Post by bluediamonds on Jun 23, 2004 4:43:41 GMT -5
+++++ The Naked Shorting of CMKX +++++
By: pedro20040
22 Jun 2004, 11:30 PM EDT
Msg. 323057 of 323294
Jump to msg. #
The Naked Shorting of CMKX
Let us look first look at the MM. But we will go a bit further and look at the person sitting behind a desk. We will call this person Dan.
Dan works for an MM. Dan is someone who sits behind a desk and determines the PPS of stock. Dan is not a high level manager. Dan is just starting his career as an MM and is assigned to low value stock trading. Dan gets paid by commission. Dan receives 5% commission on all gains (of stock that he trades).
Dan is just like everyone else. He may be married, might have kids and has bills that need to be paid.
Dan discovers a stock called CMKX. This is a stock with billions of outstanding shares and trading at 0.0001 cents per share. What Dan notices is that there is high level of trading activity. This activity catches Dan’s attention.
Dan uses $10,000 of company’s money and purchases 100 million shares of CMKX (10,000 / .0001 = 100,000,000 shares). Dan places an ask price of 0.0002 for each share of CMKX.
Buyer’s come along and purchase the 100 million shares for $20,000 (100,000,000 x 0.0002 = $20,000). Dan has just made a profit of $10,000. That is a 100% profit.
Dan uses $50,000 of company’s money and purchases 500 million shares of CMKX (50,000 / .0001 = 500,000,000 shares). Dan places an ask price of 0.0002 for each share of CMKX.
Buyer’s come along and purchase the 500 million shares for $100,000 (500,000,000 x 0.0002 = $100,000). Dan has just made a profit of $50,000. That is a 100% profit.
Dan repeats what he has done many times. At the end of the month Dan has just made the company a $100,000 profit. Dan receives a commission of $5,000 (100,000 x 5% = $5,000).
______________________________________
Dan calls all of his other MM friends and tells them about CMKX. All of Dan’s MM friends start to trade just like Dan. All of Dan’s MM friends are happy because they are all making money. Dan’s MM friends call other MM friends. And before you know it, all of the MM’s are trading CMKX.
Now Dan finds it hard to buy CMKX shares at 0.0001 per share. So Dan starts to short trade. Dan start’s to short sell CMKX at 0.0002 per share. A week may go by and Dan is able to buy back the shares at 0.0001 per share. Dan still makes his 100% profit. Soon, all of Dan’s friends start to short sell CMKX and are making a 100% profit.
______________________________________
All of Dan’s friends are short trading CMKX. Selling at 0.0002 per share and buying back at 0.0001 per share. But Dan notices that it is getting harder to buy back CMKX shares at 0.0001 because all of his MM friends are buying back CMKX at 0.0001 per share at the same time!
Dan calls his MM friends and tells them he is worried because he can not buy back any CMKX shares. Dan’s friends say to not be worried because CMKX is a little company that will not go anywhere.
So Dan and all of Dan’s MM friends decide that they will not worry about buying back short sales. Why? Some say that the company will never go anywhere. Some say that the company will go bankrupt. But the most interesting that Dan heard, was “if we keep the prices at 0.0001, then those people buying will get tired (of holding so long) and will sell the CMKX shares back at 0.0001 per share. We still make our 100% profit.”
Now Dan and all of Dan’s MM friends are naked short selling CMKX shares.
______________________________________
Dan likes making profits for the company. Dan gets a 5% commission. So Dan sells two (2) billion shares of CMKX at 0.0002 and Dan receives $400,000 in sale proceeds (2,000,000,000 x 0.0002 = $400,000).
Dan doesn’t worry about buying back the shares. Dan’s knows that one day those people who bought CMKX will get tired (of holding so long) and sell back the naked short sales (to Dan) at 0.0001 per share. Dan thinks “I just made a $200,000 profit. My commission is $10,000.”
All of Dan’s MM friends do the same thing.
______________________________________
But one day something happened
A lot of people are buying CMKX shares. There are so many people buying CMKX that the price of CMKX is now 0.0011 per share.
Dan starts to worry because Dan still needs to buy two (2) billion shares of CMKX to cover what Dan had short sold before. Then Dan gets really worried because buying two (2) billion shares will cost $2.2 million dollars (2,000,000,000 x 0.0011 = $2,200,000.)
Dan calculates (Cost =2,200,000) less (sale proceed = 400,000) = (net loss $1,800,000).
Then Dan gets really worried because he has just lost $1.8 million dollars of the companies money. Dan knows he is in real trouble. But worst, Dan gets scared because he might get fired from his job.
