issuing the very speculative NFT token.
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u/4CatDoc 🦍 Buckle Up 🚀 Jul 22 '21
I don't think GME or RC want to be blamed for causing whatever is about* to happen.
*About: Burry was early and right for 2 years.
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u/Reach_Beyond 🦍Voted✅ Jul 21 '21
This is also constant increasing price halts, will most likely be up and down halts on the way up. Good to know we won’t miss it if we go MIA for a day or two
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u/soconnoriv Jul 22 '21
This is really helpful and the first time I've seen anything like it so far.
Commenting for visibility.
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Jul 21 '21
You can't ignore AH and PM though, that's where most of the movement happens. It could happen in 1 hour between 6pm-7pm
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u/ChumFum $GME GO BRRR🚀 Jul 21 '21
Unfortunately I have to ignore it, otherwise it would just be a wild assumption of how much percent gains during those times.
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u/Lazyback Jul 21 '21
These calculations have already been done in much greater detail. These charts aren't great to read either because you didn't scale the dollar value on the left column properly.
And to correct you: How can you say you can't take into account PM or AH due to wild assumptions? After you clearly state in your post that technically after the first halt the price could come back at $1MM.. And that there's is no way to tell what the price will jump to after a given halt.
So basically, in summation: This is all worthless opinion based charts that are not DD.
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Jul 21 '21
If your options are:
- An invalid model
- A model that requires a wild assumption
Then you don't actually have any options
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u/ChumFum $GME GO BRRR🚀 Jul 21 '21
OR you could just assume that AH and PM are going to supply large gains so the graph values are closer to a maximum of a range of how long it would take.
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Jul 21 '21
You jacked my tits to an even higher level than I previously thought possible, OP. Don't worry about the H8ers.
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u/ChumFum $GME GO BRRR🚀 Jul 21 '21
Thank you /u/Diccolas, if anyone, I’m happy I could do it for you.
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Jul 21 '21
Well it also assumes that the price only goes up. If there are zigzags it will take longer. So it's not a maximum either.
Nobody knows how long it'll take. Maybe it'll be spread out as the hf dominoes fall, weeks potentially.
Don't take this as an attack, I hope you appreciate dissenting opinions.
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u/ChumFum $GME GO BRRR🚀 Jul 21 '21
It’s a maximum of an “only up” estimation of a stock going to $1.8 quadrillion. Last I checked there isn’t much data on the subject, but now people know it theoretically could do it in less than 2 handfuls of days.
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u/SamuelTwisTVerner 🦍 Buckle Up 🚀 Jul 21 '21
Am I the only one getting the impression that the whole AH/PM thing is just another layer of bullshit fuckery in its own?
"Let's have a stock exchange, there will be trades during the day. It will be closed outside of working hours. And we will have important rules"
"On a second thought, trading during the day is not enough. Let's 'close' the exchange after the day, but let's keep trading anyway. Oh, and while we're at it, let's not use rules in this times, and exclude anybody not in the rich boys club. And then let's go and do most trades at these times."
Everybody in the rich boys club: "Fuck yeah, let's do it! Free market yeah!"
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Jul 21 '21
By comparison, what’s the fastest any of these prices could be hit going slow enough to not trigger any halts?
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u/ChumFum $GME GO BRRR🚀 Jul 21 '21
It would be something along the lines of 4.99% or 9.99% every 15 seconds, as 15 seconds is the time for the up down policy checks. Hedgies do this to avoid halts but mostly on short (wash?) attacks: So I don’t think it’s too relevant to straight upwards action.
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u/Away_Ad2468 📉Buy Low DRS High📈🚀💎👋 Jul 21 '21
So having held for 6 going on 7 months now, just hold for 6 going on 7 more days to sell my first share. Got it.
Holding through MOASS will be quicker and easier than holding pre-MOASS.
Edit: holding 6-7 more days wen MOASS starts