Dan call’s all of his MM friends and finds out that they too, have billions of naked short sales, which would cost tens of millions of dollars.
______________________________________
Dan and all of Dan’s MM friends decide that they must bring the price of CMKX back to 0.0002 per share. So all of Dan’s MM friends buy from each other, sell to each other, buy from each other and are slowly bringing the price down.. Dan knows that the lower the price, the more scared (the people who bought the shares) would get and maybe, just maybe, they would get so scared and they will sell their shares.
But Dan realizes that; (2,000,000,000 shares) x (0.0005) = $1,000,000.
Dan still knows he is loosing the company’s money.
($1,000,000) less ($400,000) = $600,000 loss.
______________________________________
Dan calls all his MM friends and tells them that they need to keep doing what they’re doing (making the price go down) back to 0.0002 per share. Dan is hoping that when he does this, all of those people who bought the shares at 0.0002, will get scared and sell them back to Dan at 0.0002 per share.
Because Dan knows that; (2,000,000,000 shares) x (0.0002) = $400,000.
Dan knows that the company will not loose any money.
($400,000) less ($400,000) = $0
Dan would really be happy then!
______________________________________
But the one thing that worries Dan so much is this;
What happens if those people that bought Dan’s naked shorted shares do NOT sell the shares back to Dan at 0.0002 per share? That worries Dan.
ragingbull.lycos.com/mboard/boards.cgi?board=CMKX&read=323057
By: pedro20040
22 Jun 2004, 04:30 PM EDT
Msg. 322020 of 323296
Jump to msg. #
Remember this about Naked Shorting.
The MM's naked shorted this stock at
0.0002
0.0003
When this run first began, we watched billions of shares being sold at these pps amounts.
Finally the MM's had to quit and we jumped up 1,000%.
The MM's were naked shorting (and day traders) brought this pps down to 0.0006
The MM's were able to recover some, but not all.
0.0005 less 0.0002 = 0.0003
0.0003 times 10,000,000,000 shares = $3,000,000.00 dollars.
Now think about how many naked shorts were sold the past two weeks at different price range's.
Multiply and you will see the MM's are short millions of dollars.
If a (employee)MM lost $3,000,000.00 while trading, he/she would loose his/her job (get fired).
ragingbull.lycos.com/mboard/boards.cgi?board=CMKX&read=322020
By: pedro20040
22 Jun 2004, 11:30 PM EDT
Msg. 323057 of 323294
Jump to msg. #
The Naked Shorting of CMKX
Let us look first look at the MM. But we will go a bit further and look at the person sitting behind a desk. We will call this person Dan.
Dan works for an MM. Dan is someone who sits behind a desk and determines the PPS of stock. Dan is not a high level manager. Dan is just starting his career as an MM and is assigned to low value stock trading. Dan gets paid by commission. Dan receives 5% commission on all gains (of stock that he trades).
Dan is just like everyone else. He may be married, might have kids and has bills that need to be paid.
Dan discovers a stock called CMKX. This is a stock with billions of outstanding shares and trading at 0.0001 cents per share. What Dan notices is that there is high level of trading activity. This activity catches Dan’s attention.
Dan uses $10,000 of company’s money and purchases 100 million shares of CMKX (10,000 / .0001 = 100,000,000 shares). Dan places an ask price of 0.0002 for each share of CMKX.
Buyer’s come along and purchase the 100 million shares for $20,000 (100,000,000 x 0.0002 = $20,000). Dan has just made a profit of $10,000. That is a 100% profit.
Dan uses $50,000 of company’s money and purchases 500 million shares of CMKX (50,000 / .0001 = 500,000,000 shares). Dan places an ask price of 0.0002 for each share of CMKX.
Buyer’s come along and purchase the 500 million shares for $100,000 (500,000,000 x 0.0002 = $100,000). Dan has just made a profit of $50,000. That is a 100% profit.
Dan repeats what he has done many times. At the end of the month Dan has just made the company a $100,000 profit. Dan receives a commission of $5,000 (100,000 x 5% = $5,000).
______________________________________
Dan calls all of his other MM friends and tells them about CMKX. All of Dan’s MM friends start to trade just like Dan. All of Dan’s MM friends are happy because they are all making money. Dan’s MM friends call other MM friends. And before you know it, all of the MM’s are trading CMKX.
Now Dan finds it hard to buy CMKX shares at 0.0001 per share. So Dan starts to short trade. Dan start’s to short sell CMKX at 0.0002 per share. A week may go by and Dan is able to buy back the shares at 0.0001 per share. Dan still makes his 100% profit. Soon, all of Dan’s friends start to short sell CMKX and are making a 100% profit.
______________________________________
All of Dan’s friends are short trading CMKX. Selling at 0.0002 per share and buying back at 0.0001 per share. But Dan notices that it is getting harder to buy back CMKX shares at 0.0001 because all of his MM friends are buying back CMKX at 0.0001 per share at the same time!
Dan calls his MM friends and tells them he is worried because he can not buy back any CMKX shares. Dan’s friends say to not be worried because CMKX is a little company that will not go anywhere.
So Dan and all of Dan’s MM friends decide that they will not worry about buying back short sales. Why? Some say that the company will never go anywhere. Some say that the company will go bankrupt. But the most interesting that Dan heard, was “if we keep the prices at 0.0001, then those people buying will get tired (of holding so long) and will sell the CMKX shares back at 0.0001 per share. We still make our 100% profit.”
Now Dan and all of Dan’s MM friends are naked short selling CMKX shares.
______________________________________
Dan likes making profits for the company. Dan gets a 5% commission. So Dan sells two (2) billion shares of CMKX at 0.0002 and Dan receives $400,000 in sale proceeds (2,000,000,000 x 0.0002 = $400,000).
Dan doesn’t worry about buying back the shares. Dan’s knows that one day those people who bought CMKX will get tired (of holding so long) and sell back the naked short sales (to Dan) at 0.0001 per share. Dan thinks “I just made a $200,000 profit. My commission is $10,000.”
All of Dan’s MM friends do the same thing.
______________________________________
But one day something happened
A lot of people are buying CMKX shares. There are so many people buying CMKX that the price of CMKX is now 0.0011 per share.
Dan starts to worry because Dan still needs to buy two (2) billion shares of CMKX to cover what Dan had short sold before. Then Dan gets really worried because buying two (2) billion shares will cost $2.2 million dollars (2,000,000,000 x 0.0011 = $2,200,000.)
Dan calculates (Cost =2,200,000) less (sale proceed = 400,000) = (net loss $1,800,000).
Then Dan gets really worried because he has just lost $1.8 million dollars of the companies money. Dan knows he is in real trouble. But worst, Dan gets scared because he might get fired from his job.
Dan call’s all of his MM friends and finds out that they too, have billions of naked short sales, which would cost tens of millions of dollars.
______________________________________
Dan and all of Dan’s MM friends decide that they must bring the price of CMKX back to 0.0002 per share. So all of Dan’s MM friends buy from each other, sell to each other, buy from each other and are slowly bringing the price down.. Dan knows that the lower the price, the more scared (the people who bought the shares) would get and maybe, just maybe, they would get so scared and they will sell their shares.
But Dan realizes that; (2,000,000,000 shares) x (0.0005) = $1,000,000.
Dan still knows he is loosing the company’s money.
($1,000,000) less ($400,000) = $600,000 loss.
______________________________________
Dan calls all his MM friends and tells them that they need to keep doing what they’re doing (making the price go down) back to 0.0002 per share. Dan is hoping that when he does this, all of those people who bought the shares at 0.0002, will get scared and sell them back to Dan at 0.0002 per share.
Because Dan knows that; (2,000,000,000 shares) x (0.0002) = $400,000.
Dan knows that the company will not loose any money.
($400,000) less ($400,000) = $0
Dan would really be happy then!
______________________________________
But the one thing that worries Dan so much is this;
What happens if those people that bought Dan’s naked shorted shares do NOT sell the shares back to Dan at 0.0002 per share? That worries Dan.
ragingbull.lycos.com/mboard/boards.cgi?board=CMKX&read=323057
By: pedro20040
22 Jun 2004, 04:30 PM EDT
Msg. 322020 of 323296
Jump to msg. #
Remember this about Naked Shorting.
The MM's naked shorted this stock at
0.0002
0.0003
When this run first began, we watched billions of shares being sold at these pps amounts.
Finally the MM's had to quit and we jumped up 1,000%.
The MM's were naked shorting (and day traders) brought this pps down to 0.0006
The MM's were able to recover some, but not all.
0.0005 less 0.0002 = 0.0003
0.0003 times 10,000,000,000 shares = $3,000,000.00 dollars.
Now think about how many naked shorts were sold the past two weeks at different price range's.
Multiply and you will see the MM's are short millions of dollars.
If a (employee)MM lost $3,000,000.00 while trading, he/she would loose his/her job (get fired).
ragingbull.lycos.com/mboard/boards.cgi?board=CMKX&read=322020